Home-buyer fears can take over your desire to buy a home. Beyond the dreams of homeownership and all that entails, your purchase is a long-term commitment, from maintenance to finances.
You may be wary that you’ll purchase the wrong house. What if it’s a lemon? What if I pay too much? What if I can’t really afford it?
Let’s go over ways you can alleviate some of your worries. Please keep in mind, I’m referring to my local market, the Pacifica, CA area. Standards may be different in your area.
Inspections
You must get inspections when buying. Whether you pay for them or the seller pays, you must absolutely get the inspections that are necessary for your market.
In the recent past, buyers were wrongly influenced to buy without getting inspections. In my opinion, that’s ridiculous. If you can’t get inspections, then don’t buy the house. That is taking on too much financial risk.
Standard inspections include a pest and organism inspection, and general property, roof, and chimney inspections. Beyond that, the neighborhood may have a high water table or past flooding issues. In that case, you may need to have a foundation inspection done. If water drainage or soil slippage is a known factor, then perhaps a soil engineer is called for. Your realtor should be guiding you in what inspections are necessary. It’s an important reason to use a local realtor who knows the history of the area.
Who pays for the inspections?
In some markets, like mine, the inspections are paid for by the seller before the house goes on the market. So they will have paid for them in advance. A seller may not provide all the necessary inspections. For example, you may want to get an additional inspection on the foundation. You will pay for added inspections.
Again, in the recent past, the market was moving so fast that a seller would simply ignore an offer that had a request for more inspections. They’d move on to one that didn’t. If that’s the case, then you might decide not to buy the house.
Home-buyer fears: What about Structural Issues?
A good general home inspector will go through the house room by room checking the main operating systems of the house. Once that inspection is provided to you, you might see that the inspector has called for “further inspection.” Your realtor should be able to help you determine what, if any, further inspection is needed and what type of inspector to call.
An inspector is hired to point out every issue they can find and that’s what they’re going to do. Some may be minor, some might be too costly for your budget. If you’re able to be there during the inspections, ask plenty of questions. Ask for an explanation on the type of issue. How it happened and how you can avoid it in the future. Also find out when the repair or replacement must be taken care of so you’ll know if it’s a project you have to repair right away or if it’s something you can plan for the future.
The inspection isn’t a document you get, file away, and never look at again. Make a schedule of when you can make these repairs and check them off as they’re done. The house may need a roof in five years. Find out the approximate cost and start saving for it now. That way you won’t be surprised in five years when the roof starts leaking.
Personal Story
“I worked with a couple buying their first home. We had multiple discussions in person and over the phone about the extreme condition of the house they were interested in. The house was literally leaning down the hill. You could not only feel it standing in the house, you could see that the house was slanted, both on the outside and on the inside.
The seller had provided inspections in advance, which is typical for my market. We reviewed those in person and over the phone multiple times. The buyer was clear that he and his father could repair the leaning house and its foundation. I asked a neighborhood contractor to come talk to them for an informal meeting. Still the insisted they could handle the cost and the repairs.
We submitted their offer. I advised the seller’s agent of what they told me. We were both being cautious because of the unusually poor condition. The offer was accepted.
And then the bottom fell out. The buyers told me that they wanted to renegotiate the price of the sale. They wanted to reduce the price due to its condition. The problem: they had no contingencies. That was part of the contract that was agreed to.
I thought they were complete jerks. The family was selling the house because the owner had passed unexpectedly. Now these buyers were going to try to screw them. Totally unethical.
Ultimately, the seller would not agree to their strong-arm tactics. And fortunately, they agreed to let the buyer get out of the contract instead of suing them, which they could have done. And likely won!”
Home-buyer Fears of Losing Your Deposit
How much is the deposit?
Because of the extraordinary prices of housing, the standard initial deposit is three percent of the purchase price. About a week before close, you’ll wire the balance of your deposit to the escrow company. If your downpayment is ten percent, then you’ll be wiring seven percent to the escrow company.
How can you lose your deposit?
As long at you have property condition contingencies, and you find something wrong with the house, you have an out of the contract. The explanation gets more specific when inspections are provided to you before your offer is accepted.
Once your offer is accepted, canceling the contract is limited to things you find out in addition to what you learned from the initial inspections received. Once those contingencies are removed, your option to cancel is also removed.
If you’ve removed your contingencies and then decide that you don’t want to buy the house because you’re too scared, you might have a problem. You’ve signed a legal contract. You can’t just walk away whenever you want to.
This scenario is also true for your financing contingencies. If you have a loan and appraisal contingency but the house doesn’t appraise for what you’ve agreed to, you may have a way out. You’ll have to come up with the extra money if the contingency has been removed and the appraisal comes in short of the purchase price
Home-buyer Fears: Is my agent working in my best interests?
Both you and your agent should have a mutual commitment to one another. And you should sit down before you start the process to speak with the agent you choose in the same way you would for a job interview. You’re interviewing each other. If you have doubts and feel that your agent is not on the same page, that realtor may not be the right one for you.
Home-buyer Fears What if the Repairs Are Too Expensive
I just had this conversation with a home buyer who was interested in a house in El Granada. The house needed $10,000 in electrical upgrades and $30,000 in dry rot and termite repair work.
You have to evaluate the cost of the repairs and when they need to be done against the value of having a house now rather than later.
What I mean by that is that housing prices are going up. Fast. If you buy that house today, how long do you think it will take for it to go up in value by $40,000?
Right now, the next house that goes on the market will be listed for the price that the last one sold at. So if a house is listed for $900,000 and sells for $1 million, the next house that lists is going to list for $1 million. And those numbers are reasonable in this market.
So $40,000 may sound like a lot of money. When you’re talking about $1 million house, $40,000 is very little, especially if the work can be done over time.
The above real estate information, Conquer Your Home-Buyer Fears, was written by Vicki Moore, a realtor specializing in home sales from Pacifica to Pescadero, including greater San Mateo County.
Vicki can be reached via email at pacificalocals@gmail.com or by phone at 650-888-9268. Vicki has helped people move in and out of many San Mateo County homes for the last 25+ years.
Are you thinking of making a move? I have a passion for real estate and love to talk about it! I service real estate sales in most San Mateo County cities and towns.