Tips to Follow When Doing a Final New Home Walkthrough

There are many steps to follow when purchasing a new home. One you should never skip is your final walkthrough. If you do skip this step, you might unwittingly take on large financial burdens that you had not planned for.

“It allows the buyer and their agent to check the property for any new signs of damage, inspect appliances and systems, and ensure that the home is reasonably clean and in good condition,” says Baruch Silvermann, CEO and founder of The Smart Investor, a free online academy for investors, and a real estate investor himself.

It is a good idea to always take your Realtor to the walkthrough. If there is a problem your agent can make a huge impact when addressing the problem. Take your phone to take pictures, videos and notes. Here are some additional tips you should follow during your final walkthrough.

Check the electrical system. If one switch or outlet does not work, that could be a sign of a bigger problem with the wiring. Go through your home and check the security system, doorbell and garage door as well as the outlets and light switches.

Run the AC/Heating. This should be one of the first things to check in the home. The HVAC is a very important unit and one of the most vital systems in the home.

“The big problem with heating systems is that part of the unit could be outside – the compressor, coil, electrical components, and fan – making it difficult to find the fault,” says Silvermann. “Other common problems can be related to lack of gas, corrosion, or a faulty compressor.”

Look for wet spots. Leaks can cause things such as mold and rotten wood. The repercussions can be termites and even worse foundation issues which can be expensive repairs.

“Visually look around for wet areas on the ceiling or discoloration from leaks by windows,” says Jeff Lichtenstein, owner of Echo Fine Properties in Florida.

Run anything mechanical. Go through and flush all the toilets, run the dishwasher, washing machine, dryer and all the fans (including ceiling fans and exhaust fans). It would be a disappointment to move into your home and then find out that the dishwasher is not working after you have closed.

Inspect the bathrooms. According to Remodeling Magazine, bathroom remodels retain their value at resale. It is important to check the toilets to make sure they are not running, and turn on all the faucets to make sure they work correctly.

“Check that bathrooms are free of water damage, standing water, and mold by the shower, sink, and base of the toilet,” says Silvermann, who says mold can develop within days, so it’s worth taking a close look after the inspection.

Take a look around outside. Make sure all the exterior doors and windows are properly sealed.

“Any small leak can cause the heating and air conditioning system to operate at higher power and raise the electricity bill,” says Silvermann. “And check wood and concrete around the exterior of the home for cracks and water damage.”

Following these six tips can help with the walkthrough process. Make sure to take give a copy of your inspection to the seller so the items will be corrected before closing.

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New Homes Are Popular With Millennials

Many potential home owners have many different preferences when it comes to buying a home. According to the NAHB Economics team, millennials show an increase in interest in new homes built for sale and offered by a builder.

Statistics show that between 2007 and 2018, millennials who desired to purchase a new home, went

from 28% to 41%. Existing homes stayed around 40% in the 11-year time span and custom-built homes fell from 37% to 18% during the same time span.

The data shows that millennials, at 41%, are the first in the running when it comes to wanting a brand new home offered by a builder.  The next generation for this preference was seniors coming in at 31%. The bottom two were baby boomers at 29% and gen x at 28%.

Several factors play into the desire for new homes for millennials. They want to live in the central city, which is opposite for the majority that still want to live in the suburbs. Millennials want a set of

amenities that are not necessarily custom such as trash compactors, wet bars, built-in kitchen seating and an exercise room. Millennials are okay with smaller homes on smaller lots if they are able to get what they want in amenities and finishes.

Other data that was reported in the study looked at existing homes and custom homes built on owned lots. When it came to existing homes, baby boomers were the highest at 48%, gen x at 47%, seniors at 43% and millennials came in last at 41%. Those that desired a home custom built on an owned lot all hovered between 18% to 27%.


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Important Home Buyer Walk Through Information

When most people think of a walk-through, they think of buying a new home and walking through with a builder to go over the punchlist of items which need to be completed, tweaked, or fixed before closing on the home.  However, there is another type of walk through that can be done by you as the home buyer which will help you decide if you even want to put an offer in on a home.  And, you don’t have to be an expert at construction to evaluate the merits of the home you are buying – you can just use the common sense tips below and all of your senses!

1. The first thing you will want to notice about a home for sale is how it smells. Some homeowners are smart and will install air fresheners which emit a smell throughout the home, but pay attention to any odors which seem out of place.  This could indicate a long term problem like mildew or decay.

