Ask the Egghead: Is a final walk-through necessary?

Dear Egghead: I’m buying a house in a new community and it looks like closing time is nearly at hand. My new house is a two-hour drive away. Is it necessary to do a final walk-through?

ANSWER: It’s not required, but it’s a good idea. You want to be certain that no damage has occurred since you last saw the house, and that any repairs the seller offered to make have been completed satisfactorily. It’s an even better idea if you haven’t had a chance to view the house after the seller moved out. You might notice things that hadn’t been obvious when the house was occupied.

Problems large and small can crop up when a house is unoccupied. Here’s an example that happened to me with the first home I purchased. I did the final walkthrough a couple of days after the sellers moved out. Before leaving, the the sellers had unplugged the refrigerator while the icemaker was full of ice. After they left, the melting ice leaked through to the floor, creating a large pool of water on the kitchen floor and some leakage to the basement. Luckily, I was able to mop up the melted ice and restart the refrigerator. If there had been no intervention during the next 48 hours, there could have been considerable damage to the kitchen floor and the family room beneath the kitchen.

If you’re unable to attend, ensure your agent completes the walkthrough. At the very least, you want to make sure that all of the seller’s belongings and trash has been removed.

Here are some other tasks that should be completed during the walkthrough:

  • Check all doors and windows, ensuring they open, close, and lock without problems.
  • Turn on the washing machine, dishwasher, and oven to ensure they’re working.
  • Flush all the toilets to check the water flow and absence of leaking.
  • Ensure the garage door works.

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Ask the Egghead: How much earnest money deposit should I put down with my home offer?

Dear Egghead: I’ve found the perfect house and am ready to submit a full-price offer. How much earnest money should I put down?

ANSWER: The customary amount is 1 percent to 3 percent of the purchase price. If your conviction is strong about this home, putting a bigger deposit would strengthen your offer. (For new construction, deposits are usually much larger, perhaps 10 percent).

The custom of earnest payments has a long history.  In the Middle Ages, it was called “earnest penny” or “Gold’s silver,” intended to secure a bargain, perhaps for the purchase of a servant.

Why should you offer more than 3 percent on real estate? If you’re sure about the house, you want your offer to be as strong as possible. Putting a larger deposit down lets the seller know you’re a reliable transaction partner, and there’s a very high likelihood you’ll follow through on the purchase.

Earnest money protects the seller from flaky buyers who might back out of a deal without just cause. In exchange for the seller taking their home off the market, you put cash down to assure the seller that you will follow through to closing, or lose that deposit.

Here’s an example of a weaker offer: you have a financing contingency included with your offer — indicating that you might back out of the deal if you’re not approved for a mortgage — you can abandon the deal, but the seller keeps your earnest money. Without a financing contingency (or an inspection contingency) — and with a larger earnest money deposit — the seller gains confidence that your offer is solid.

It’s possible to successfully purchase a home with only a token earnest money deposit of less than 1 percent, but your offer must be compelling in other ways. For example, an offer without an inspection contingency, and without a contingency that you must sell your current home before closing. The ultimate offer is an all-cash offer with no contingencies — and failing that, a hefty earnest money deposit that shows that you are extremely motivated to follow through on the purchase, and that you have the means to do so.

If you’re sure about this purchase, offer a deposit of more than 3 percent. You’ll be that much closer to buying the house you want.

Ask the Egghead: Should I buy a three-bedroom house, a 4-bedroom, or a 5-bedroom?

Dear Egghead: I know the conventional wisdom is that a single-family detached home should have at least three bedrooms, perhaps four or maybe more. Is there an actual advantage to finding a place with five or six bedrooms?

ANSWER: For the near term, it depends on your living situation. Most people should opt for a place with a bedroom for each adult, plus another room for a baby — assuming that the family will be growing. That way, at least one of the adults should be able to get a full night’s sleep.

That brings up the question of how many bathrooms is ideal. Ideally, most people would like to see nearly one bathroom for each bedroom in the house (such as three bathrooms for a four- or five-bedroom house), but older houses tend to have far fewer bathrooms. Yes, the American standard of living has gone up dramatically in the past few generations. Your typical three-bedroom house older than 50 years will probably have just a single bathroom and perhaps a half-bath in the basement.

So far, we’ve considered the question in terms of your immediate personal living situation. But what’s the best configuration if you’re attempting to sell the house? In that case, you’ll want to have a bathroom and a quarter for each bedroom. An upgrade to correct this situation will pay off at selling time. Upgrading existing bathrooms is smart, too. It’s commonplace now for master bathrooms to have two sinks — one for her, one for him.

Adding a bedroom for a three-bedroom house can easily add $50,000 to the resale value of the home but this can vary according to the particulars of your location. And the equation depends on whether you’re repurposing existing space to create the bedroom, or adding more square footage to your house. Keep in mind that it’s customary for a bedroom to have a window, closet, and a direct passage to a hallway, so check your local zoning regulations, and consult a local realtor for advice.