7 Questions to Ask Before You Make an Offer

When looking for your dream home, you probably already have a list of considerations — where it’s located, how many bedrooms, and whether the floors are hardwood or laminate. But buying a home involves more than searching online listings for homes with a view.

Buying a home is one of the biggest purchases you'll make in your lifetime, and you want to make sure you're getting the most bang for your buck. Here are seven questions you should ask before making an offer on a home to ensure you make the best decision for your long-term goals.

1. Can I Afford to Buy It?

Ultimately, the most important question to ask is whether you can afford to buy a home. That includes the cost of the down payment and your monthly mortgage payments, as well as hidden expenses such as maintenance, insurance, and utilities.

Take a close look at your budget and account for the upfront and possible hidden costs before you make an offer. You don’t want to find yourself unable to pay your bills and risk foreclosure.

2. Why Is This House for Sale?

Owners have different reasons for selling their home. They might be moving for a job or looking to move into their dream neighborhood. But in some instances, their reason for selling could be a red flag to consider.

For example, if you're buying a foreclosed home, you may find yourself on the bank's timeline instead of your own. Likewise, if a family is moving because they’ve outgrown the home, you should look more closely to ensure it meets your size needs.

3. What Is the Neighborhood Like?

It’s important to take a close look at the neighborhood around your home, as well as the property itself. Find out how close the home is to stores, restaurants, and other amenities you need.

You should also look up the crime rate and the proximity to schools and public transportation. If you’re sensitive to noise, take into account whether you can hear noise from nearby roads, trains, or if you’re in the flight path of an airport.

If the home is listed in a neighborhood "in transition," find out what that means. It's possible there are ongoing renovations and new stores arriving that could increase, or decrease, the value of your home over time.

4. How Long Has it Been on the Market?

Knowing how long a home has been on the market can give you insight into the quality of the home, as well as the mindset of the seller. In a buyer’s market — where there are more homes for sale than people looking to buy — it's not uncommon to see homes that have been on the market for several weeks or even months.

However, if a home has been on the market for a long time, it could be a sign that there are serious problems, such as poor plumbing or a shoddy foundation, which can result in costly repairs. It might also be a sign that the sellers have overpriced the home, making it a questionable investment for you.

No offers — or multiple failed offers — could be the result of bad luck or a cold market. Still, it’s a good idea to ask and know before you purchase a questionable property.

5. How Much Are Closing Costs?

Before finalizing an offer, make sure you know all the expenses that will be involved with the purchase, including closing costs. Closing costs include the down payment, paperwork fees, and commission for the real estate agents involved in the sale.

Realtor commission fees can vary, but they typically range between 5% and 7% of the final sale price — split evenly between the buyer's and seller's agent. A home that sells for $500,000 will likely result in $25,000 to $35,000 in commission fees.

In most cases, the seller pays the commission, but in some cases — particularly in a hot seller's market — a buyer may be asked to cover some of the costs.

6. How Does the Home's Market Value Compare to Other Properties for Sale?

Buying a home is one of the most significant purchases you'll make in your lifetime, and it has the possibility to be one of the greatest long-term investments. As such, you want to make sure you're getting a fair price and aren’t paying too much up front.

This is particularly important if you're purchasing a home with a mortgage. In most cases, a lender will only approve a loan for the assessed value of a home. If the offer price is significantly higher than the assessed value, you’ll be responsible for paying the difference.

While looking for homes, it’s important to work with a real estate agent you can trust. You can consult a top-rated Realtor to find out if the home is fairly priced for the current market.

7. How Much Did the Seller Pay for it?

Homes tend to appreciate in value over time, so it's likely the current sale price is above what the seller paid for the property. But looking at the sale history can give you more insight into the home’s condition and whether you’re getting a good deal.

For example, if a home is listed for $500,000, but it was sold less than one year ago for $400,000, you may want to pause. It’s possible the seller bought the home in poor condition and made upgrades and renovations before relisting. Home flipping is common, but you want to find out what updates were made and if they added true value to the home.

If the home is relisted quickly without any updates, you may want to reconsider because the home may be overpriced.