How to avoid overpaying in a buyer’s market

DEAR BOB: My wife and I want to buy our first home, as sheis expecting in about six months. However, the area where we want to buy is ina “buyer’s market” with lots of homes for sale. We notice many”price reduced” hangers on the for-sale signs, so we are in no hurryto buy. The block where we almost bought a house last weekend has three houseslisted for sale out of 20 houses on the block. How can we avoid paying toomuch? –Ned W.

DEAR NED: Before you make a written purchase offer, ask yourbuyer’s agent to prepare a written comparative market analysis, or CMA. This isthe same form that listing agents prepare for their sellers at the time a homeis listed for sale.

Purchase Bob Bruss reports online.

A CMA shows recent sales (not asking) prices of nearbycomparable homes, current asking prices of similar neighborhood homes, and theasking prices of recently expired comparable listings.

Then you and your buyer’s agent can make value adjustmentsfor the pros and cons of each house, compared to the house you want to buy, soyou can arrive at an intelligent purchase offer price.

In a buyer’s market, it is better to make a purchase offeron the low side than to offer too much. You can always come up in your offerprice, but you can never come down.

Be sure your purchase offer contains contingency clauses for(a) a satisfactory lender’s appraisal of the house and (b) your approval of aprofessional home inspector’s report.

After the seller accepts your purchase offer, be certain youaccompany your inspector to discuss any home defects he discovers, which couldresult in a price renegotiation.

DOES HOME BUYER HAVE RECOURSE FOR NON-PERMIT WORK?

DEAR BOB: We recently bought our first home. In the processof remodeling, we discovered the seller took out several building permits butnever obtained final permit inspections. Shouldn’t the seller have disclosedthis to us? If we have to tear out some of his unpermitted work to get thebuilding inspector’s approval, do we have any recourse against the seller?–Stephanie T.

DEAR STEPHANIE: As part of the home-sale disclosureprocedure, sellers are required to disclose any work they know of that was donewithout required building permits. This includes work for which a finalinspection was not obtained.

If you incur extensive costs to obtain building inspectionapproval for the non-permit work that was undisclosed, you might want to takeyour seller to court. Please consult a local real estate attorney for details.

OWNER’S TITLE INSURANCE ALSO PROTECTS HEIRS

DEAR BOB: About a year ago, I inherited my mother’s house,which I now rent to tenants. A neighbor is claiming a driveway easement overpart of the rear of the large lot. As far as I can determine, the lot doesn’thave any easements except for public utilities such as power, water and sewer.The neighbor says she used this easement for many years while my mother wasalive. This is news to me. Do I have any recourse to stop the neighbor’s use ofthat driveway? –Nathan R.

DEAR NATHAN: If your mother obtained an owner’s titleinsurance policy at the time of her purchase, that owner’s title policy alsoinsures you as the heir. Check with the title insurer to see if there was any evidenceof a driveway easement in either your mother’s deed or the deed of theadjoining property.

If use of the driveway easement was with your late mother’spermission, then the neighbor has no legal right to continue using it if yourevoke that permissive use. However, if use of the driveway easement wasnonpermissive but “open, notorious, hostile and continuous” for thenumber of years required by state law, then the neighbor might have establisheda prescriptive easement. For details, please consult a local real estateattorney.

The new Robert Bruss special report, “Five Easy Ways toBuy Your Home and Investment Property for Nothing Down,” is now availablefor $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit cardat 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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