Hiring an Agent
If I use a Realtor, do I need to sign a big contract?
You will need to sign forms when you hire a real estate agent to represent you. These forms include agency disclosure, affiliated business disclosure and a Buyer Representation Agreement.
Do I have to sign the Buyer Representation Agreement?
To hire an agent to represent you in the purchase of your new home, you need to formalize the agreement with a signature on the buyer representation form. The form outlines the agent’s responsibilities to you and your responsibilities to the agent.
How much does it cost to have an agent represent me?
Buyers do not pay the agent. The “buyer’s agent” is compensated out of the listing commission (the house being sold) when you buy a home. However, every transaction does include a $395 “Broker Administrative Fee” that goes to Coldwell Banker Burnet.
What other costs should I expect when buying a home?
Buyers should be prepared to pay approximately $300-$500 for a professional inspection of the home they plan to buy. A buyer will need to write an “earnest money” check for the house on which they make an offer. This money is credited back to the buyer at closing. You will also have to pay closing costs—which are the costs to secure financing, title fees and your escrow money. (See “Financing” below for more information.)
What is all the fuss about “dual agency”? What does it mean?
Dual agency occurs when the listing (seller’s) agent and buyer’s agent work for the same broker (e.g., Coldwell Banker Burnet). When this happens, agents cannot negotiate to the detriment of either party. They must keep in confidence any knowledge of “price, terms or motivation” of either the buyer or the seller.
What is the benefit of using my own agent when I find a house on my own?
Your agent will help you every step of the way. This includes analyzing the market to figure out the best offer, and negotiating for you after the initial offer is presented.
Additionally, extremely important follow-up work is required after your offer is accepted. This includes
- providing purchase agreement documents to the loan officer and title company/closer
- reviewing title commitment
- reviewing settlement statement
- coordinating inspections
- negotiating inspection items
- follow-up addendums
- checking county, city and state records for things like wells, permits and underground storage tanks
- coordinating final walk-through
There are countless things an agent does to help ensure that you have a secure, hassle-free transaction and successfully close on your new home. You do not pay a commission to be professionally represented, so it makes sense to work with a professional dedicated to your interests when making such a significant financial investment.
How should I choose an agent to represent me?
Sit down with an agent, and ask him or her how he/she works. Spend some time with him/her, and see if you feel comfortable. Is this person someone who you like? (You’re going to be spending a fair amount of time together.) Does he/she ask you questions about what your needs are? Is he/she professional? Does he/she have experience in both years and transactions? Does he/she have references?
Financing
What is the difference between pre-approval and pre-qualification?
Pre-qualification establishes approximately how much you can afford to borrow based on how much money you have told the lender that you have, earn and owe. Pre-approval, on the other hand, is a stronger commitment from the lender. The lender typically will have collected income and asset statements from you, and possibly approved you through a desktop underwriting system.
Do I need to have a lot of cash to buy a house?
Many mortgage options are available today for new home buyers. Some of the programs allow you to buy a home with very little or no down payment. In fact, programs even exist that will allow you to finance your closing costs. Sit down with a reputable lender to find a program that fits your needs.
Does my "earnest money" check get cashed? Where does it go?
Yes, your "earnest money" check (which is essentially a deposit that accompanies an offer you make on a house) is cashed and deposited into the listing broker’s trust account within three businesses days of final acceptance of your offer. The money is credited back to you at closing.
How much earnest money should I have?
It depends. There is no set required amount of money. Earnest money is negotiated as part of the Purchase Agreement. One percent to two percent of the offer amount may be acceptable in some cases, and more upfront money is necessary in other cases.
How do I figure out where to secure a mortgage?
Your agent can recommend various loan officers for you to talk with. It is your decision to pick the loan officer with whom you feel most comfortable. This is a crucial part of buying a home. When comparing lenders, make sure you are comparing apples to apples. It is also strongly recommended that you work with a “lender” and not a “broker.”
