15 Homebuying Frequently Asked Questions!
As a full time Realtor who works with a lot of home buyers, this market has proven to be quite challenging for them in 2022! And when I sit down with them before we even begin looking at houses, they generally have a lot of questions. Here are the 15 most frequently asked questions I have gotten over the last year!
QUESTION #1 - SHOULD I TALK TO A BANK BEFORE LOOKING AT HOMES?
The answer is a resounding YES! In this market of 2022, homes have only been on the market a matter of a day or so, with offers being reviewed a couple of days later. So you definitely need to know what type of loan you qualify for, how much money you will need to bring to closing, what your payment will be! And you should even have the lender submit all your paperwork to the underwriter for underwriting review and approval before beginning the home search!!!
QUESTION #2 - SHOULD I BUY OR CONTINUE TO RENT?
This is not one I can easily answer. The answer is really going to depend on things like where you want to live, what you want in a house, how much money you can afford (or you want to afford) and what you are willing to compromise on. I normally advise buyers to talk to the lender to determine what they would be comfortable paying each month and at what price point, then talk to me about where you want to be to see if it is doable. If you want to be in the Short Pump area of Henrico County, but you need a 4 bedroom home and you can only do a price point of say $200,000 you may not be able to purchase a home until you have more money saved!
QUESTION #3 - I OWN A HOME NOW - SHOULD I BUY BEFORE SELLING MY CURRENT HOME?
In the 2022 real estate market, when you are competing with multiple offers, you want as few contingencies in your offer as possible. So it is best to sell your home after you have purchased another home. But you may not be in a position to do that, so talking to the lender first will let you know if it is even something you can do!
QUESTION #4 - DO I REALLY NEED A REALTOR TO BUY A HOUSE? WHAT ARE YOU GOING TO DO FOR ME THAT I CAN'T DO FOR MYSELF?
You don't NEED a Realtor to help you buy a home, but it is always wisest to have a Realtor to help you with your purchase. Virginia is a Buyer Beware state, which means that disclosure by the seller can be pretty minimal at best. Yes, you can find a home by looking on sites like Zillow and Redfin and Realtor, but you need to make sure your contract protects you. Using the listing agent to assist you with your purchase can be fraught with perils, as you need to remember that the listing agent is representing the Seller, not you the Buyer. You need to make sure you are aware of the disclosure laws, how to handle inspections, who are good inspectors to use, your time frames, what happens when an appraisal comes in low or with condition items, how the HOA works, how to compete with other buyers who may be making offers on the same house you are! A full time Realtor does this every day and is aware of the laws and technology to make sure you are protected and to help get your transaction to closing with minimal stress!
QUESTION #5 - WHO PAYS THE REALTOR?
Realtors do not make a salary - we are on straight commission. And the commission is only received when the transaction closes. The seller and listing agent agree to a commission to be paid at closing. The listing agent, when the home is listed in MLS, offers a cooperating commission to the buyer's broker from the commission they received from the seller. If the transaction does not close, we do not get paid!
QUESTION #6 - HOW MUCH SHOULD I OFFER?
That is always a good question - and a tough one to answer. In our current market, where prices are rising rapidly year over year, it really boils down to how much do you think a home is worth! I can run a Market Analysis for you to show you what the most recent sales in the neighborhood have been, but when prices are getting bid up, you have to decide if you want to offer at or above the asking price, and what your max price would be on the house! And, of course, that will also impact your monthly payment, so you need to also keep that in mind as well.
QUESTION #7 - HOW LONG DOES THE SELLER HAVE TO RESPOND TO MY OFFER?
When you write up your offer, you will put a response deadline in it, which lets the seller know at what time your offer is no longer a valid offer. Many homes that are currently being listed today will have showings starting on a Thursday or Friday, with all offers due in no later than some time on Sunday, with sellers reviewing the offers sometime on Monday, with a response time of Monday night or Tuesday! But they have the right to respond to any offer before the review period. So when making your offer, make sure you discuss this with your Realtor.
QUESTION #8 - WHAT IF MY OFFER IS REJECTED?
