Should I get pre-approved for a loan or mortgage before I start looking?
Yes! Not only will you have an easier time of a successful acceptance of an offer, you will know how much you can afford. There is no reason looking for a $750,000 home when you can afford a $600,000 home. This process will also help you understand what the other associated costs of purchasing a home will be.
What do I need to do to start the process in buying a home?
Getting pre-approved for a mortgage is one of the most important steps in starting your search for a home. Obtaining a pre-approval letter with the ability to adjust the approval amount in a short time is almost a must in today’s seller’s market. When submitting an offer, the sellers always want a pre-approval letter or proof of funds.
How long does it take to close on a property?
In today’s crazy busy market, some title companies are taking 60 – 75 days from start to closing. Add to that the actual search and negotiations, and you will be close to 3 months before you could possibly be in your new home. Prior to this recent seller’s market, closings could take place in 30 – 45 days.
Should I buy or rent?
Buying a home right now is a solid investment; interest rates are extremely low and prices will only go up. There are exceptions, how long will you be in the house – if only for a couple of years, it might be better to rent, as you may not recoup your closing costs in such a short period of time.
What is a seller’s market?
Plain and simple – the seller holds the cards. They can ask an elevated price, they can turn down offers, they do not have to make repairs or upgrades. With low inventory, buyers find it difficult to find options and have to settle.
Who pays the commission on the sale of a property?
Generally, the seller pays the commission to both the listing agent and the sales agent. It is rare that the buyer has to pay towards the commission.
Should I sell my home before buying a new home?
There are pro’s and con’s to this. The greatest benefit to buying a home prior to selling your current home is that you will have your housing lined up and have the ease of moving on your own schedule. Doing this requires you to either pay cash for the new home, having the financial ability to be approved for a new mortgage or, you can put in an offer on a new home with a contingency based upon the sale of your current home. Selling your home first also has advantages. You can be confident you won’t have two houses at the same time, you will have (hopefully) cash towards the new purchase and you will not have to make an offer with a sale of home contingency.
Do I need a Realtor when buying a home?
There is no reason not to have a Realtor when purchasing a home. A Realtor has extensive tools that will assist in your search. Zillow, Realtor.com, etc are limited and they pull their listings from the MLS. A Realtor can run comps, analyze prior sales, see trends and negotiate for you. Another important reason to have your own Realtor is the listing agent for the seller is on the seller’s side, trying to get them the best price and terms, while your own Realtor will be trying to do the same for you. The best part – you don’t pay the commission to the Realtor – the seller does.
How much money do I need to put down on a property?
The amount depends on the price of the property and the seller’s request. For as little as a $1,000 deposit, you can take a property off the market for inspection. Once the inspection period is complete, it is customary to put down an additional amount which would total 10% of the purchase price. This ensures the buyer has skin in the game and won’t walk away.
What is a short sale?
A short sale is when there is more owed on a house than the proceeds of the sale would cover. It is a long process and the buyer must be patient. The sale needs bank/lender approval and might end in disappointment. If you need to move quickly or by a certain date, this might not be the way for you to purchase a home.
What is a foreclosure?
A foreclosure, or REO, is a property that is owned by a lender. Most foreclosed properties are sold as-is, so you might be getting what looks like a great deal, but there may be underlying issues with electric or plumbing issues or the roof needs to be replaced or there may be liens on the house.
Is buying a home in a good school district important?
Yes! If the county has specific school zones based on addresses, it is vitally important to get into the right school zone if you have or will have children. Even being 1 block off can mean the difference between an ‘A’ rated school or a ‘D’ rated school. It is better to invest a little more money into the location of a home, than to be forced into sending your children to a private school for 12 years.
How much should I offer for a home?
There is no set percentage or formula when it comes to making an offer on a home. Your realtor should run comps, see what the trend has been and take into consideration how much time you will have to negotiate. Recently, buyers have been coming in too low, thinking they have time to negotiate. In today’s market, this is not the case. A buyer that comes in with a very strong offer with reasonable or no contingencies will beat out someone that is low balling a seller – every time.
What is earnest money?
Earnest money is a deposit, sometimes called a good faith deposit. When a buyer and seller agree to all terms, the buyer will make a deposit into an escrow account, showing the seller you are serious about purchasing the home. Many times there will be a second deposit made following the inspection period. Again, this shows the seller that the buyer is serious and has skin in the game and will not walk away from the deal.
When will the seller respond to my offer?
Within most real estate contracts is a timeframe for the seller to respond to an offer. is a default of 2 days if the field is not filled in. In this current cut throat market, some agents are advising their buyers to request a response in less than 24 hours, some just a few hours. This puts pressure on the seller to respond and doesn’t allow them to receive as many multiple offers. If the seller does not respond in the allotted time frame, the offer is no longer good, however, the buyer may choose to extend the time frame.
What is escrow?
Escrow is where funds are held by a third party who will disperse those funds once both parties one and two agree and sign off on release. Typically, a buyer will place the earnest money deposit into escrow, which is held by and attorney or title company. Any additional deposits will also be placed in escrow and held there until closing. At closing, the buyer signs to release the money to the seller adding all additional monies through a wire transfer or a lender. In the case of any discrepancies, neither the buyer or seller can touch the funds until all issues have been resolved either by attorneys or mediators.
Is a home inspection necessary?
Absolutely! Unless you are purchasing the property for land value with the intention of tearing it down. A buyer should always know what they are purchasing and the condition so they know how much additional money they will have to spend. The home might look great but there could be some underlying issues that only a profession inspector can find.
Should I waive my financing contingency?
If you can pay cash, yes, waive the financing contingency – it will make for a stronger offer. If you waive the financing contingency, you have the OPTION of paying cash or getting a mortgage, but either way you will have to close and cannot get out of the deal due to lender issues. If you NEED a mortgage, do NOT waive your financing contingency or you could lose your deposits if the loan does not go through.
Is a final walk through necessary?
Yes! Unless you are purchasing a home you will be completely remodeling including all systems, you NEED a final walk through. In most cases, weeks to months go by between the initial inspection and the closing. You want to make sure everything is working as it should, you want to make sure all furniture and appliances that were contracted to be left are still there, and all repairs were made as per the buyers election / sellers response of the inspection.
Should I have my agent hold an open house?
Having an open house is a great way for your house to get seen by many parties at the same time. You can have people that are interested in your home, but do not have a Realtor, feel more comfortable viewing your home without the pressure. An open house also brings excitement, potential buyers know that it is more likely you will get multiple offers when you have an open house.
Can I back out of a real estate deal?
Buyers are able to back out of a purchase, however, depending on the circumstances, they may lose their earnest money deposit. If the property does not pass a suitable inspection, or if a financing contingency is in effect and the buyer cannot get financing, they buyer can get out of the deal and get return of their deposit.