Home buyers have lots of questions and expect their realtors to be able to answer them. The thoughts surface at varying stages of the home buying process. Every buyer will have at least one somewhere along the way.
Most questions are probably answered based on your experience and knowledge of your field. However, if you don’t know the answer, just let the buyer know you will find the answer. Then, don’t hesitate. Get on it!
Here are some questions that come up often enough to make our FAQ list.
Should we buy a home or keep renting?
The answer being, of course, that someone has to answer that question for themselves. Most home buyers plan to be in the location for the long term, is that their intent? Lots of homeowners don’t think about the added expense of maintenance and upkeep. Real estate taxes and insurance get figured into the mix, too.
Renting, however, might be more expensive than a monthly mortgage payment. If you plan to remain in a location long term, it might be worth revisiting the option of buying your home.
Will my credit score affect the lender?
Yes. In today’s economy, there is little if any hope of obtaining a mortgage without a credit score that rings in with at least a 620. If you want the best interest rates, a buyers score should be closer to 740. If the latter is the case, they should be checking for the lowest interest rates available.
They are packing serious credit clout!
Should we contact a lender before we start looking?
Yes. The buyers should shop around for a lender first. This will benefit both you and the buyer because already having completed the application process will include knowing their final budget. The realtor will not be showing properties that are unattainable due to the price of the home.
Lenders can line up the buyer with the loan that works best for them. First-time homebuyers are usually able to obtain financing with very little money down. Veterans can apply for loans that would afford them better rates. We’re talking 0% interest rates for veterans and those currently serving in the military. It is a good idea to ask lenders about loan options.
Lenders will, also advice buyers of any closing costs toward which the seller could contribute.
How much down payment will we need to buy a house?
Typically, that is not a question for the realtor; however, some realty agencies do have mortgage lending departments, as well. Down payments vary due to the lender. The type of loan that the buyer qualifies for is part of the equation, too. Down payments range from 3% for a First Time Home Buyer’s loan up to 20% for a 15 or 30-year mortgage. Discussing with your lender will determine the down payment amount that is required.
Who pays the realtor fees when buying a house?
Most buyers don’t even consider looking for a realtor when they are looking for a home. However, it is often the case that the seller picks up the realtor fees at the closing. Looking into it beforehand will enable a buyer to use a realtor to help them search for the perfect home. Who pays what gets stipulated in the written purchase offer.
What’s a buyer’s representative?
In short, they are an advocate for the buyer in a real estate transaction. Real estate laws vary from state to state. A buyer’s representative assures that the buyer’s best interests are at the forefront throughout the entire process.
What’s a seller’s market?
A seller’s market is when there are increasing demands for homes in an area. It drives the cost up and that’s in the buyer’s favor.
Some examples are:
- An economic boom in the area causes an increase in the labor market. It, in turn, brings in new residents looking for homes.
- Interest rates that begin to trend downward improve mortgage affordability and creates interest in the home market.
- Likewise, a short-term spike in interest rates could cause those wait-and-see consumers to lock-in to a loan before interest rates rise for the long-term.
- A lack of construction in an area could cause a spike in prices for those homes that go on the market in the area.
What’s a buyer’s market?
Declining home prices and reduced demand to purchase homes in an area create a buyer’s market. It brings the cost of homes down in a particular area.
- Higher interest rates limit the number of people that are willing to incur a mortgage.
- A short-term drop in interest rates gives borrowers a short window of having the edge. They have more purchasing power until home prices reflect any recent changes in interest rates.
- A new subdivision equipped with all the modern amenities can force a buyer’s market in older residential neighborhoods. It is especially the case in communities that need renovation.
Can the closing costs be financed into my loan?
All USDA backed loans allow for the closing costs to be financed as part of the real estate loan. The most common closing costs include:
- Appraisals to determine the market value of the home.
- A title search is completed to check for any unknown liens against the home.
- Title insurance for the lender protects them from any unexpected or unknown problems that go undiscovered during the title search.
- An escrow deposit is the first month’s installment toward the amount needed to pay real estate taxes and insurance.
- The down payment is the required percentage of the loan amount that is required to finance the balance.
- Any title company or settlement fees incurred by the lender usually get paid at closing.
Is there a penalty if I want to back out of an offer made on a home?
It depends on the circumstances.
Your safest bet is to notify the seller before he has a chance to sign your offer. It will avoid any confusion. Hopefully, your change of mind will be immediate. Retracting before an owner has time to sign is almost always considered no harm, no foul.
