Frequently Asked Questions when Buying
- Residential has provided a list of frequently
asked questions that a individual may have when considering the purchase of a new home or
small income property.
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Where do I begin the process of looking for a home?
The first process has two steps.
We believe that you should begin by determining your
overall budget and what you can afford. Finding that perfect home only to find out later
that you don’t qualify is heartbreaking. A qualified mortgage
broker can assist you in determining your budget and get you pre-qualified for a loan.
Next, you need to focus on what you're looking for in a
home. You can start by establishing priorities based on the following questions:
Where do you want to live? What are the current prices
in those areas? What school districts are in those neighborhoods? How large a home do you
need? Do you need a yard or is a condo more your style? Many other factors can determine
your needs based on your own personal lifestyle. Depending on where you live, you may have
a choice of homes in dozens of styles, sizes, and settings.
What are the advantages of using a real estate agent
to help me buy a home?
Buying a home is certainly one of the most rewarding
experiences most of us ever have; it's also one of the most challenging. If you're buying
for the first time, the process may seem overwhelming. One clear advantage of enlisting
the help of an agent is simply that you don't have to "go it alone." A
good agent has the training, the know-how, and the experience to help you through each
step of the process, and make the process of finding, buying and moving into your new home
as smooth, quick, and enjoyable as it can be. Another advantage is that an agent
represents a valuable source of information about market trends, communities and
neighborhoods, and especially, homes for sale throughout the area. Remember, not every
home seller runs an ad in the local paper or puts a sign up in the yard. In fact, many of
homes actually sell before there is ever a need to advertise them. An agent offers you
market expertise augmented by access to complete, regularly updated information about
every home listed by area agents through the multiple listing service. As you'll
see in the following several questions, professional expertise and services can be of
considerable help throughout the buying process.
How do I find the right agent to work with?
The key word here is right. While there's certainly no
shortage of qualified agents to choose from, it's important that you find one who can
fully understand your wants, needs and individual tastes, and whose personal and
professional judgment you respect.
Until recent years, virtually all real estate agents
involved in a given transaction worked for the seller. However, a growing number of
today's homebuyers are choosing to be represented by a buyer’s agent. A
buyer's agent only represents the buyer in the real estate transaction. Above all, look
for someone who makes you feel comfortable.
How does buying compare to renting?
Renting offers a lifestyle that's nearly
maintenance-free. When renting you receive no equity, no tax benefits, and most
likely no protection against regular rent increases. If your rent has averaged $700 a
month for the last 10 years, you've spent $84,0000 and received nothing in return. When do
you invested in yourself instead of your landlord? Several financing options hold special
advantages for first-time buyers or families with limited cash reserves. FHA-insured and
VA-guaranteed mortgages can minimize or even eliminate your down payment. In
addition to tax deductions you'll likely receive your home may appreciate in value. A home
that costs $100,000 and increases in value only 2% a year would appreciation nearly $4,200
in just two years. (Home appreciation is not guaranteed) If you live in the home for two
of five consecutive years the profit you make from the sale is tax-free. Certain
restrictions apply, please consult with your accountant for all specifics related to your
particular situation.
Where can I get information about local schools?
Again, a good real estate agent is perhaps your best
source. They know where the local schools are, and can provide you with valuable
information about school districts, including test scores, extracurricular activities, bus
service and more. If you're relocating, an agent may even be able to put you in touch with
teachers and principals when you visit the area. And if you want to do a little searching
on your own, the Internet may also be a good place to start.
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How can I find out what homes are selling for in a
given neighborhood?
In most areas, home sales are a matter of public record
-- you can get all the information you want about recent sales, including prices and
listing dates, by calling the county Recorder of Deeds. An easier way is to ask your real
estate agent. If you're interested in a particular home, an agent may be able to provide
you with a list of comparables (sale prices of homes in your area that are roughly
the same size and age as the home you're considering).
When I start visiting homes, what should I be looking
for the first time through?
The house you ultimately choose to call home will play a
major role in your family's life. A home can be an excellent investment, of course, but
more importantly, it should fit the way you really live, with spaces and features that
appeal to everyone in the family.
As you look at each home, pay close attention to these
important considerations:
- Is there enough room for you now, and in the near future?
- Is the home's floor plan right for your family?
- Is there enough storage space?
- Will you have to replace the appliances?
- Is the yard the size that you want?
- Are there enough bathrooms?
- How much maintenance and/or decorating will you need to
do right away? Later?
- Will your present furniture work in this home?
How many bedrooms should I be considering?
Whether you are married or not, or have kids or not,
spare bedrooms come in handy when family and friends come to stay. And when you're not
having guests, extra rooms are useful as a library, den, or TV room. Another good reason
to choose a home with extra bedrooms: Extra space will make your home more appealing to a
larger number of interested buyers when it comes time to sell.
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Is an older home as good a value as a new home?
It's a matter of personal preference. Both new and older
homes offer distinct advantage, depending upon your unique taste and lifestyle. New homes
are generally larger and usually easier to maintain. Homes built years ago offer more
total space for the money, as well as larger yards. Some people are charmed by the
elegance of an older home but shy away because they're concerned about potential
maintenance costs. A home warranty typically paid for by the seller will give you
peace of mind for a full year or more after you move in.
What do I need to bring along when I'm looking at
homes?
Bring your own:
- Notebook and pen for note-taking
- Flashlight for seeing enclosed areas
- Tape measure for checking room sizes, clearance, etc.
