Answers for 10 Questions Home Buyers May Ask - dummies

Answers for 10 Questions Home Buyers May Ask

By Eric Tyson, Ray Brown

As a house seller, you should anticipate tough questions smart home buyers (or their agents) may ask you. Most sellers and their agents are quick to praise property features such as a remodeled kitchen, new roof, and swimming pool. That’s great, but what home buyers really want to know about are benefits — how house features translate into advantages for them. For example, that fancy kitchen may inspire more family meals, and a swimming pool becomes an entertainment center for healthy outdoor family activities during the lazy, hazy days of summer. Other types of benefits buyers may be looking for include quality schools, a low crime rate for safety and security, convenient nearby shopping, a hospitable neighborhood, and favorable fair market value (FMV) appreciation (showing the home is likely to be a profitable investment).

You need to make sure you’re prepared to answer these potential questions in a manner that honestly represents your house without jeopardizing a potential sale. The best defense is a good offense. Sellers (and their listing agents) who are prepared should have nothing to fear from buyers who ask these questions. This list includes ten challenging questions you may be asked and some advice on how to handle them.

What Do You Like Best and Least about Living Here?

When someone asks you what you like the most and the least about living in your house, you don’t want to look like the proverbial deer in the headlights. Do your homework. Make a list of items you like about your house. Do another list of things you don’t like. On your “like” list, put things like waking up with the sun on your face, watching the moon rise while sitting on the back porch, family dinners in the kitchen, and playing board games by the fireplace — whatever you truly enjoy about your house.

The “dislike” list is more difficult. On one hand, you don’t want to scare away buyers. Conversely, every property has flaws, and you want to be honest. Ray once owned a house he loved except when he had to do battle with poison oak. Maybe you don’t like navigating the driveway when it snows. Perhaps you hate the long central hallway or small kitchen or hot attic. Just because you dislike something about the property doesn’t mean the next buyer will.

Folks in the market for a condo usually ask this question. They’re curious about the issues that don’t apply to a single-family detached home, such as a dictatorial condo homeowner’s association board of directors or a president who refuses to listen to condo owner opinions.

Why Are You Selling This Lovely House?

When buyers ask you why you’re selling your house, they have a hidden agenda. They’re either probing your motivation for selling to see if they can exploit a weakness, or they’re looking for property flaws.

If the buyer knows you’re under severe pressure to sell your property as soon as possible, that can weaken your negotiating position. (A few examples of deadline situations are things like buying a new home before you sell the old one, being transferred to a new job in another city, getting a divorce, and property foreclosure.) If you have a deadline and the buyers don’t, they may use that deadline against you. Therefore, never divulge your deadline.

If you have a nice, unstressed reason for selling, candidly answer the question. “We’re selling because the house is too big for us since the kids moved out to start their own families” or “We’d like a bigger place because the kids need rooms of their own” are examples of answers that won’t get you in trouble. If, however, you’re going through the divorce from hell or are about to depart for Timbuktu tomorrow, just say, “My housing needs have changed” and change the topic.

How Much Did You Pay for This House?

Some buyers may want to know the amount you paid for your house in order to discover how much room you have to negotiate on price and terms. In most states, the seller’s purchase price is recorded in the public records (and, thus, can generally be found online with a little hunting). But even in the few states that don’t record price information, the buyer’s agent can usually find out what you paid through the local Multiple Listing Service (MLS) or by other methods.

A related question that buyers may ask you or your listing agent is “What is the current mortgage balance, and are there any other liens, such as a second mortgage, a home equity loan, or a mechanics’ lien?” The answer shows prospective buyers how much cash you need to pay off those secured obligations. This information can give prospective buyers a peek into your motivation or your ability to carry back a second loan if the buyer is seeking seller financing.

Cost and fair market value are wildly different things. Cost is a measure of past expenditure. Fair market value is what a buyer will pay and a seller will accept for something given the item has had proper exposure to the market and neither the buyer nor the seller is under duress.

Smart buyers know that what you paid for the house when you bought it has little or no bearing on its value today. You may have made extensive renovations. Certainly, internal and external market factors have changed since you acquired the property. Talking about what you paid for your house is as productive as discussing the price of tea in China.

How Did You Establish the Asking Price?

Some prospective homebuyers may ask how you determined your asking price, usually because they suspect it is too high.

Smart sellers base their asking price on facts established by a written comparable market analysis (CMA). You or your agent can respond to this question by telling buyers about other properties comparable to yours in size, age, location, and condition (comps) that are either currently on the market or have sold within the past six months. Comps are the best, most powerful indicators of FMV.