When do I pay my first mortgage payment after I close on my new house?
Usually about 30 days after closing. For example, if you close on April 26th, your first payment would be due on June 1st.
What is private mortgage insurance (PMI)?
PMI or MIP (Mortgage Insurance Premium) is a monthly fee charged by lenders on loans that have less than a 20% down payment. The premium can be removed after you reach 20% equity in your house. In an FHA mortgage this fee is paid up front and wrapped into the loan.
How much are closing costs? Do I have to pay them?
Closing costs are fees charged by the lender and the title/closing company. They vary, depending on the size of your mortgage, but are typically about 3% of your loan value. These costs can sometimes be financed as a part of your mortgage. Your agent can help structure them into your offer price.
Are all lenders the same?
No. Like any industry, there are reputable businesses and some not-so-reputable. Securing your financing is one of the most important things you will do when buying a home. Ask your agent for recommendations for reputable loan officers.
What if I think I have poor credit or have been turned down for a loan? Can I buy a home?
We have many contacts in the mortgage industry. Some loan officers specialize in helping people with past credit problems. A good lender can also help you set up a plan to financially prepare to buy a home.
The Buying Process
Can I get out of my apartment lease to purchase a home?
Sometimes; some leases have a “purchase clause” or a “sublet clause.” Ask your agent if you need help.
Which is better for a first-time home-buyer: a townhouse or a single-family home?
Both options are available to a first-time buyer. Sometimes a townhome can be more affordable than a home, but this isn’t always true. You should explore both options and decide which one fits your needs best.
What does a townhome/condo association do?
Associations vary by development. In general, the association charges monthly dues to provide hazard insurance, maintain the exterior of the buildings, provide lawn care, snow removal and landscaping. However, each association is different; some cover a wider range of services. It is important to review the “condo documents” and resale disclosure information when you are deciding to purchase a townhome.
What is the condo doc recession period?
The seller of a condo or townhome is required by law to provide a resale disclosure certificate and all condominium documents (rules, by-laws, covenants, etc.) to the buyer. The buyer has 10 days from receipt of the documents to review the information. The buyer can rescind his/her offer with no penalty within the 10-day period.
What if I want to buy new construction?
You are entitled to have representation from your agent. They will negotiate on your behalf with the builder. You are not required to use the builder’s agent.
What if I find a house that I like during an open house?
First, your agent should go through the open houses with you so that you are represented. However, if you like a house, do not mention it to the agent hosting the open house. Give your agent’s business card to the person holding the open house. Then, call your agent and let him/her know about your interest in the home. You can then go back to the house together or write an offer together.
What if I find a house that is "for sale by owner"?
Call your agent. He/she will look at the house with you. The rest of the process is very similar to buying a house listed with a real estate company. Sellers listing their homes “for sale by owner” are typically open to working with agents.
How many houses do I need to look at before I make an offer on one of them?
The average buyer looks at approximately eight houses before choosing one. This is only an average. The first house you look at may be your ideal home, or you may need to look at more than eight before finding the one you like.
Upon purchasing a home, do I need to do an inspection?
We recommend that you have a professional inspect your home as a condition of the purchase agreement.
How important are title searches and appraisals?
Both are very important. A title search will determine whether anyone other than the sellers have a legal claim to the property. An appraisal provides independent confirmation of the value of the home.
What happens when I find the right home?
Your agent will write a purchase agreement on your behalf. This is approximately an 11-page document that will take 1 to 2 hours to put together. Your agent will present it to the listing agent and the home sellers.
What is the "final walk-through"?
Typically, the day prior to closing, you and your agent will take a final look at the home. This is to ensure that it is in the same condition as when you made the offer. This usually takes about 15-minutes.
How long does it take to close on a home?
On average, there is a 45-day period from the offer acceptance and closing. 30- and 60-day closes are also very common. The actual closing takes place in a title office and takes approximately one hour.
