You have decided to enter the buying market. You have managed to get your pre-approval letter from your bank, and now you’re ready to hit those open houses on your own or with your real estate agent. When you attend open houses or your broker setups up showings on your behalf it’s important to take your time check out the property, but you should always try to get as much information on the first or second showing and here are some good questions most agents ask while on showings with their clients
1)What is the owner-occupied ratio? This is an important question to ask many times banks will want 50% or higher to secure a mortgage, and even if you’re paying cash you want a high owner occupied ratio vs a high rent ratio to protect your investment long-term.
2)How are the reserves? You want a building with healthy reserves. Reserves are typically used when there is work that needs to be done in the building or to maintain day to day maintenance. It can also affect your financing. Knowing the figure is always good. Your attorney will also look this over when you have an accepted offer and should be able to point out any red flags and offer solutions to solve the problem making the place of interest your new home.
3)Any pending assessments? The worst thing you want to do is buy a condo and then right when you move in get hit with an assessment. If you know of assessment you and your attorney can figure out a plan to protect you or at the very least you and the seller can share in the cost.
4) if there is an assessment and work hasn’t started knowing when the work will occur and how long the project will take. Who wants to move into a place and find out the brand new place you moved in is going to be under construction. If the work is in progress knowing when the completion will be is a great follow up question.
5) What do your condo fees include? Sometimes there are errors on listing sheets or sometimes there is something on the listing sheet that needs clarification. You want to know what your condo fees include so you can budget according.
6) On a listing sheet often times you will see what taxes are and most agents put the amount omitting the residential exemption its smart to ask if the taxes reflect a residential exemption. Most Cities and towns offer a tax break when you are buying a home for primary residence it can be anywhere from 1,000-15000.
7) If you’re looking at new construction especially if it’s a high-rise in Boston find out if a percentage of the resale has to go to the BRA Boston Redevelopment Authority. A lot of new developments in the city a percentage of the resale which can be anywhere from 2-3% would have to be given to the BRA and it comes from the Seller.
8) If your not ready to sell and decide you want to rent out your unit what is the Building policy? What term of the lease is acceptable? Is it clearly spelled out in the Condo Docs? Some buildings only allow one year lease and other allow shorter terms. Condo Docs should spell it out clearly what they need if you accept an application. It should also clearly state if there is a move in fee, what paperwork you must submit to allow the move to happen in the building. Condo Documents should also state the length of a lease as well.
9) What is the pet policy? Some buildings have weight restrictions and other have breed restrictions and some only allow dogs and cats and have put a limit how many pets an owner may have in the building. Your condo docs which you should have a chance to review if you have an accepted offer from the seller. The documents should also state if its pet-friendly for all or just owners in the building and what the procedure is to have your pet approved to live in the building.
10) If the property you’re looking at is in pre-construction keep in mind the buying process might be slightly different vs if you are the second owner of a property. You should ask how they plan to build up the reserves in the building? A lot of pre-construction projects require new owners to put two months of condo fees to building up the reserves in a new construction project.
11) If you’re looking at a Mid-Rise or High-Rise Building with multiple units especially fairly new construction it’s a good idea to ask does the developer have a units that have never hit the sales market and knowing the percentage of units the developer still has? If you don’t remember to ask the condo documents should spell that out for your attorney. You and your attorney will discuss and figure out if it’s an issue you should be concerned about.
12) You should ask your broker before you put an offer in to run comps and to find out what the last sale was in the building. If there was a sale not far from yours and is similar in size and style it might give you a good idea if you need to offer asking or can negate in price. Also if you see several sales in a building especially in a small building it might be a red flag that you might want your attorney to explore a little bit making sure you’re making a sound investment.
13) Is the building professionally managed and if yes by who? It’s not a bad idea to look into the management company online to see what folks have said about them and to see what other properties they manage. Your real estate agent can find that information out or you might be able to find out that information yourself online. Also when you walk into the building make note how the common areas are maintained as well that might help you decide if the building is managed well.
14)What percentage of the units sold are investors? You want a building where the building is mostly owner occupied an investor might not care what goes on in the building since they don’t live there.
15) If working with developer what are some of the other projects the developer has done in the area? Knowing about past projects the developer has done can help you feel more comfortable with the property. Knowing other properties the developer has done can also show their work and attention to detail or lack of. I have had some buyers google the developer and find out they had issues in their project and might bring additional questions to the table you might want to voice to your agent or attorney if you decided to put an offer in.
16) If looking at pre-construction or new construction not open yet its smart to ask how the buying process is. Some new construction projects don’t negate on price will not accept an offer to purchase. You also might find you can not put your offer subject to home inspection. No one can say you can’t have a home inspection but they can say you can’t put offer subject to home inspection. Most sales transaction the buyer puts down a 1,000 deposit with the offer to purchase, but if they don’t honor offer to purchase you should ask what the deposit is? Some don’t require their buyers to put anything down till they go to purchase and sale. You should know what is required to put down at purchase and sale if you never had to submit an offer. All new construction projects will allow you and your attorney to review condo rules, regs, and budgets prior to signing purchase and sale. Knowing the process ahead of time will help you and your attorney manage expectations.
These are just a few of the questions should ask when they find a property they really like. Don’t be afraid to ask questions is the bottom line when you’re buying a home. The questions you, your agent ask the clearer picture you will have about the potential investment you are making. These are just some questions a buyer should ask. Most agents have their standard questions they ask, but many have tailored questions that they ask that will serve their client’s needs. If you would like to discuss buying a home or have additional questions I am always happy to answer them. Feel Free to Contact me anytime
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