Purchasing a home can create many emotions and feelings. One of the best ways to ensure buying a home does not become overwhelming, is to become well educated and properly prepared for the process. Here are our most frequently asked questions from buyers.
Should I talk with a bank before looking at homes?
YES! There is no reason to look homes that are outside your budget. Therefore it is important to meet with a bank for a full pre-approval, and a list of all the costs associated with that loan.
Even if you are confident you can afford and qualify for the home, the seller of the home you want to buy does not know you. Therefore, you need that pre-qualification letter from a lender to effectively negotiate your best price.
Should I buy or continue to rent?
Buying a home can be a very solid investment. Also, with the current low interest rates, you can get more home for your money. This being said, renting can also be a better option for some, depending on the circumstances. With current interest rates, it can actually be cheaper to pay a mortgage than to pay rent.
Of course there are always exceptions. The cost of selling a home can be high, and depending upon the rate of appreciation, it may take a couple years to realize a profit. In the long term, real estate out performs every other investment. However, if you are looking at buying and selling quickly, it needs to be the right home, at the right price, at the right time.
Can I find a rent-to-own property?
They do exist, but they are rare…and good ones are almost non-existent. I know the reasons why you may want a rent-to-own, but ask yourself why a seller would ever agree to one. Most sellers want their money so they can move on. Also, rent-to-owns place a huge risk on the sellers (In central Ohio, less that 5% are ever purchased). The only reason the seller would accept a rent-to-own contract is that you are offering them far more money then they could ever get in a traditional sale, plus paying a rent and deposit well above market to compensate them for the risk they are taking.
I own a home, should I buy another before selling my current home?
There is no right or wrong answer to this question, because there are pros and cons to both options. Buying a home before selling your current home is certainly the easiest method. It avoids lining up the closing dates perfectly, and allows you to take your time in selling the home. However it does potentially require more cash. You need to either be able to make two house payments for a period of time, or pay a high enough amount on the new home to convince them to accept a contract subject to the sale of your home.
Do I really need a Realtor when buying a home?
When buying a home, it’s strongly recommended you have a Realtor who is an expert in that specific neighborhood. There is a lot of information about a home and community that you can find on your own. However there are a lot of nuances that only an area expert would know. Upcoming changes in school zoning, traffic congestion, noise from school events, pricing trends, resale factors, and many more. Also, as a realtor, I have negotiated purchases with the same realtors for over 30 years. I know every detail of the history of the home, the neighborhood, and the realtor we are negotiating with. My services are paid for by the seller, so why go it alone?
Keep in mind, not all Realtors are the same. Be sure t0 interview your realtor, and stick with the one whose knowledge you can trust.
Who pays the Realtor fees when buying a home?
In almost every case (over 97%), the seller pays the full Realtor fees for the buyers realtor.
What is a short sale?
It is when a seller is selling their home for less than what they owe, and does not have the money to cover the difference. In those cases the seller is asking the bank to accept a loan pay off that is “short” of the full amount owed.
The bank does not have to agree, and those negotiations can be very time consuming and frustrating. As the buyer of the home, you can do nothing but sit and wait. Every situation is different, however the average short sale takes five months from contract to get a final answer and closing from the bank, and 50% fall through before they get to that point.
What is a foreclosure?
Foreclosures can actually be much smoother transactions than short sales. In a foreclosure, sometimes called a REO (Real Estate Owned), the property is actually owned by a lender. This eliminates the long short sale negotiation process. The other benefit is that the bank does not want the home, allowing us to often negotiate a much better price for you. It is important to understand that foreclosures are sold “as-is” and the bank makes no claims about the condition of the home. We would still be conducting a comprehensive home inspection.If problems are found, you would have the right to walk away without cost, but the bank will not fix anything (in most cases).
How is the neighborhood/area?
This is why it is important to use a Realtor with strong experience and knowledge of the specific areas you are interested in. We can answer your questions about growth of the local economy, crime statistics, taxes, and local amenities. Your Realtor should be able to provide all pertinent information to allow you to make an educated decision on areas and neighborhoods.
How are the schools?
Just like tips for selecting a neighborhood, a top Realtor will be familiar with the school, know the principals, and can set up meetings for you to be able to get the information you need to evaluate the various school options.
What are the average utility bills?
Utility bills can be obtained from the home owner and in some cases, from the local utility company, who can provide averages over the past 12 months. Keep in mind, everyone prefers to have their home temperature different, so the average bill could be different if you were to purchase the home.
What’s the age of the home?
The most popular items in a home that buyers want to know about are the major mechanical items, such as the roof, furnace, water heater, and air conditioning. We are able to find the dates of a furnace, water heater, and air conditioning unit by looking at the serial numbers. The roof age is often known by the home owner and, if not, can usually be approximated by looking at the roof characteristics, such as the sagging areas and the way the shingles are laying.
How many homes should I look at before putting in a purchase offer?
We begin your search with an in depth interview about what you are looking for in a home. There is no hard and fast rule to this question, but from the interview, we are very often able to narrow it down to just a hand full of houses to find you an ideal home.
How much should I offer the sellers?
It is my job to provide you with two numbers. First, from a market stand point, what is the best value for this home. Second, from a negotiating stand point, what is the bottom line for this seller. I am very accurate at predicting both numbers. However the final evaluation is up to you…what are you willing to pay? I have had clients pay above market value for a home, just because they liked it. In those cases I explain the value, then negotiate the lowest possible price the seller is willing to go, and then it is up to my client. I have also had people turn down homes that were a great buy from an investment standpoint, because they simply did not like the home enough. In other words, I can talk to you about money and investment value. It is your call on the feel you get, and your personal tastes.
What is an earnest money deposit?
An earnest money deposit is also frequently referred to as a good faith deposit. When a buyer purchases a home, their Realtor collects a deposit to hold in their escrow account. The primary purpose of this deposit is to show a seller you are serious about purchasing their home. The amount that is deposited is subtracted from the final figure that a buyer pays at the closing table. In most cases, the larger the deposit, the stronger a purchase offer looks to a seller.
How long does the seller have to respond to my offer?
There is not a standard answer to this question, and it depends upon the circumstances. Twenty-four hours would be a typical time frame.
What if my offer is rejected?
There are four basic responses to offers. The offer is (1) accepted, (2) countered, (3) rejected, or (4) ignored. It is rare for your offer to be rejected or ignored unless a seller is offended by a low-ball offer. In those cases you can always write a new offer. However, once you have offended them, it is rare for it to work out. It is always better to begin with a serious offer, seeking to attract a serious response.
Do I have the option to have any inspections?
Yes. We write the purchase offer contingent upon a satisfactory home inspection, pest inspection, chimney inspection, radon test, and many other inspections.
What’s the next step?
Once your offer is accepted, there are many things that need to be completed, such as inspections, formal mortgage application, appraisal, and title work. Throughout the mortgage process, you should expect the bank to require documentation, letters, and other items from you to satisfy the bank conditions, so don’t be upset or surprised when this happens.
Do I need to do a final walk-through?
Yes, we will be doing a final walk through before closing. The purpose is to simply verify the home is in the same condition as when you purchased it, and any remedy items noted from the home inspection have been completed.
When is the closing date?
This is determined with the initial contract, providing enough time for the lender to get everything to closing. Depending upon the loan type, this is a minimum of 30-45 days. Beyond that, it is negotiated between the buyer and seller.