Property Reports: The Importance of Being Prepared
A home is an investment. As with any investment, it is important to research in depth the asset you’re investing in to make sure it’s what you really want and that it’s worth it, long-term. Whether buying cars, home electronics or appliances, savvy consumers will try to get all the information they can about their prospective purchase. Shouldn’t buyers do the same when looking at a home, which is likely the biggest purchase in their lives? Knowing everything about the home’s pricing history, market availability, neighbourhood issues, comparables, details of the specific home and more is absolutely vital. Should you make an offer on the home of move on? If you’re making an offer, how much should it be? Only by obtaining a comprehensive, professional property report can home buyers be truly prepared to make informed buying decisions.
Types of Property Reports
While there are many sub-topics and levels of detail available, there are essentially two general types of property reports and it is important to obtain both. These two types of report are the home report (specific details about the physical piece of property) and the price report (value-related information from a variety of sources and factors). Combined, these reports can illustrate to the potential home owner the true worth of the home they are considering.
The Home Report
A home report is a detailed look at the structure itself, and should be performed by a licensed, experienced home inspector. The home report’s goal is to detail the condition of the home and describe any current or prospective problems with the property. If these issues don’t make the prospective buyer turn away from the deal, then they will need to be mitigated in a satisfactory manner before the purchase. In this situation, issues that surface during the inspection could lead to further price negotiations or remediation by the seller. Whether the home report causes the deal to dissolve, the home to be discounted, or the problems to be fixed, it’s clear that a home report is vital to the best interests of the buyer. Here are some areas a home report can cover:
*Structural integrity (walls, roof, supports, foundation)
*Systems (heating, cooling, water heater, ducts)
*Electrical (wiring, lights, main electrical panel)
*Plumbing (pipes, toilets, sinks, faucets)
*Dangerous materials (lead, radon, asbestos)
*Pests (rodents, insects)
With all that could possibly be wrong with a home, it is crucial to secure the services of a professional to conduct a thorough examination of the property for a home report. If the home passes the inspection, or if the issues can at least be straightened out, then it’s time to analyse the price.
The Price Report
A price report is an examination of the factors that go into the pricing of a home. The price report’s purpose is to provide the buyer with information in order to determine if the price is fair and if it is worthwhile for the buyer to pursue the purchase. This is a big financial decision to make and small factors can add up to large disparities in price. Knowing about what goes into a specific home’s pricing could mean thousands at the settlement table.
A home buyer can obtain a property price report from a local business who specializes in this, or online. The buyer should check with their lender or real estate agent for recommendations if a local company is desired. A simple web search for the terms “property report” and the name of your city, state, or country will yield results for companies that can supply many different price reports for a fee. Either way, there are many options for price reports:
*Sale history (how many times the home has changed hands and what was the price in each transaction?)
*Market history (how long has this home been on the market? What has the price been during this time? Has it been lowered since being put on sale?)
*Selling price of comparable homes that have sold recently in the same area or comparable homes currently on the market
*Neighborhood information, including demographic data
*Area map (schools, libraries, law enforcement, fire, hospitals)
All these factors and more contribute to the price of a home, and can be negotiating points when bargaining with the seller. For example, if the house down the street just sold for $8000 less than the asking price here, perhaps the seller should lower their price. This can be negotiated. A savvy consumer wouldn’t even buy a television without knowing what the electronics market looks like at the time of purchase, so why should buying a home be different?
Your Prospective Home’s Price
The physical characteristics outlined in the home report and the dollar-related topics covered in the price report combine to ensure a comprehensive property report. All these factors contribute to a home’s ideal price, which may end up lower than the asking price. A smart home buyer needs to get a detailed property report to be secure in the knowledge that they are making an intelligent, informed purchase and a lifetime investment.