Real Estate Tips

By Steve Gillman - 2007

The six real estate tips that follow will help you avoid common and not-so-common mistakes people make when buying a house. Real estate always involves some risk, but there are many ways to reduce those risks. Here are six of them.

1. Be Careful with "As Is" Properties

It is okay to buy a property that is sold "as is," and all properties are ultimately sold with no promises other than those made in the contract. In other words we take our chances when we buy. On the other hand, even if they say "sold as is," you can get an inspection. If the owner won't allow this, just keep looking. There's no good reason that a seller shouldn't allow an inspection (and the bad reasons are a risk you don't want). Some lenders won't loan on properties under such conditions in any case, so you could be in trouble with financing if you tried to buy without an inspection.

2. Note the Lay of the Land

Notice the way the land lays around a home. If you are there on a sunny day after a dry-spell, you might think nothing of the slope towards the house. Unfortunately it could mean there will be water pooling near the foundation every time it rains heavily. You want proper drainage. Look for any water stains on basement walls as well, as evidence of past water problems.

3. Prepare for The Unexpected

Have at least $2,000 set aside for "unexpected costs" when buying a house. I know an investor who is very careful in his planning and has done many fixer-upper projects, and he still averaged a couple thousand more that he estimated for total expenses each time. You might be buying a home just for yourself, but you should still expect the unexpected, and make it part of your planning.

4. Look in the Attic

Pop your head up into the attic (or have the inspector do so), especially in older homes. A flashlight will help. Look for signs of leaks, and to see if the wiring has been updated at some point. Bare wires strung on ceramic insulators are still common in old homes in some areas. See how thick the insulation is as well, and look for signs of animals (droppings, gnawed wood, holes).

5. Using Real Estate Agents to Negotiate

Although it could help, you don't have to meet the seller in person to use some negotiating ploys. If you are making the offer through an agent you can hesitate and suggest that you really didn't want to go this high on the price. Start talking about another investment or home opportunity that you're looking at as well. Any good agent will pass along this information, and may advise the seller accept the offer as written rather than risk chasing you away with a counter-offer at a higher price.

6. Calculate Your Costs

Perhaps the most important of these real estate tips is to figure your total costs carefully. Plan for extra expenses as mentioned above, but look at your ongoing costs also to honestly compare houses, whether you're investing or buying a home for yourself. Expenses like property tax and insurance rates can vary a lot from one property to another, for example. A particular house might cost twice as much to heat as another. Interest rates can be much higher on a house if it is classified as a mobile home, and some double-wide mobiles look like standard "stick built" homes.

You should know what you'll be paying at closing, of course, and what fees your lender will charge you. But your ongoing expenses can be just as important, especially if you'll be in the home for a long time.

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