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When you are looking at buying a property, always ask questions. After all, knowledge is power.
In fact, despite claims that ignorance is bliss, the opposite is true in real estate. If you are making a purchase, the more you know the better. That way you have a clear picture of the value a home holds and can understand what you will need to do once you buy the property in order to maintain it.
However, you typically will not get the information you need by saying ‘tell me everything,’ so you will have to be specific. This way the seller can provide you with the information you need to be an informed buyer.
So, in order to help you ask the right questions during your next deal, here are three major questions you should be asking every time you are looking at buying a property.
But first, before you get serious about buying a property, it is important to sit down with a mortgage broker to go over your options. This could be getting a pre-approval to make buying a property easier, looking at commercial lenders if you plan on buying a property on the commercial side, and more. For more information, click the link below to book a free strategy call with our team at LendCity.
Have There Been Any Renovations or Additions?
Whenever you’re buying a property, it is key to know whether any major renovations and additions have been done on the property. Not only will this help you gauge the age and maintenance needs of the home, but it can also help you save money in the long run.
Unpermitted Additions and Renovations
Unfortunately, sometimes people complete renovations or remodelling projects without getting the required permits to complete the work. This can be due to the cost involved with obtaining proper permits, a shifting timeline that the permit would not allow, or a lack of awareness on the part of the previous owner. Regardless of the reason, you need to be careful that any additions or renovations made were done by the book or else you may face problems down the line.
The Improvements May Be Removed
While work permits can be applied for after the work has been completed, it can be expensive and result in hefty fines on top of the existing fees. If these fees are not paid, either you or the seller will have to remove those additions. This can cause both the sale price of the home, and the conditions on the purchase agreement to change.
Your Insurance May Be Voided
You always have to be careful to ensure that all renovations made on the property were done by a licensed professional, otherwise the property may no longer be insurable. For example, if an addition on a home required electrical wiring to be run through and installed, but the proper permits were not in place and an electrical fire were to ensue, the insurance company may void your claim and refuse to cover the damages.
The Sale Could Fall Through
Unpermitted additions can cause major complications when conducting a home appraisal. Since the value of the home calculated on the appraisal cannot factor in any illegal additions, your appraisal may come in significantly lower than expected. This can cause your lender to refuse to provide you with the loan required to pay the asking price on the property. If the seller refuses to budge on their price after the appraisal, this can cost you the entire sale.
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What Comes With Buying a Property?
Usually when you are buying a property you can expect that what you get is what you see. However, that is not always the case. Often there are certain pieces that you may want to come with the property that the seller is planning to take along with them. So, make sure you ask about anything you may want to keep.
While typically you will not need to worry about features such as light fixtures, hardware and sinks leaving with the homeowner, there are cases where the previous owner may want to take those elements with them once they sell.
Fortunately for you, anything that is installed into the wall or connected directly to the home’s primary utilities that the seller plans to keep must be disclosed on the sale agreement. However, it can still be beneficial to inquire about this while you are doing a walkthrough.
Furniture and Appliances
While furniture and appliances are almost always property of the seller, some people are looking to have a fresh start when they move and do not plan to keep these items. This means you have the opportunity to try to make an offer to buy them with the home. If the current homeowner knows they no longer want their living room furniture or cannot be bothered to relocate heavy appliances such as an oven, washer, or dryer, they may be easily convinced to include their purchase as a condition on the sale.
Are There Any Easements?
Finally, when you are buying a property, you should be sure to ask if there are any easements you should be aware. If you are not aware, an easement is a legal right for someone aside from the property owner to access a property for a specific purpose. This does not mean that the holder of the easement would have the right to occupy your property, but they would be able to pass through or work on the property within the limits of the agreement.
There are three common types of easements:
This is an agreement with utility companies and the city to allow for things such as access to plumbing and electrical infrastructure on the property.
These are an agreement between the property owner and another party to allow access to the property. This is common on farmland to allow piping or field access through your property.
Easement By Necessity
This final type of easement is an unwritten permission for someone to use the property due necessity. While these are unwritten, they are still legally enforceable. This is most common in the case of homes without road access being constructed behind properties that do. This would mean the person without road access may need to drive through the other property in order to get to their home.
Your Lender May Want Specific Information When You Are Buying a Property – Ask for It
In order to satisfy certain conditions on your mortgage loan, you may require information from the property owner to provide to the lender before buying a property. You should always make sure that any of these requests for information are handled as immediately as possible as to satisfy the lender’s terms and ensure your purchase can go forward.
For any more information about the world of real estate investing or if you are looking at buying a property, contact us at LendCity. Our team of professionals will gladly help you find the answers you need. You can contact us at 519-960-0370 or you can visit us online at LendCity.ca Alternatively, click the link below to book a free strategy call today.