Before you Write an Offer
Before the offer to purchase is created you need a pre-qualification letter or better yet a pre-approval letter from a reputable local lender.
This is one of the best negotiating tools a buyer can have. It shows the seller that you are financially able to purchase the home. After you have found the right home, it is time to prepare the offer.
When you are buying a home, there are many problems that the seller is obligated to disclose. In Florida, this is done on a seller disclosure form. Your agent will provide the seller disclosure for the property around the time you are considering making your offer. They will also send any addendums or attachments that are in MLS such as the HOA or Condo rider.
Here are six things to research that can provide additional insight about the prospective home before you make a final decision.
1) What do the comps say about value? Comps are comparable sales between private parties of arms length transactions (not related or having a previous relationship). Your agent will research comps to give a recommendation of market value. When looking at comps, you want to focus on sales within the last 6 months. If there aren't enough relevant sales in the last 6 months, you can look back 1 year, but not usually any longer than that. Stay within the same property type, for example, single family block home. Only look at comps 20% less or more in square feet. Ideally stay within the same neighborhood or building. If comparable homes aren't available in the neighborhood, try to stay within a half mile or two miles max and don't cross a highway, major road, railroad or body of water.
2) What are the current market stats for the neighborhood? Understanding things like the list price to sale price ratio recently in the neighborhood, the median sale price per sq ft and the average days on market helps you to understand how competitive you need to be with your offer. You can also find out if any seller credits such as closing cost concessions are common for the neighborhood and the financing types typically used for sales.
3) Get an insurance quote. Homeowners insurance can vary widely from property to property. Find out if flood insurance required. Call an insurance agent or use an online tool to get a quote for homeowner's insurance. Anyone can get a quote, you don't have to have the property under contract.
4) How safe is the neighborhood? Look up the address on local crime maps. Check for sex offenders. Look up sinkhole activity in the area. Google the address and neighborhood to look for any public information / reputation that you may want to be aware of.
5) How are the public schools in the area? If schools are important to you, look up the school zoning on the county website.
Don't take anyone else's word for it as school boundaries change from time to time. Call the school that you plan on enrolling your child in and verify that the address you are considering is appropriately zoned, ask if any changes are planned for the zoning, and see if you can schedule a tour if you are moving into the area from another area.
6) Find out about required homeowner expenses. Ask the seller, what do the average monthly utilities cost? Find out about HOA fees, condo fees, CDDs. Use a calculator on the county website to estimate taxes. The taxes you see in MLS are the current owner's taxes and will be reassessed once you buy. Every county in the area has an online tax estimator tool that will give you an estimate on what your taxes will be on a given address for a given price.
Knowing all you can about a prospective home and neighborhood, not only helps you decide if it's the home of your dreams, but what offer to make as well. Your real estate professional can help you get your key questions answered and give you advice on how to evaluate your findings.