If it isn’t, Californians have a 17 day contingency period during which a potential buyer may back out of the contract due to a significant issue coming to light. Say sever foundation damage was discovered during an inspection, for instance. However, after the contingency period, it gets tough to get out of the contract without losing money.
The Cancellation of Contract, Release of Deposit, and Joint Escrow Instructions were created by the California Association of Realtors for cases where the buyer wants to back out without a major issue coming to light or failed financing. Forfeiture of the earnest money deposit is all but guaranteed to occur during this process.
How’s the neighborhood? What about the schools?
Both of these questions are certainly understandable, but as in the decision to buy or rent your home, this is not a question that a realtor should be answering. It could influence a decision to buy the house by providing personal insight. The realtor should be able to give statistics on the amount of crime, economic growth, or local amenities, but not reflect any personal views.
Likewise, a top-notch realtor will be able to provide websites, statistics and other information regarding schools in the area. This information will allow the buyers to make informed decisions on their own without being swayed by the opinions of their realtor.
What do the utilities cost?
Asking the seller to be upfront in providing copies of a year’s worth of utility bills is the best way to deal with this question. They could be on hand immediately because sellers expect this to be a common question from potential buyers.
How old is the furnace or AC unit?
An experienced realtor is good with a serial number. The manufactured date is within the serial number on those items. It’s the same with other significant items, say a water heater for instance. The homeowner is usually able to disclose the date of a roof replacement. If not, a roof inspector could gage the age fairly accurately by normal wear and tear factors.
How many homes should we look at before we settle on one?
To put it simply, politely pass along the information that the buyers will know it when they see it.
It’s the home you picture you and the family waking up in each morning. Or, you catch yourself mentally arranging your stuff here and there.
Odds are they knew that all ready. They’ll understand what you’re saying.
What’s my bottom dollar?
As realtors, we can advise the buyer what they might offer for a house. Ultimately, though, the decision as to how much they will afford is the buyer’s decision alone.
What’s the earnest money’s purpose?
It is an amount given to the seller upon receipt of the offer made on the house. The buyer provides the seller with an amount of money to hold in escrow until the time of closing. The amount gets deducted from the total purchase price. Usually, the more significant the amount, the less worry attached that the deal will fall through.
Is it essential to do the final walk-through after the closing?
Yes. A lot can happen in those few weeks between the time you last stepped foot on the property and obtaining the keys in hand. Doing a final walk-through of the property is essential. The buyers should check for things like flushable toilets, working furnace and a/c, and if there is hot water.
When do we close?
Answer this question with a calm tone of voice, won’t you?
Those closing dates change at the drop of a hat it seems. We need to make sure buyers and sellers alike understand that the closing date is more of a target date at first. A broad range target date of 30 to 45 days is not out of the question.
Many factors determine when every “t” is crossed and “i” dotted on the documentation needed to complete real estate transactions.
The “no news is good news” approach works here. Every day without a “pushing back the date” call is a day closer to closing!
Who qualifies for a First Time Home loan?
The FHA home loans require that the applicants have a credit score of 580 or higher. The accepted applicant will provide a down payment of 3% of the purchase price or appraised value of the home. The home buyer must also have a debt-to-income ratio of 45% to 50%.
VA loans, for military members and veterans, can typically receive 100% financing. It is a huge benefit for those who qualify for this loan.
Who takes care of any issues found by the home inspector?
Negotiations with the homeowner will determine the answer to that question. The buyer’s Realtor or representative will help with the negotiating process.
Should we sell our current home before buying a new one?
It is another question Realtors get asked, but the buyer should only determine the answer. A Realtor can assess the situation and offer advice, but the homeowner is who should make that call.
If you plan on selling the property and have plans as to what you will do if your current home sells before you find a new one, there is no reason not to place your existing home on the market.
How long do we have to give the seller to respond to our offer?
The amount of time you will wait gets stipulated in the written offer. Giving the seller twenty-four hours to respond is quite sufficient.
The perfect property
It’s important to remember that buyers are looking for their home. The place they will safely abide, raise their families, and live their lives. It may seem to get a bit trying if you must show property after property, but in the end, it is worth it.
The house will come along that your buyer will feel is where they are meant to be. When that happens, you will feel the glow of happiness begin to flow from them. It can’t help but grow stronger as the closing date draws near.
Go with that flow whenever you can. It is a building block of positivity for the new neighborhood. It can be a building block of positivity for you, too.