Whether you’re a first-time home buyer or a home buying professional, common questions may arise in your house search. As a Real Estate agent, I get questions from every buyer pertaining to many different parts of the buying process. Below I have answered some of the most frequent questions I get asked.
What is the first step of the home buying process?
The first step in the home buying process is getting a Pre-Approval letter. Speaking with a mortgage lender before your home search will let you know how much you are able to spend on your home. The lender can help you determine how much is required for a down payment and how much will be included in closing costs. Most Realtors require a home buyer to have a pre-approval letter before they start the search, especially in luxury home searches. Speaking with a lender can help first-time home buyers learn more about the loan process and educate them about special programs. Different loans are available when buying a home, and the lender can help you get pre-approved with the best loan.
Should I buy or continue to rent?
When determining if you want to buy a home or continue to rent, there are many factors you will need to decide on for which will fit you best. The length of time you will be in the home or living in the area can play a role into deciding to rent or buy a home. When interest rates are low, it can be cheaper to buy rather than rent. With home ownership comes more responsibility, including routine maintenance and potential problems that a landlord would have been responsible for fixing.
Do I really need a Realtor when buying a home?
While it is not required, I strongly recommend using a Realtor during your home search. A Realtor can help you with the search process, help you find homes that may not be listed on Zillow, Realtor.com, etc., and can help you with the legal jargon in a contract. A Realtor can help advise you in the price negotiation process and help you with repair amendments. You don’t want the listing agent to take advantage of you during the contract negotiations.
Who pays the Realtor fees?
In most cases, the home buyer pays little to no fees for a Realtor. The seller’s closing fees include agent commission for both agents, the listing agent and the buying agent.
Can I buy a home and sell my current home at the same time?
This can be a tricky decision for a home buyer to make. Sometimes you must, especially in the case of relocation. If you are relocating through your job, see if your employer can help with a relocation service. If you are using the equity from your current home as a down payment for your new home, then you want to sell your current home first. Some people decide to rent their home and turn it into an investment property until they do want to sell.
If you buy a home before your current home is sold, your offer can become contingent, meaning you can’t buy the new home until the old home is sold. The benefit of finding a home first is that you know where you are going to live and the pressure to find a home is decreased.
If you sell your home before you find a new home, you are in a good position to negotiate for the new home. A problem can be finding a place to live until you find the home you want, and an option is to request a “lease back”, allowing you to stay in the home for a short period of time after the house has closed.
How many homes should I see before making an offer?
This varies depending on the buyer. Starting an online search with your criteria helps narrow the amount of homes you may see without it. You can look at pictures and see if it is located somewhere you are interested in. You may look at hundreds of homes online and see less than 5 in person. Some buyers will walk into the first house and place an offer, while others may look for a whole weekend. It always depends on if criteria changes or if a buyer can see themselves living in the home they are looking at.
How do I know if the property is a good deal?
You may never know if the home is a perfect deal, but with the help of a Realtor, you can see what homes with similar attributes to the one you are looking at sold for. The status of the market can also play a role in the strength of a deal, in the case of it being a buyer’s or seller’s market, and if home prices are decreasing or increasing.
How are the schools?
One of the most popular criteria in a home search for buyers with families is the strength of the school district in the search area. You can search all the Texas school district rankings on txschools.org.
What are the average monthly bills?
Besides paying your mortgage, there are other monthly costs that you will need to factor into your budget. Utility bills can sometimes be obtained from the home owner, but the information is usually found through a utility company. You also must factor in the size of your family, how low you like to keep your air, and the amount of water you use. Some houses are in neighborhoods with an HOA. Homes with an HOA have either yearly, semi-annually, quarterly or monthly charges and they help with neighborhood cleanliness and home standards.
What is the age of the ___?
When you are looking through the house, you will want to pay attention to the age of many large features, because they may not need repairs now, but may require them in the next 2 years. Areas you should talk with your Realtor about include the roof, water heater, air conditioning, furnace, and if applicable, the pool. Your Realtor can contact the seller to find out the age of the items, or they can check the serial number.
Making an Offer
When can I back out if I change my mind?
In most contracts, there is an option period, and this allows the buyer to pay a low fee to back out of the offer if they decide they no longer want the house. Negotiations and amendments can be made in this time.
How long does the seller have to respond to my offer?
It depends on when you submitted a contract and what other offers the seller may have received. It can be within a few hours, but it can also be up to 3 days. When homes have many offers, they may take longer to filter through and decide which one is best for them.
How much below the asking price can I go?
This is ultimately up to the buyer, but it is best to talk with you Realtor so they can advise you on an amount that is fair for the neighborhood and with the qualities the home possesses. Some sellers may be eager to sell and will accept an offer much below asking, and others may want to make a large profit on their home and will stay close to the asking price. In a multiple offer situation, you may need to offer above asking price. No matter what price you put in your first offer, there is always room for negotiations and counteroffers.
How quickly can I close?
If you are working with a lender, this depends on the length of time they can get your loan done. Typically, this is about a month after the execution date. Some lenders can do a quick close or may need longer than 30 days depending on the loan and your conditions. If it is a cash transaction, closing can happen in as little as a week, depending on how long the title company can prepare documents for closing. If you are purchasing a new construction home, it may be months from the day you signed the contract, depending on when the estimated completion date is.
Should I get a home inspection?
Yes!! Getting a home inspection will give you piece of mind when moving and is an inexpensive way to see the condition of the home. FHA and VA loans require you to get a home inspection in order to purchase a home. It can reveal any costly defects in the home that need to be fixed for the home to be habitable.
What is an earnest money deposit?
Earnest money is a deposit that is usually 1-2% of the purchase price and is given after the contract is executed. It is used to demonstrate to the seller that your offer is real and you are interested in purchasing the home. It also reserves the home for you. If the offer goes through, the earnest money is applied to your down payment and closing costs. Your Realtor will ask you for the check and can inform you about how your earnest money can be protected.
Do I need to do a final walk-through?
While it is not required for resale, it can be a good idea if you had repairs done before the closing date. It allows you to check that everything has been fixed, and if several weeks have gone by, it can assure you that nothing has changed. For a new build home, you will have one scheduled a few days before closing.