Aging Baby Boomers are buying second homes at a record pace. Last year alone, 377,000 single-family second homes were sold, according to the National Association of Realtors. Buying a second home for retirement, vacation or rental may be a great idea. But if you’re buying outside of the area you’re accustomed to, plan on ramping up your due diligence investigations.
The first thing to be aware of is that real estate law, custom and practice varies from one location to the next. For example, in New Jersey, you need to hire an attorney to help you buy and sell residential real estate. In California, you usually don’t need an attorney.
In some states, title and escrow companies handle the closing, and in other states attorneys are in charge of closing transactions. Property surveys are required in some states and not in others. The point is that there’s a lot of diversity. You can’t assume that the way homes are bought and sold in another area is the same as it is where you live.
Finding out about a local real estate market requires a little sleuthing, which is best done in advance. Emotions can run high when you find a home to buy. Don’t wait until you’re in the midst of a heated negotiation to discover what you need to know in order to make a prudent decision.
A good way to start learning about an area is to subscribe to the local newspaper. You may be able to find the local paper online.
Realtor.com, the largest depository of listings nationally, is an excellent tool. You can search for properties by ZIP code, which narrows your search considerably. Realtor.com also offers information on market conditions. This information is provided by real estate agents who work in the local area. The shortfall is that this information can be spotty.
When no local agents report for an area, Realtor.com displays a statewide or national market activity report. This broader market data is insufficient. You need to know what’s happening at the local level, which can vary significantly from one place to the next.
Another way to find out more about real estate in an area is to use a search engine to search the Internet for home buying information in a certain area. For example, search for: home buying in Palm Springs, Calif. Scroll through the search results until you find a site that looks like it provides educational information, not just a sales pitch.
Even though real estate agents’ personal Web sites are designed to sell their listings and capture your business, they can be used to collect information about an area. Many agent sites include general consumer information or links to useful information.
There is no obligation to work with an agent that you find on the Internet. However, an agent who has invested the time, money and effort to design an informative site may be one you’d like to interview. Be aware that information on the internet is not regulated, so double check all pertinent information for accuracy.
As useful as the internet is for gathering information, there’s no substitute for spending time in a location where you’re considering buying. If you’re buying a retirement home, it’s a good idea to rent in the area for awhile before buying.
Once you hook up with a good local real estate agent, you’ll have a resource to tap for more information. So, select an experienced area specialist who provides full service and has good communication skills.
THE CLOSING: Interest rates vary form state to state and so do closing fees. It pays to use a good local mortgage broker or lender who knows the ins and outs in the particular area.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.
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