2. Check out the paint job. See how well the paint job has aged and how well it has withstood the test of time.  If it is peeling or chipping, that might mean that there is a problem with moisture or sagging in the construction.

3. Popcorn ceilings COULD be a warning sign, but not necessarily.  Depending on the age of the home, you might want to avoid older homes which have popcorn ceilings because they were

originally applied with asbestos material.  Since asbestos is a cancer-causing agent, you will not want to purchase an old house with popcorn ceilings without either absolutely loving the house or having that checked out.

4. Look around at all of the walls, ceilings, and baseboards for the presence of water stains to make sure that there are no leaks in the roof or the exterior siding.

5. How well is the home maintenanced?  This can be a big indicator as to how well the home was taken care of by the current owner.  Just like you want to buy a car with one owner (who took good care of the car and had it maintenanced often), the same goes for a house.  If the home has long term cleaning problems or simple problems were not repaired before the home was put on the market, the more likely it is that the home was not maintenanced, which could lead to problems for you as the buyer further down the road.

6. Depending on the part of the country in which you live, as well as the season of the year, keep a lookout for bugs.  In Louisiana, many houses, no matter how well sealed and insulated, may have bugs present in the house, just because of the climate and the weather here.  However, if you can tell there are bug “droppings” and spider webs everywhere, there may be more “leaks” in the actual structure of the home which indicate an energy efficiency problem.

7. Pay attention to the type of floors in the house. Even if you fall in love with the house itself, be mindful of the condition of the floors as they may need to be repaired or replaced in the future.  You will want to be ready and realistic about the cost.

8. Renovations can be a good thing or a bad thing for home buyers.  Properly completed renovations in order to sell the home like new carpeting, an excellent paint job, exterior landscaping, and replacing deck boards or trim can be a good thing.  If the homeowner offers the information about renovations, question that information closely to make sure that it was done correctly, not last minute, and is now completed.  Poorly done construction renovations will not last, and unfinished renovations should be required by your contract to be finished before you close on your home.

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Items to Negotiate When Buying Your Home

So, you think you got the hard part out of the way when you were able to find a home to buy, in your price range and location, and it’s either a new home or quality home that is perfect for you.  However, before you hand over your precious investment money, there are several items to negotiate that you are going to want to address in the offer that you make on your new home.

Financing

In order to make you a more “quality buyer,” you are going to want to have a very good idea as to how much home you can afford.  Before you ever start your home buying process, you should make sure that your income and credit are in order, and you should meet with a lender in order to get a

lender commitment letter to use in making the offer on your home.  This letter shows the seller of the home and the Realtor or Realtors involved that you are a real buyer with financial backing who will be able to close on the home in a reasonable time period with minimal hassle.  This will make you a solid prospect, and you may be able to use this to beat out any other interested bids or prospects on the home.

Inspections, Repairs, & a Home Warranty

Unless the home that you are buying is an “as is” purchase, where you are taking the home without any changes, you will want to make sure you get a home inspection.  For the sake of expediency, you may want to put a time limit on the amount of time a seller has to get an inspector and make the inspection of the home. If there are repairs or major systems that have issues, you will want to negotiate the cost of these repairs off of the seller’s price or have the seller repair them before closing.  If the home passes inspection but is an older home or has questionable systems or appliances that will potentially bread down quickly, you can ask the seller to provide a home warranty on the home as part of the items to negotiate.

Closing Date

The sooner that you offer to close on the home, the better as far as any motivated seller can attest.  However, there will be times when a seller is selling and trying to move into another home and may be “stuck” in between the two homes during your home buying process.  In order to make you a

“better buyer,” you can offer a short-term lease back as part of your offer which gives you a small break on the purchase price and gives the seller more flexibility in their moving timeline.  Then you and the seller can agree on a fixed closing date that works for both, making you an attractive buyer with your willingness to negotiate to fit their lifestyle.

Closing Costs

In most of the items to negotiate above, you as the buyer are making yourself totally flexible and available to the seller, but don’t forget to take care of you.  If possible, you should ask that the seller help you pay some of the closing costs associated with your home purchase.  They may stick firmly to their selling price, but some sellers will be willing to give a little if they are getting a solid home buyer prospect who will close quickly and work with them on repairs of the home.  Closing costs can add up with the abstract of title, title insurance, deposits into escrow – prorated taxes and insurance – and your loan origination fees, so definitely try to negotiate these costs to get the seller to step up for some of them.  Remember, all the seller can say is “no,” so it doesn’t hurt to ask!

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