10 Common Real Estate Questions
Every day, our agents are asked many different questions about the home buying process. Some questions are easy to answer because they affect home buyers the same way, while others are may be more situational. Nevertheless, it is our agent’s job to help guide your through the complex world of buying and selling a home. Naturally, there are a common set of questions which can be answered almost universally. Whether you are buying your first home, or this is not your first rodeo; here are the 10 most common real estate questions.
1. What is the first step of the home buying process?
As you’ve heard many times before, “Knowledge is power”. That is especially true when discussing the financial aspects of home buying. We always suggest your first step should be contacting a reputable local lender to get pre-qualified for a mortgage loan. Obtaining a Pre-Qualification/Pre-Approval letter from a lender helps you in 3 ways:
First, you find out how much home you can afford to borrow. This cuts down on time spent looking at properties that are not within your budget. Second, obtaining a pre-qualification will show you how much money is required for your down payment and closing costs. Do you need to pull money from additional savings, or maybe you are receiving a gift from family? Your pre-qualification will put that amount in perspective. Lastly, being pre-qualified to purchase a home puts the seller’s mind at ease, knowing that you are serious buyer.
In a strong Seller’s Market, making an offer on a home WITHOUT a pre-qualification will typically end in rejection. So, contact that lender FIRST, and be sure that you are financially ready to become a homeowner.
2. What is a Seller’s Market?
In a Seller’s Market, increasing demand drives home prices up. Depending on the area, economic factors, a spike in interest rates, and low inventory might be the driving forces behind the market.
3. What is a Buyer’s Market?
A Buyer’s Market is characterized by lower demand and declining home prices. Interest rates trending higher, high inventory, and economic disruption can all be factors in a Buyer’s Market.
4. How long does it take to buy a home?
Depending on the market conditions of your area, the average time to complete the sale is 30-45 days. Your real estate transaction has multiple parties involved; so if you are buying a home in a hot market, it could take a little longer than expected. For example, there are only so many appraisers in your area, and if all of them are working 10+ hours days, you can see how things can back up and remain out of your control. If appraisal turnaround time is extended by 2 days, the underwriter’s turnaround time is also impacted. You can see how this can become a chain reaction…
5. How much money do I need for a down payment?
Gone are the days of needing 20% down to purchase a home. In fact, the national average is around 11% down payment, including first time and repeat buyers. But many buyers put even less money down. First time home buyers tend to utilize the 3.5% down payment option offered by the FHA loan. Repeat buyers do still utilize a Conventional Loan most of the time, but with newer conventional loan programs, that down payment can be reduced to 3% if the qualified borrower carries private mortgage insurance (PMI).
6. What if my offer is rejected?
Yes, sellers can flat out reject your initial offer. But under most circumstances, if a seller is not so hot on your initial offer, they will counteroffer. Remember, if the seller counteroffers, you are still in the game. These counteroffers can go back and forth many times, so do not get discouraged, the goal of negotiations is to bring both parties closer together.
7. Should I conduct a Home Inspection?
YES! In fact, some mortgage programs require a home inspection to be performed. Home inspections can reveal defects in the home that are not easily caught during your showing. We ALWAYS recommend having a home inspection completed by a licensed home inspector to ensure peace of mind during the buying process.
8. What is “earnest money”?
Before the days of mortgage pre-qualification, prospective home buyers would provide a good faith deposit, proving their financial strength and seriousness to buy. Nowadays, deposit money tends to be 1%-2% of the purchase price, along with the initial offer. Rules on how earnest money relates to your purchase can be found in the purchase agreement and should be explained by your agent when submitting your offer.
9. How much do I pay an agent to help me buy a home?
Did you know that home buyers pay little to NO FEES to an agent or their broker? Let us explain why:
For most home sales, there are two agents involved in the transaction; one for the seller and one for you, the buyer. The listing broker for the property charges the seller a fee to represent them. Half of that fee goes to your Buyer’s Agent for bringing you, the buyer to the deal. Thus, buyer’s agents are paid by the seller, and not YOU! For most local companies, the buyer is only responsible for a Broker’s Fee, somewhere in the ballpark of $200-300.
10. Do I really need to have a final walk-through?
Final walk-throughs are not a requirement, but we recommend every buyer complete a final walk-through immediately before closing. Did you ask for certain repairs to be completed? The final wak-through gives you the ability to make sure all terms of the contract have been taken care of. No one likes a surprise AFTER they bought a home.