You want an experienced agent who can point out the not-so-obvious characteristics of a property, so you can make an informed buying decision.
Much of the property research you can do on your own like finding out the age of the home, condition, nearby schools, etc. simply by driving by the house, visiting major real estate sites, or checking out the county assessor’s site.
However, there are some parts to your research that a Realtor should help you with. Here are four questions you need to ask your Realtor before buying an investment property.
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Ask for a copy of the seller’s disclosure statement
A seller’s disclosure statement is filled out by the seller and should disclose any past or present major defects with the property.
Here’s a sample Seller’s Disclosure Statement to give you a better idea of what’s covered.
Ask if the property was previously “under contract”
When a property is “under contract” it means that the seller has accepted an offer from a buyer.
If the property was previously under contract, but is back on the market, then the contract fell through for some reason.
Another possibility is that there were items on the property inspection report that caused the buyer to back out of the deal.
If a property was previously under contract, you’ll want your Realtor to call the listing agent and ask why the deal fell through.
If it was due to a property inspection issue such as a compromised foundation, it’s better for you to know that before you take the time to submit an offer and spend money on your own property inspection.
Is the property in a flood plain?
Buying a property in a flood plain can be problematic for several reasons such as:
- FEMA may not let you renovate the property.
- Some banks won’t finance properties in a flood plain.
- You may have to carry flood insurance.
In addition to asking your Realtor to investigate this for you, you can do your own research by visiting a site like www.freeflood.net
What’s the current & after-repair-value?
Whether you are buying a house to flip or rent, you still need to know what it’s worth now, and what it will be worth after you renovate it (should you decide to renovate it). Getting an idea of the current and future value is crucial in determining how much you should offer.
A Realtor can pull what’s called a CMA (Comparative Market Analysis) to help determine the property’s current value and after-repair-value.
After-repair-value (ARV), as the name suggests, is the value of a property once all repairs are made. You’ll obviously need to let your agent know what repairs you intend to make in order for them to help determine the ARV.
Now, don’t confuse a CMA with an appraisal. While both of them are concerned with a property’s value, an appraisal is done by a licensed appraiser and is typically ordered by a bank in order to approve a certain amount of financing for a property.
While there’s a lot of research you can do on your own, there are some items you’ll need a Realtor to help you with. This post has included 4 of them.
The great thing is – working with a Realtor won’t cost you anything since the seller pays all real estate commission once the deal closes.