Hi all, Its been 10 years since I have been through this process so I have a couple of questions. I own my main home outright. We are bidding on a summer home now. Questions 1) Will I be able to deduct the mortgage interest from the 2nd home if its my only mortgage? 2) After I have the house inspected, what rights do I have as a buyer to go back and negotiate the price based on items that are uncovered? Is there a certain technique to this? Andy
The answer to your first question is "Yes". Even if it's not your only mortgage you should be able to deduct the interest.
It may be different in each state re: rights the buyer has-there were some differences with OH vs. NY as far as the entire sale process. We had a pretty easy negotiation. Our inspector found some knob & tube wiring that he felt need to be addressed in the near future. We submitted this with the inspectors report and an aprox. cost to fix. They agreed and adjusted the sale price down. Our broker gave us the "it can't hurt to ask," advice on your question. She said not the abuse it, but if you felt it was legit, list it and negotiate the points into the final sales price. This is our first house, so maybe others have had some tougher post-inspection negotiations.
Doesn't the seller have to provide prospective buyers with a property inspection report? When you make your offer you can probably insert a clause in your offer where you say that you reserve the right to change your mind if you find something seriously wrong with the house or at least to go back to the negotiating table to make them fix something. My friend just backed out of a deal because the house he planned on buying had foundation problems. He said that he went into the basement and the floor wasn't level! What's even worse is that the home inspector didn't think this was a big deal. Don't take the home inspector's report at face value. See everything for yourself.
In regards to number 2, you would have had to specify in the contract that the offer is contingent upon passing inspection. However, you should double check with your state to see what the regulations are. If you are concerned about little things in the house that may not be working properly DO NOT purchase the house "as is" and especially do not waive the inspection contingency. That way everything in the home must be in "working order". If you offer to purchase the home as is then you are out of luck, unless the seller is charitable. Once the contract is accepted you can't really renegotiate anything. Worst-case scenario, as a buyer, you can back out of the contract and lose your earnest payment. Depending on the problem and the size of the earnest payment you will lose, that may be the best choice. Unless, however, the seller is REALLY understanding and agrees to renegotiate or let you back out of the current contract consensually. If the seller is really motivated he/she may be understanding just to close the deal. However, legally, the seller may not have to do anything for you if the contract does not specify that they must, in which case, you would need to make the repairs after you purchase the home. Technique = make sure it's in the contract
Some more information (lots actually) about buying a second home: http://biz.yahoo.com/special/2home05.html Sachin