Be prepared to "snoop around" a little. After
all, you want to know as much as possible about the home you buy. Sellers understand that
because their home is on the market, it will be looked over pretty thoroughly. If you need
to go back to a home for another look, your agent will be happy to schedule another
appointment. Also, be sure to ask any questions you have about the home, even if you feel
you're being nosy. You have a right to know.
What should I tell the agent I'm working with about
the homes I look at?
Tell the agent everything you liked and didn't like
about each home you see. Don't be shy about talking about a home's shortcomings. Is the
home too small for your needs? Let the agent know. Was the home perfect except for the
carpeting? Let the agent know.
How many homes should I look at before I buy?
There is no set number of homes you should look at
before you decide to make an offer on one. That's why providing your agent with as many
details as possible up front is so helpful. The perfect home may be waiting for you on
your first visit. Even if it isn't, the house-hunting process will help you get a feeling
for the homes in the community and narrow your choices to a few homes that are worth a
second look. If you're looking in more than one community, try to make the most of each
house-hunting trip. Stop by the local chamber of commerce to pick up promotional
literature about the community. Or ask the agent for welcome kits, maps, and information
about schools, churches, and recreational facilities. Also, be sure to take along a camera
and snap some pictures of all the homes you like. That will make it easier to remember and
reach a decision.
How do I know I'm getting the best value for my
money?
A professional appraisal is the best way to tell if a
home is priced fairly. A real estate appraisal is an unbiased opinion of a property's
value based on its style and appearance, construction quality, usefulness, and other
factors, including the value of comparable properties nearby. When you apply for a
mortgage, the lender will have a professional real estate appraiser perform an appraisal
of the property.
I'd like to have a professional look at the home
before I buy it. What does a home inspector do?
For your own safety, and to make sure you're getting
your money's worth in the home you choose, using a professional home inspector is highly
recommended. A home inspector will check a home's plumbing, heating and cooling,
electrical systems, and look for structural problems, like a damp or leaky basement.
Usually, you call an inspector immediately after you've made an offer on a home that has
been accepted. All offers should include an inspection clause which states that your
purchase obligation is contingent on the findings of a professional home inspector. Your
home cannot "pass" or "fail" this inspection. The inspector's
job is to make you aware of repairs that are recommended or necessary. A seller may be
willing to renegotiate a price to accommodate needed repairs, or you may decide that the
home will take too much work and money. A professional inspection will help you make a
clear-headed decision.
In choosing a home inspector, consider one that has been
certified as a qualified and experienced member by a trade association. Your real estate
agent may refer you to qualified inspectors in your area.
Should I be present during the inspection?
Yes. It's not required, but it is very much to your
advantage. You'll be able to clearly understand the inspection report, and know exactly
which areas need attention. Plus, you can get answers to many questions, tips for
maintenance, and a lot of general information that will help you when you move into your
new home. Most important, you'll see the home through the eyes of an objective third
party.
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Do I need to use a lawyer to buy a home?
Because the legal contracts and other paperwork involved
in buying a home are complex, and can be confusing to the general public, many people
prefer to work with an attorney.
Your attorney will review contracts, make you aware of
special considerations and potential problems, and can accompany you to the closing, to
help make everything go as smoothly as possible. If you don't know a real estate attorney,
ask your real estate agent for help. Agents work with many legal professionals every
month, and can provide you with the names of several attorneys in the community.
Do I need to talk to my insurance agent?
Yes, and the sooner, the better. Most insurance
professionals have a lot of experience in working with home owners, and can offer useful
tips about home ownership, particularly regarding home safety and keeping your premiums
low. Once you've found a home, work together to develop a homeowner’s policy that
meets your individual insurance needs.
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When I've found the home I like, how do I make an
offer?
When you've found a special house you want to call home,
you'll probably feel excited and a bit nervous. Let your agent know you're ready to write
an "offer to purchase". It's a legally binding contract that you submit with the
price your willing to pay along with other considerations. It will be signed and dated and
drafted by you and your agent. It may also be a good idea to have a lawyer review it
before you submit it so you can have your legal questions answered by a professional. It's
best to make your offer without sharing with your agent your willingness to offer any
higher price if the seller does not accept your original offer. Your offer will have a
time limit for the sellers to accept, reject it, or make a counter offer. If a
counter-offer is made, you'll have time to respond. Often, several offers go back and
forth until an offer is accepted, or one party decides to end negotiations.
How do I determine the amount of my initial offer?
There is really no rule to use in calculating an offer.
Naturally, the buyer wants the best value and the seller want the best price, but
negotiations can be influenced by many factors, such as a seller who may be changing jobs
and wants to sell quickly, or a buyer who really wants a specific home. After you've
looked at the home's features, asked questions, checked comparables, and talked it over
with your agent, you should have a good idea of what the home's value is in the current
market. Consider what you can afford, and make an offer that you consider to be fair. Most
buyers and sellers negotiate on price, with both sides "giving" a little until
both agree.
What's "earnest money" and how much do I
need?
When you sign an offer to purchase, your agent will ask
you for earnest money, it shows you are serious about wanting to buy. This money will be
held in a special escrow account. If your offer is accepted, your earnest money will be
included as part of your down payment. If your offer is not accepted, you'll get back all
your earnest money. But keep in mind that if your offer is accepted and you then back out,
you may forfeit the full amount.
Is there any way I can protect myself against
emergency repair bills in my new home?
Yes. Home warranties offer you
protection against many potentially costly problems not covered by your homeowner's
insurance. They've become increasingly popular in recent years and for good
reason: the coverage can save you thousands of dollars in the event of a major mechanical
breakdown. They are usually paid for by the sellers and they are good for the first year
after the close of escrow.
There's so much to remember before I close. What do I
have to do?