In this market, it is not out of the ordinary for a seller to reject your offer. After all, it is very possible that you may be competing with a number of other buyers and the seller can only accept one offer on their home. So I tell my buyers that if they their first offer is rejected, be sad for a little bit then let's move on and continue to look for other homes. In the meantime we can keep an eye on the house that you lost out on and if it comes back on the market, we can always make another offer. Another option is to allow your offer to become a back up offer.
QUESTION #9 - WHAT CONTINGENCIES ARE IN MY OFFER?
When writing an offer, you will have many contingencies in the standard boiler plate language of the contract. And in this market where many buyers are waiving a lot of contingencies, you may or may not wish to waive contingencies. This is definitely something to discuss with your Realtor when making an offer. But here are the most common contingencies in offers: financing, appraisal, inspection, clean and marketable title.
QUESTION #10 - HOW LONG DOES IT TAKE TO BUY A HOUSE?
The answer to this question really does depend on how long it takes to find a house to make an offer on and then get the offer accepted. But once you have an accepted offer, it should take anywhere from 30 to 60 days to get to closing. If you are currently renting, you really need to keep in mind when your lease is expiring so that you are able to coordinate your closing on the house with expiration of your lease.
QUESTION #11 - WHAT'S YOUR BEST ADVICE FOR FIRST TIME HOME BUYERS?
My best advice is to work with a Realtor, a Realtor who is there to answer your many questions (and you will definitely have lots of questions), who is familiar with the loan options available for first time homebuyers. You will want to listen to the advice that the professionals are giving to you. Buying a home today can be complicated so you want to work with the professionals that can guide you through the process.
QUESTION #12 - ARE THERE ANY SPECIAL HOMEBUYING PROGRAMS OUT THERE?
A good Realtor will be aware of all the home buying programs available in your area. In our area, we have some great grant programs for first time home buyers - VHDA financing, a variety of grant (down payment assistance programs) for first time home buyers, some grant programs for buyers who have purchased before, renovation loans, investor loans, USDA loans. All of these programs are available but not all lenders offer the same programs or have the same credit requirements so it is good to talk to your Realtor as they may be able to direct you to the right lender for your particular situation!
QUESTION #13 - HOW MUCH MONEY DO I NEED TO BUY A HOUSE?
Sometimes it is hard to think about how much money it really does take to buy a home! So when you write your contract you will need to put down what is called an Earnest Money Deposit - this money is held in the trust account of the real estate company and is applied to the cash you have to bring to closing. When you make loan application with the lender, you will need to pay for the appraisal and the credit report. Once your offer has been accepted by the seller, you will need to pay for inspections - this could be for a whole house inspection and other specialty inspections such as radon, roof, HVAC, chimney, well, septic, termite. When you go to closing, you will have to bring money to closing including the down payment and the closing costs (which covers the attorney's costs to do the closing as well as title search, state and county/city fees, lender charges, etc). Once you close you may have additional costs including the cost to move your belongings, cost of furnishing the new home, HOA fees if there is an HOA.
QUESTION #14 - WHEN DO I GET THE KEYS?
In our area, once you have gone to settlement and signed papers and handed over the cash needed for closing, you will be given the keys. There are some sellers, however, that will stipulate that you are not to be given the keys until the transaction is recorded and disbursed, which can be as much as 2 business days after closing. But this would have to be agreed to by all parties in the contract.
QUESTION #15 - CAN I SEE HOMES THAT ARE PENDING? WHAT ABOUT COMING SOON?
In our area, once the seller has accepted an offer, the listing agent must take the status of that listing from Active to Pending. Most sellers are not agreeable to allowing further showings on the house once it is pending. If a home is in a Coming Soon status, this means that there is a listing agreement between the seller and the listing broker, but no showings are yet being allowed. Many times this is to allow the seller to do some staging, maybe complete some repairs, the agent to get pictures taken, etc. In our area the maximum time a home can be in a Coming Soon status is 21 days. No showings are allowed, even by the seller themselves while a home is in this status. However, there are some buyers who are willing to write an offer on the house while it is in this status and buy the house Sight Unseen. If a buyer does write an offer on a home they have not been into since no showings were allowed, the listing agent is legally obligated to present that offer to the seller and the seller has the right to accept that offer.
As you can see there are a lot of questions buyers have. After reading through the above, you may find that you have more questions. Please don't hesitate to call/text/email me if you would like to sit down and discuss your home buying options. I am happy to help!