By Leonard Baron, MBA, CPA – ProfessorBaron.com and Wendy Mihm FinancialRx.com Founder
So you are ready to enter the real estate market and you want a Buying a House Checklist to help you make better purchasing decisions. These decisions are some of the largest you will make in life and will have significant financial impacts on you for years going forward. You realize that independent and unbiased information will be best to help you make smart and safe purchasing decisions on your largest purchase.
This independent information does exist and the framework for making these smart choices has not changed over the years. What has changed is the ability for the average real estate buyer to have the tools needed to do their homework, also called doing your due diligence.
One of the main decisions of course is should you even buy real estate and what issues should you consider. Impacting your course of action will be how long you plan to own the property, is it the right area and type of property for you, and how does one determine the financial picture so you can make sure you can afford the house and still pay all your other bills.
For example, the old adage of buying a property to earn some equity and trade up in a few years really doesn’t apply in the current marketplace. Experienced buyers know what the novice does not….that the transaction costs on the buy and the sell wipe out any hoped for equity gain if the property is not held for a minimum of five years. Hence, if a buyer isn’t sure they are going to own the property a long time, they will most likely do better by renting and leaving all the expensive issues of ownership with their landlord. The truth is, renting is not necessarily throwing away money, but short term ownership typically does result in throwing money away.
Other issues that a buyer would want to know relate to the true income tax impacts of real estate ownership and whether or not they are really getting any tax benefits? Or how to understand and select a mortgage lender who is giving them a fair deal. There is a whole buying a house checklist anyone can download that covers all the important issues you should want to know.
Items that should also be considered are:
– HOA financial analysis to lower the risk of higher HOA fees or special assessments,
– Property condition and inspection issues to help you understand the true costs of property rehabilitations and avoid potential money pits
– Title insurance and reviewing a plat or survey so you are sure you are getting what you believe you are getting and issues do not crop up after you close escrow
– Property and liability insurance so that if your house is damaged or you are sued you have insurance coverage in place
– Many other items and issues that you should consider and think about when purchasing real estate.
Your taking the time to use some unbiased and neutral information to help you make smarter choices will reduce the risk of something going wrong on your purchase and hopefully lead into a smart and safe long term real estate experience.
You can download and review the Due Diligence Buying a Home Checklist from Leonard Baron’s website, no charge and no log in required, under Chapter 1 @ www.professorbaron.com.
So don’t skimp on protecting yourself on your largest purchase. Take the time, energy and effort to consider the real and significant issues with real estate ownership and significantly lower your risks by making prudent choices that will last for years.