HOME BUYING FAQS
QUESTION: Should you use an Agent to buy a house?
ANSWER: Probably, for two reasons. First, in virtually all situations, the buyer does not pay a commission, so the services of an Agent working for you are paid for by the seller. Second, without an Agent, you may be missing valuable representation of your interests. See the Agency page for more information. Many visitors to this Web Site skip the information on the Agency page and may be leaving themselves un-represented.
QUESTION: How should I choose between buying and renting?
ANSWER: Home ownership offers tax benefits as well as the freedom to make decisions about your home. An advantage of renting is not worrying about maintenance and other financial obligations associated with owning property.
QUESTION: Do we dig deep and buy our dream home or settle for a starter house?
ANSWER: Choosing between a smaller house in an affluent neighborhood, an older, bigger house in a more working-class community or a brand-new home is not easy. If you're in this situation, start by examining your priorities and asking the following questions:
1. Is the surrounding neighborhood or the home itself the most important consideration?
2. Is each of the neighborhoods safe?
3. Is quality of the schools an issue?
4. Do any of the areas seem to attract more families with children or adult residents?
Then ask yourself where do I fit in?
As for the return on your investment, home-price appreciation is hard to predict. In the late 1980s, the more expensive move-up housing appreciated wildly. But during the recession that followed, smaller homes tended to hold their value better than more expensive ones.
QUESTION: How do I get the real scoop on homes I am looking at?
ANSWER: Home inspections, seller disclosure requirements and the agent's experience will help. Disclosure laws vary by state, but in some states, the law requires the seller to complete a real estate transfer disclosure statement. Here is a summary of the things you could expect to see in a disclosure form:
1. In the kitchen: a range, oven, microwave, dishwasher, garbage disposal, trash compactor.
2. Safety features: such as burglar and fire alarms, smoke detectors, sprinklers, security gate, window screens and intercom.
3. The presence of a TV antenna or satellite dish, carport or garage, automatic garage door opener, rain gutters, sump pump.
4. Amenities such as a pool or spa, patio or deck and fireplaces.
5. Type of heating, condition of electrical wiring, gas supply and presence of any external power source, such as solar panels.
6. The type of water heater, water supply, sewer system or septic tank also should be disclosed.
Sellers also are required to indicate any significant defects or malfunctions existing in the home's major systems. A checklist specifies interior and exterior walls, ceilings, roof, insulation, windows, fences, driveway, sidewalks, floors, doors, foundation, as well as the electrical and plumbing systems.
The form also asks sellers to note the presence of environmental hazards, walls or fences shared with adjoining landowners, any encroachments or easements, room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property.
Also look for, or ask about, settling, sliding or soil problems, flooding or drainage problems and any major damage resulting from earthquakes, floods or landslides.
People buying a condominium must be told about covenants, codes and restrictions or other deed restrictions.
It's important to note that the simple idea of disclosing defects has broadened significantly in recent years. Many jurisdictions have their own mandated disclosure forms as do many brokers and agents. Also, the home inspection and home warranty industries have grown significantly to accommodate increased demand from cautious buyers. Be sure to ask questions about anything that remains unclear or does not seem to be properly addressed by the forms provided to you.
QUESTION: Is a low offer a good idea?
ANSWER: While your low offer in a normal market might be rejected immediately, in a buyer's market a motivated seller will either accept or make a counteroffer. Full-price offers or above are more likely to be accepted by the seller. But, there are other considerations involved:
1. Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive as an offer without that condition.
2. Is the offer made on the house as is, or does the buyer want the seller to make some repairs or lower the price instead? 3. Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
QUESTION: What contingencies should be put in an offer?
ANSWER: Most offers include two standard contingencies:
1. A financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender.
2. An inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction.
A buyer could also forfeit their deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. Therefore, the purchase contract must include the seller's responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.Most offers include two standard contingencies: A financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender. An inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction. A buyer could also forfeit their deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. Therefore, the purchase contract must include the seller's responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.
QUESTION: Are interest rates negotiable?
ANSWER: Some lenders are willing to negotiate on both the loan rate and the number of points but this isn't typical among established lenders who set their rates like large corporations set the prices on their goods. Nevertheless, it pays to shop around for loan rates and know the market before you go in to talk to a lender.
You should always look at the combination of interest rate and points and get the best deal possible. The interest rate is much more open to negotiation on purchases that involve seller financing. These usually are based on market rates but some flexibility exists when negotiating such a deal. When shopping for rates, look for published rates in local newspapers or check the growing number of Internet sites that publish such information.
QUESTION: Can you negotiate the price on new homes?
ANSWER: It can be difficult to negotiate the sales price with a developer because they may claim their prices are based on fixed construction costs. But it doesn't hurt to try. Experts say builders are more likely to be flexible on price at the very beginning rather than at the very end of a development project. Early on, most developers want to move people in quickly so the project picks up momentum. Also, developers may be more inclined to accept lower offers when only a few units remain. If negotiating the price doesn't work, buyers commonly negotiate for better amenities (upgrade carpet, light fixtures, etc.) or lot location. Experts say a developer will rarely pass up a deal over a couple hundred dollars' worth of carpeting, for example.
QUESTION: What are some tips on negotiating?
ANSWER: The more your agent knows about a sellers' motivation, the stronger a negotiating position you are in. For example:
1. A seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow.
2. Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home.
Remember, that the listing price is what the seller would like to receive but, is not necessarily what they will settle for. Before making an offer, have your agent check the recent sales prices of comparable homes in the neighborhood to see how the seller's asking price stacks up.
QUESTION: What repairs should the seller make?
ANSWER: Most sellers like to make all minor repairs before going on the market in order to seek a higher sales price. In addition, nearly all purchase contracts include a buyer contingency "inspection clause," which allows a buyer to back out if numerous defects are found. Once the problems are noted, buyers can attempt to negotiate repairs or a lower price.