BUYING A HOME
When you are new to the buying process, questions about real estate abound. Buying a house is exciting, frightening, sometimes weird, often epic, and never boring. You are accumulating a lot of cash for a place that is lucky in the next few years. Therefore, you will encounter many problems in each step of the process.
Q. WHAT HOUSE AM I ABLE TO AFFORD?
A. It depends on your income and other financial obligations, enter them in the realtor.com family affordability calculator to get a rough figure.
“You should figure out your price range prior to shopping. If you see that your favorite home is out of the price range, it will disappoint you.” – Alyssa Blevins (Pierce Murdock Group, Alexandria, VA)
Meet the lender to get the prior approval for the mortgage.
Q. CAN I BUY A HOME AND SELL MINE AT THE SAME TIME?
A. Yes, you can do this. However, it can be a tricky situation. For example, if your home sold prior to buying a new one, you would need to rent another location until you found a new home. Meanwhile, if you buy a house before selling your current home, you may not have enough money for the new mortgage.
“This is among the trickiest questions in real estate”. – Cedric Viquerat (Coldwell Banker Residential Real Estate)
However, there is an option available called a “sales contingency”. Basically, this means that you only agree to purchase the new home when your current home sells. The downside to this is, the seller may not agree to these types of contingencies.
Q. SHOULD I LOOK AT SEVERAL HOUSES BEFORE BIDDING?
A. It depends on you, but these days buyers can see hundreds of homes online. On average, a buyer views 10 houses before bidding.
“Everyone’s situation is very different. Some people have found a home within a few hours of hunting. For others, it takes months.” – Will Johnson, Founder of Sell and Stage Hendersonville, TN.
Q. WHAT IS CONSIDERED A FAIR OFFER?
A. Usually, offering 5% less than asking price is considered a fair offer. If you see a listing has been on the market for a few months, you can attempt to make an offer lower than asking price, but there are some risks.
“You never know if the seller will accept a lower price because they have different motivations for selling.” – Marc Castillo from Coldwell Banker of Atlanta, GA.
If the seller is eager to move or sell, they may accept your offer or counter offer to reach an agreement.
Q. HOW DO I KNOW IF THE PROPERTY IS DOING WELL?
A. Although there is no crystal ball that magically knows the value of a particular home, you can minimize the surprise by investigating a little.
“The best way is to look at similar properties in the area and see what they sold for, this can help you determine if the prices are increasing or decreasing.” – Felise Eber, Coldwell Banker Miami Beach.
Q. HOW FAST CAN I CLOSE?
A. You want to give yourself enough time for due diligence.
“The typical closing period is 30 to 45 days. This provides enough time for you to properly investigate the property and finish the loan process.” – Rina Camhi, 10MinRealty founder, Houston, TX.
Q. SHOULD I CHECK THE HOUSE?
A. Although buyers often want to know if they really need to do a home inspection, most real estate agents are clearly saying yes, yes and yes.
“House inspectors reduce the burden by observing the roof, electricity, heating and air, and the condition of the pipes. Ensuring these work properly can prevent you from expensive repairs in the future. If something doesn’t meet your requirements, you can resolve the issue with the seller prior to signing.” – Will Johnson, Founder of Sell and Stage Hendersonville, TN.
Q. IF I CHANGE MY MIND, CAN I BACK OUT?
A. As a buyer, you can always change your mind, but if there is not a good reason, you might forfeit any earnest money put down, this is usually 1-2% of the purchase price. However, there are methods to back out of a deal and retain your earnest money.
“Contingencies are amazing loopholes.” – Bridges
For instance, if a home inspection is not satisfactory, a buyer has the right to request their deposit back. Additionally, “subject to appraisal” is a loophole that allows you to back out in the event your lender believes the property is not worth the amount offered.
SELLING YOUR HOME
Last week, we revealed the most frequently asked questions from home buyers. Since people at the other end of the agreement have a lot of ideas, today we will solve the most common problems that many realtors will hear from the sellers, and even get some answers.
Q. HOW MUCH WORK SHOULD I DO AT HOME BEFORE PUTTING IT ON THE MARKET?
A. Alyssa Blevins of the Pierce Murdoch Group said:
“Many suppliers are so anxious about the idea of having to clean and repair their homes, so that they avoid putting them first. Many times, things are much less than what the owner thinks.” – Alyssa Blevins of the Pierce Murdoch Group
In most cases, you may not need to do a lot before putting the home on the market. Before spending months and lots of money improving your home, or giving up altogether, allow a real estate agent to show the house. You may be surprised by the current sales prospects.
Q. HOW MUCH IS MY HOUSE WORTH?
A. In 2016, the median house price was $228,000, but the exact price of your home will depend on your size, community and many other factors. What makes things even more complicated is its own bias: we tend to psychologically exaggerate the positive aspects of the home and eliminate those flaws that are too obvious the calculating mind of a buyer.
“It seems people compare their home to the most expensive property in the area”, said Mary Ann Grabel from Douglas Elliman in Greenwich, CT.
Instead, look at prices of similar properties that has recently been sold in the area. Agents will refer to data for comparing the price against the current market. Then, they will determine the average price of your location. At the same time, low prices can have huge advantages, resulting in multiple offers that may eventually increase their prices through a bidding war. Therefore, you should do your homework, and discuss a good and realistic approach with your real estate agent.
Q. HOW LONG DOES IT TAKE TO SELL A HOUSE?
A. On average, houses are on the market about 100 days prior to selling, although time varies by region and price. So set a competitive price and make sure you and your real estate agent are leading in as many aspects as possible. Spread the word through your own social network: real and virtual. You never know who will pass the special person to the sale.
“The bigger the risk exposure, the faster the quotation,” – Felise Eber, The Jills
The Jills, is a luxury real estate sales team in Miami Beach, a residential real estate branch of Coldwell Banker.
Q. IS STAGING REALLY IMPORTANT?
A. Staged homes sell an average of 88% quicker, and for up to 20% more compared to those that are not staged. The reason it works is that it provides buyers with a “plan” that allows them to develop their own fantasy of owning a home and imagine living in their own home.
“Choose a neutral paint color and delete family photos. – Johnson
Give the aspiring owner a blank canvas that they can mentally design along with loved ones.
Q. SHOULD I BE PRESENT WHEN THE BUYER SEES MY HOUSE?
A. According to Johnson:
“No, there isn’t any reason it would be appropriate. Buyers can become uncomfortable when the owner of the property is present. This makes them feel as if they cannot comment on things, or ask questions that might be taken offensively.”
Owners have attachments and history with the house, and tend to argue when potential buyers comment on things a bit negatively. This may prevent buyers and lose quotes.
Q. WHAT IS THE AGENT’S COMMISSION?
A. Although the commission may vary, it is usually 6% of the house price and is usually shared with the buyer’s agent. But the meaning of this question is: “What are real estate agents doing to make money?” Keep the following facts in mind, unlike doctors that charge by appointment, or lawyers who charge by the hour, listing agents do not get paid until the sale is finished.
For each hour that a real estate agent spends showing homes to potential buyers, he/she usually spends an average of nine hours working for the client through networking, locating potential buyers, and completing paperwork. Don’t think all agents are equal either. The majority of contracts last a year.
Realtor Susan Ratliff recommends sellers:
“Interview at least three agents before choosing one. This is no different than choosing an accountant, attorney or doctor. You need to trust the person and be comfortable around them.”