Have You Received Inspection Reports?

Buyers may ask you when or if your house was inspected, and this question should be an easy one to answer. Obtain customary inspections before putting your property on the market. That step gives you time to decide whether you want to do the recommended repairs before you put your house on the market or sell the property “as is” and let the buyer make the repairs (often in return for a credit in escrow for the buyers).

Always fully divulge any and all corrective work you’ve done recently. Dig out old invoices and receipts, which support your narrative, and remember to check for warranties that may be transferable to a buyer.

Customary local inspections vary. Local realty agents can tell you which inspections are required or recommended in your area, such as for termites, radon, energy efficiency, building code compliance, and so on. Either you or your agent should have any recent inspection reports easily available for serious buyers to inspect. This process saves time and removes the fear some prospective buyers may have that you’re trying to hide something.

May I See Your Written Defect Disclosure Statement?

If a prospective buyer asks to see your written defect disclosure statement, you should say, “Sure, here it is.” Sellers who don’t prepare a written disclosure form for serious prospective buyers to review before making a written purchase offer are waving a red flag that warns buyers you don’t have a savvy listing agent who insists on such defect disclosures at the time of signing the listing agreement or that you may be hiding something. Smart buyers understand some sellers may lie or “forget” to disclose a known property defect. If you have to ask whether to disclose something about your property or the immediate neighborhood, you’ve probably answered your own question. When in doubt, disclose.

Most states now have laws or precedent court decisions requiring some form of written home defect disclosures. Even in the few states where there aren’t disclosure requirements, smart agents recommend that their sellers provide written house defect disclosures to prevent future lawsuits. Most agents now also recommend that home buyers obtain their own professional home inspection reports even if the seller already has provided one.

Are There Any Neighborhood Changes That May Affect the Home’s Desirability?

House sellers almost always know if any significant civic changes are under discussion, such as street widening, construction of a freeway, or a planned special assessment for civic improvements such as new sewers or streets. However, smart buyers will verify any planned improvements affecting the property at the local city hall or other government agency.

Any of these changes would materially affect the property values. Therefore, you should disclose all recent and proposed changes in writing to prospective buyers. This info includes plans your neighbors may have to improve their property if such improvements affect your house’s views or your access to adjoining public areas.

How Many Times in the Last Year Have You Called the Police and Why?

When potential buyers ask about police calls and possible neighborhood nuisances, they’re trying to determine how safe and secure your house is. Answering this question is easy if you don’t have any problems of this nature. If, however, you do, you must disclose any and all such problems.

This open-ended question covers many potential problems, which can affect a home’s desirability. These problems include barking dogs, noisy late-night parties, and troublesome neighbors. If the situation is continuing, make sure you disclose all issues to prospective buyers to prevent a future lawsuit for nondisclosure of a serious defect.

A visit to the local police station, or its website, can reveal local crime statistics for the neighborhood. Also, this is usually the place to search public records for any registered child sex predators living nearby (called Megan’s Law). But homebuyers shouldn’t expect sellers to know the neighborhood crime statistics, nor to know if a registered sex offender lives nearby. Responsible buyers are their own best investigators.

What Problems Have You Had with the House?

This open-ended question is intended to bring out past problems, which may have been solved. But, even if you think you solved a problem, you should protect yourself by disclosing the problem and how and when it was repaired. Failure to do so can lead to an allegation of under-disclosure. A common example is the seller who has had a roof leak patched. The problem was solved, at least temporarily, so why disclose? Because the fact that there was a leak and repair speaks to the condition and/or quality of the roof. This disclosure may lead the buyer to have a roof inspection. If you can prove that the buyer knew the condition of the roof at the time escrow closed, you’re unlikely to hear from her when the time comes to replace the roof. This question has one major thing in common with many of the other questions in this chapter — a variation of queries about property inspection reports and defect disclosure forms.

Buyers have many ways of probing for property defects. Answer this question by giving the buyer a copy of your written disclosure statement.

What Are the Local Public Schools Like?

If prospective buyers have school-age children, they may ask this question first. Even if buyers don’t have children, the quality of the public schools has a strong effect on whether families with children want to move to your area, thus affecting buyer demand and future appreciation in market value.

Presuming your school system’s test scores are good, you can provide the data yourself. Contact your local district or visit its website if your agent doesn’t have the data already. Just be careful not to imply that your house is within a particular boundary area for a particular school unless you’re 100 percent certain you’re correct!