Buyers FAQ

Q – Should I talk with a lender before looking at homes?

A – Unless you are paying cash for a house, you will need to get a mortgage. In order to know how much home you can afford, you will need to get pre-approved for a loan. Talking with a lender is the first-step in the home buying process.

Q – Do I need a Realtor when buying a home?

A – A buyer’s agent represents the buyer exclusively. This means s/he works to protect your interests in the transaction and helps to negotiate the best purchase price and terms. Because an agent’s commission comes from the selling side of the transaction, using a real estate agent when buying a home essentially comes at no cost to the buyer. Real estate agents have access to MLS data that is not available to the public. With access to this information, your Realtor can help you make educated decisions on the home’s value, the future of the neighborhood, and your bidding strategy.

Q – What is a buyer/broker agreement?

A – An exclusive buyer/broker agreement is a simple form that says the Broker will represent the Buyer for the purchase or lease of real estate in a designated area & for a specific amount of time. It also lays out compensation guidelines and some additional legal information.

Q – Why should I sign a buyer/broker agreement?

A – While the fiduciary duty really is the main reason to sign an Exclusive Buyer/Broker Agreement, having one in place will also provide you with many benefits during your home search and purchase. You are able to get a better idea of the scope of services the broker/agent owes you as a client, as they are outlined in the agreement and discussed at time of signing. You will be treated as a client instead of a customer, therefore being entitled to superior services. With full attention, accountability and disclosure from your Realtor, your best interests will be top priority during your search, negotiation and closing. With a formalized agency agreement in place, you and your agent will be working as a team to make your home buying process a positive experience with positive results.

Q – Is it best to save for the ultimate dream home or begin with a less expensive starter home ?

A – It can take a long time to save for that perfect dream home. Meanwhile, the market has been flooded with some of the most favorable mortgage interest rates in years. Low rates make housing more affordable, which is why so many buyers have jumped on the home buying bandwagon. Home-price appreciation has also been strong, making very solid gains in communities across the country. In fact, home prices are expected to increase 2.5 percent to 3 percent annually over the next five years. If you purchase a starter home today, you can potentially begin to build value that can lead to the purchase of a larger, or more desirable, trade-up home in the future.

Q – How long does it take to buy a home?

A – The timeline for finding a house varies greatly from person to person. Once you find a house and have an accepted offer, it usually takes around 30-60 days to close if you are acquiring a loan to purchase the home. If you are paying cash then in most cases it is less than 30 days.

Q – How much money do I need for a down payment?

A – The most common answer is 3.5% to 20% of the purchase price. Veterans are usually eligible for a VA loan, which requires no money down. There are many different programs available to buyers and they are constantly changing. Contact your local lender to find out more.

Q – What is an earnest money deposit or EMD?

A – The earnest money deposit is an important part of the home buying process. It tells the seller you’re a committed buyer, and it helps fund your down payment.

Q – What are the standard contingencies in an offer?

A – Most purchase offers include two standard contingencies; financing and inspection. The financing contingency states that the sale is dependent on the buyers ability to obtain loan commitment from a lender. Inspection contingency allows the buyer to have professionals inspect the property to their satisfaction.

Q – What is a home inspection?

A – A home inspection is done by a paid professional. He/she inspects the home searching for any defects or problems with the home. The inspection usually takes place after a purchase contract has been signed and is paid for by the buyer.

Q – Do I need a home inspection?

A – Yes, we strongly adivise getting a home inspection. Purchasing a home without an inspection could leave you with thousands of dollars in unexpected repairs.

Q – What is a home warranty?

A – A home warranty is a contract between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home’s major components, such as the furnace, air conditioning, plumbing and electrical system. A home warranty may also cover major appliances such as washers and dryers, refrigerators and swimming pools. Most plans have a basic component that provides all homeowners who purchase a policy with certain coverages. Homeowners can also purchase one or more optional components that provide additional coverage at additional cost.
Home warranty companies have agreements with approved service providers. When something that is covered by a home warranty breaks down, the homeowner calls the home warranty company, and the home warranty company sends one of its service providers to examine the problem. If the provider determines that the needed repair or replacement is covered by the warranty, he completes the work. The homeowner only pays a small service fee, plus the money he/she has already spent to purchase the warranty.

Q – Should I get a home warranty?

A – We highly reccommend a home warranty to home buyers. A home warranty helps protect against pricey, unforeseen repair bills and provides comfort that your home is protected. For a homeowner who doesn’t have a tragedy fund or who wants to keep their emergency fund, a home warranty can act as a safeguard. Home warranties are perfect for people who aren’t handy or who don’t want to worry about tracking down a contractor when they have an appliance or major system breakdown. Most home warranty companies offer renewable plans year after year.

Q – What is the difference between list price and sale price?

A – The list price is a seller’s advertised price, or asking price, for a home. It is a rough estimate of what the seller wants to sell the home for. A seller can price high, low – which does not happen very often – or very close to what they hope to get. A good way to determine if the list price is a fair one is to look at the sales prices of similar homes that have recently sold in the area. The sales price is the actual amount a home sells for.

Q – What is the difference between appraised value and market value?

A – A certified appraiser who is trained to provide the estimated value of a home determines its appraised value. The appraised value is based on comparable sales, the condition of the property, and several other factors. Market value is the price the house will bring at a given point in time, once the buyer and seller establish a “meeting of the minds” on price.

Q – What are closing costs?

A – Closing, or settlement, costs are expenses over and above the price of the property. Both the buyer and seller incur some of these expenses when transferring ownership of a property. Who actually pays, however, often depends on local custom and what the buyer or seller negotiates. Closing costs normally include title insurance, loan points, escrow or closing day charges, property taxes, and document fees. The lender provides an estimate of closing costs for prospective homebuyers.

Q – Who pays for closing costs?

A – Who pays closing costs depends on the negotiations between the buyer and seller. In most cases, they each pay their own.