35 Things You Should Know Before Buying a Luxury Home

March 23, 2006

By Camilla McLaughlin

1. Luxury buyers don’t necessarily pay cash. What appears as cash at closing is often funds that buyers have sourced using assets or is the result of financing that leaves cash reserves and portfolios intact. Look for lenders who cater to the affluent.

2. The Internet is real estate’s most versatile tool. From ascertaining an agent’s specialty to learning about areas and scoping out properties, there is no better resource. But remember, the best virtual tour is no substitute for the real thing.

3. Shop as hard for your broker as you do for the property. Look for an agent, who is as much a pro in her field as you are in yours. Ask for references and follow-up on them. Ask about education, special training and how long they have been in business. Ask what they did before real estate. Ask how many upper-tier properties (and in what price range) the agent has sold in the last year.

4. Calling on a listing? Ask for the listing agent; take advantage of a personal or mobile number if it is advertised. Often buyers who call about a home wind up working with whoever answers the phone. Frequently, that is a new agent.

5.An expert in one market might not be an expert in another. Great agents are great agents, but if they don’t work specifically in your target price range in your target location they will not be as valuable a resource as someone who does.

6.Special properties necessitate specific expertise. Ranches, waterfront, equestrian estates, all require specialized knowledge. You, and an agent who doesn’t normally work in this arena, might not be aware of what such a property entails, including legal requirements and potential liabilities, but agents who specialize make that their business.

7.How homes are bought or sold varies by state, county and region. Attorneys might handle the sale in some states and not at all in others. Sellers must vacate before closing in some, and a day or two after in others.

8.Ask about transfer taxes, how much and who pays?

9.Review the purchase and sale documents before you hit the road. Familiarizing yourself early on puts you in the driver’s seat when it comes time to write an offer.

10.Good agents educate you about the market. You can’t make an intelligent decision about buying unless you understand the market. You need to know what properties have been selling for, what they will sell for in the future and what will be built.

11.Prices and comparisons don’t tell the whole story. Catch the flavor of different areas by spending time with your agent just driving around learning about neighborhoods and properties. Go back on your own as well at different times of day, particularly if you have children.

12.Look beyond your target price. You might be looking in the $5 million bracket but to understand value and be confident with your offer you have to know what $3 million, $7 million or even $10 million buys.

13.Location, location, location still determines value with waterfront, views and prestige areas close to city centers topping the charts. Ask about future hot locations and be prepared to pay a premium for a platinum address.

14.Realtors are not good mind readers. Even though top agents are pros at matching buyers and homes, they rely on a foundation of good communication with sellers.

15.Clarify wants and needs. Some agents have buyers make lists of “must haves” versus “optional” and “would be nice” preferences. A measure of self knowledge is a good compass.

16.Trust that your agent understands what you want and will steer you to properties that are a good match. If every home is a mismatch or if the chemistry just isn’t there, jettison that agent.

17.Be prepared to demonstrate your ability to purchase, unless you are well known. This is usually done “banker to banker” to verify that buyers have funds available to close and to also source the origination of those funds.

18.Don’t forget resale. It might not be on the top of your list but one day you will be selling this property.

19.Top agents are ringmasters. Whether it is ensuring that you have a good title company, the right engineer or locating missing documents, a good agent should facilitate every aspect of the sale.

20.Price grabs the spotlight, but an offer is a bundle of conditions and terms including closing dates and financing. Price should reflect all of these as well as the home’s condition.

21.Don’t make personal property part of the contract. Create a separate agreement. Too many deals fall through because of an armoire or chandelier. Make sure you understand what remains and what doesn’t and that it is written into the purchase and sale agreement.

22. Take the time to review all disclosures and have your agent explain them. This is not as easy as it sounds. California has 43 required disclosure documents.

23.Making an offer? Decide how much you (and your partner) are committed to owning that house and understand your tolerance for risk. It is much easier to compromise when you know that you absolutely want the home.

24.Most luxury owners do not absolutely have to sell.

25.The seller, the seller’s agent and your agent don’t come with the home. Keep personalities out of the transaction and out of the negotiations.

26. Don’t discuss potential renovations with the seller or his agent. There is a chance you might alienate the seller if he gets wind of your intentions to replace his new kitchen or beloved screened porch, and coming to a meeting of the minds will be more difficult.

27. Have a new survey done if one hasn’t been done in the last couple of years.

28.Have separate inspections for security and fire systems; outdoor sprinkler systems; the home itself; and pool, well, septic, sea walls. Check sewer lines for roots if huge trees are a concern.

29.Request that all area rugs be rolled up so you can see the floors during a home inspection.

30.The goal is to buy the house and only you can decide if losing the sale is worth a $2,000 inspection item or any other disputed issue.

31.Make sure you receive a copy of homeowner association and condo documents. Ask if any special assessments are in the offing as well as about cash reserves. Will you receive any special assessment as a new owner?

32.Problems with title clarity can and do occur. Titles often are written in antiquated language; even a typo decades ago can create a cloud. Water and mineral rights, historic roads and paths, utilities and confused boundaries all affect ownership. Have an attorney review the title and explain any easements or encroachments.

33.Protect your interest with title insurance as comprehensive as needed for that type of property. If a lender is involved, they will have title insurance but that covers their interest-not yours.

34.If a membership is to transfer with the property, make sure the sellers are in good standing and that they will sponsor the buyers.

35.Ask about how an agent will represent you and discuss the ways agents work in transactions. Some say a buyer agent is best; others contend a good agent in any capacity will do their utmost. But be wary: some buyer agents do not know the luxury market or the territory, which will work against your interest in the long run. Hiring a buyer agent is a contractual agreement, so be absolutely sure that an agent is the best for you before committing. The exception: Some top Realtors include buyer agents on their team.

=============================================

** For questions or comments, email marc@marcvitorillo.com or jpschaaf@knology.net . We would like to hear from you. Visit LuxuryTampaBay.com for more real estate info.

“The highest compliment I could ever receive is a referral from my friends and past clients. Thank you for calling me when you hear of someone wanting to buy or sell a home.”