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Questions to ask the Realtor® before buying a house

Real estate agent speaking with home buyersBuying a new home is exciting and perhaps a bit stressful. After looking at too many homes to count, you've found a great house at an acceptable price. But before you make an offer to the seller, take a deep breath and ask the Realtor® the following questions:

Why is the homeowner selling?

Is it because there's a super highway cutting through the neighborhood, or a shopping center or is there mine subsidence? Chances are, the homeowner is moving up to a larger house or moving down to a smaller house, divorce etc. If you don't ask any more questions, ask this one.

Seller disclosure

Most states require the seller to provide the prospective home buyer with a disclosure form that informs the home buyer of any known defects in the home or previous problems that have been corrected or not. Read the seller disclosure carefully. Does it look like an honest representation of the house, or does it appear deceptive?

Comparative market analysis (CMA)

Ask the Realtor® to prepare a comparative market analysis. The CMA is a detailed report of similar homes offered for sale, homes under contract, recently sold and listings recently expired, canceled or withdrawn. The CMA will give you a good starting point for your offer.

Home condition

How old is the roof, furnace, air conditioner, electrical breaker box. What improvements, if any, have been made to the house since the seller owned the house?

If the house has a basement, was it freshly painted, or remodeled? You have to consider the possibility that the seller is covering up a problem, like water seeping through the walls or foundation issues.

Make sure you have a home inspection from an experienced home inspector.

How long has the home been on the market?

If the house has been on the market for a long time, you have to ask the Realtor® the reason. What do other home buyers know that you're not seeing?

How much is the seller paying for homeowners insurance?

A simple question, but an important one, because the insurance premium is part of your monthly mortgage payment. If the homeowners insurance premium is sky high, the lender may refuse to extend a mortgage on the house, because the debt to income ratio is out of whack.

Does the seller have a Comprehensive Loss Underwriting Exchange (CLUE) report?

CLUE is a loss history report that contains any insurance claims on a home in the last few years.Why is a CLUE report important? A CLUE report will disclose any damage to the home, including flood damage after a storm.

Only the homeowner can request a CLUE report. The seller can obtain a free CLUE report for the home once a year from LexisNexis. The request for the CLUE report can be made online or by calling (866) 312-8076. If a C.L.U.E. report cannot be obtained before making an offer, home buyers may want to make their offer contingent upon a clean C.L.U.E. report. You might be surprised to know that claims made by the home seller can increase YOUR insurance rates!

Subsidence

Ask the Realtor® (and seller) if he or she is aware of any mine or earthquake subsistence in the area. Just a tiny bit of earth movement can wreck a foundation.

School bus stop

Where's the school bus stop? Even if you don't have kids, a school bus stop nearby can add value, and it's a good selling point.