If an older existing home is the route you want to take, consider having an appraisal and a home inspection performed.

Appraisals become useful, especially if you're entering an area for the first time and are not sure of the real estate market you're shopping in, and what constitutes a fair price. Plan on spending anywhere from $250 to $500 on the appraisal, but it may well be worth it if it prevents you from spending thousands of dollars too much on a home.

A home inspection is always a useful tool for determining if there are any hidden flaws in a home. The inspector will provide you with an objective report on the condition of the home. If the inspection discloses that the plumbing needs work, you might still decide to buy the home, but you'll be making an informed decision and, most importantly, armed with that knowledge you can bargain for a price reduction. The home inspection is generally performed after a sales contract is signed, with cancellation provisions in the contract if the report discloses material problems in the home.

Your Home Inspection Report

The format for reports varies, but all reports should cover at least the following home components:

• grounds and land
• plumbing
• electrical system
• detached structures and garage
• attic
• roof and gutters
• basement and foundation
• kitchens and baths
• heating plant and cooling system
• well water testing (if applicable)

IMPORTANT NOTE: If radon or lead are factors in the area you're shopping in, be sure to have the home inspected for these problems. Most home inspections don't test for them automatically and require a separate charge for this service. Your real estate agent will tell you if these are problems in your prospective community.

SUGGESTION: When choosing an inspector, look for one who is certified by the National Institute of Building Inspectors or a member of the American Society of Home Inspectors. Both organizations require strict standards of its members, which helps insure quality work for you.

SUGGESTION: Be sure to ask your real estate agent if the house you are interested in is in a flood zone or earthquake zone. If it is, you will need a separate insurance policy to cover these perils. They are not covered by your standard homeowner's policy.