Buying a Rural Property – First Steps

Perhaps for years you've dreamt of owning a place in the country – maybe a small ranch in Colorado, or a private lakefront lot in Minnesota, or maybe your own ski chalet in the Rocky Mountains. Today's low real estate prices combined with great interest rates are making it possible for more people to realize this dream. Before you get out your checkbook, here are some things to consider before taking the plunge.

1. Determine what things are important to you. If you are an avid skier and find yourself spending the equivalent of a mortgage down payment in condo rentals every year, maybe purchasing a property closer to the slopes is just what you need. Keep in mind, however, you won't have the freedom to move around, so choose a location you'll want to return to year after year. If you're only thinking about taking up a new sport or hobby, consider renting for a few seasons to ensure your dream still holds the same appeal once it becomes a reality.

2. What sorts of ties do you have to your current home? Do the kids come to visit on holidays? How will your having a second home affect your family routines?

3. Begin to zero in on the perfect location for your rural home by making a list of all areas that fit. List your favorite sports and past times, desirable weather, geography (do you want mountain living or beachfront), available employment opportunities, ethnic or social conditions, taxes and utilities, and price range.

Next, do some research and determine which states are most compatible with your needs. Try to get your list down to about three favorites.

4. Contact the chamber of commerce and local government agencies for as much information as they will send you and begin compiling a portfolio on each region.

5. If this is not an area you've previously visited, try renting a place for at least a few weeks to get a feel for the place. Another option is to visit some home sitting sites such as HouseCarers.com to check for house sitting opportunities in the area. It's one of the best ways to immerse yourself in an area and feel like part of the community.

6. Once you've planned your visit, contact area realtors and make appointments to tour some houses. Send them a list of the properties you want to view as well as your list of criteria and maximum price range. The agent will undoubtedly include other houses on the tour; and you may find it helpful to take notes and pictures of your favorites as they will all start to blend together after awhile.

7. Revisit your favorite homes, inspecting inside and out, looking for obvious deficiencies such as water stains, leaks, odd smells, leaky faucets, or poor water pressure. Find out the age of the roof, furnace, well and septic (if applicable) and request maintenance records.

8. Once you're ready to submit an offer, make it contingent on a successful home inspection by a professional. Add up any of the big ticket items you may need to repair or update and deduct the costs from the asking price. Note that the seller will be responsible for the cost of the survey, and any other pertinent inspections such as water, soil, structure, etc. You should reserve the right to cancel the deal if any of these inspections produce what you consider an unsatisfactory result.

Budget for Closing Costs – Home Inspection and Title Fees

Purchasing a home is a euphoric event. Once escrow begins, the euphoria can change to frustration, particularly if you are not ready for the closing costs that quickly accumulate.

Budget for Closing Costs – Home Inspection and Title Fees

Closing costs simply refer to the fees associated with various things associated with the escrow process in a real estate transaction. In the excitement of having an offer accepted for your dream home, you can easily lose track of the fact you are going to need to have some serious cash on hand to pay them. Many people make the mistake of only assuming they need the down payment money, and have to rush around town trying to come up with money for the closing fees.

If you are buying a home, you need to get a professional home inspection. Doing so can reveal potential problems with the home that you wouldn’t otherwise notice. Problems can include things such as rot, termites, water leaks and a bevy of other issues. The time to do this is during escrow. Of course, that means you are also going to have to pay for the inspection. Depending on the size of the property, home inspections can run a few hundred dollars up to a few thousand. Make sure you have money set aside for the fees.

Title insurance is something you absolutely must purchase when you buy any real property, a home, building, land or whatever. Title insurance protects both you and your lender. Title insurance is just what it sounds like. A title company will research the title of the home and essentially guarantee that the title is good. This means the seller actually owns the title and has the right to sell it to you. The title company will also make sure there aren’t any liens on the homes or other things that will cause you problems. Depending on the price of the home, title insurance can run you a couple of hundred dollars or up into the thousands. Again, it is important to find out the cost and budget for it.

Title insurance and a home inspection are two things you should absolutely have when purchasing a home. Just make sure you budget for them.

Buying a Home -- Is a Home Inspection a Good Idea?

To avoid “buying a pig in a poke,” buyers have long demanded the closing on a home purchase be contingent upon a satisfactory inspection by a home inspection firm. In many parts of our country, we’re now experiencing a strong sellers’ real estate market and sellers often receive more than one purchase offer on the same day for their home. In this environment, buyers are rethinking the home inspection requirement. Is this a good idea?

To Inspect or Not To Inspect

Clearly, if a seller got two offers and one requires a home inspection be done, most sellers will choose the non-inspection offer with all other things being equal. So, a home inspection requirement can put you at a competitive disadvantage. Still, are you willing to risk purchasing a home that has some fundamental, expensive problems? What if you purchase the home and subsequently learn plumbing under the floors must replaced? What if the repair costs $10,0000?

One option may be to include a provision in your purchase offer that provides for a home inspection done for informational purposes only. That way, settlement under your offer is not conditioned upon the inspection. It would not provide you with the option of amending the contract to have the seller make repairs, nor would it provide a way for you to void the contract should serious problems be uncovered. Should serious problems be discovered, however, the seller is bound to know the deal will be in jeopardy. For that reason, even an “informational” home inspection won’t look as good to her as a contract with no requirement for a home inspection.

Another option you might consider in lieu of a home inspection is a sub rosa inspection. Instead of using James Bond for spying, you could ask a friend working in the construction or engineering field to walk through the house with you. The goal, of course, is to look for any glaring “red flags” that are deal killers.

If your friend doesn’t see anything disturbing, you can then write a clean contract offer without contingencies. Sellers love no contingency sales. The chances are good that you’ll get the home you want, but still have a some assurance there isn’t anything seriously wrong with the property.

There is no one right answer when it comes to deciding on home inspections. Each buyer has to ask himself how much risk he is willing to take. If you are the only party making an offer, demand an inspection. If you are one of many potential buyers, well, you are going to have determine your comfort level. Others can provide information, but the decision is yours.