WORKING
WITH A PROFESSIONAL
- What are the advantages of using a real estate professional to
help me buy a home?
Buying a home is certainly one of the most rewarding experiences
most of us ever have; it's also one of the most challenging. If
you're buying for the first time, the process may seem overwhelming.
And even if you've been through it several times, every move is
different and presents new challenges.
One clear advantage of enlisting the help of a
sales
professional is simply that you don't have to go
through it alone. A good sales professional has the background and
skills to help you through each step of the process, and make the
experience of finding, buying and moving into your new home as
smooth, quick and enjoyable as it can be. Another advantage is that
a sales professional represents a valuable source of information
about market
trends; communities and neighborhoods; and especially homes for sale
throughout the area. Remember, not every home seller runs an ad in
the local paper or puts a sign up in the yard. In fact, many homes
actually sell before there is ever a need to advertise them. The
market expertise a sales professional offers you is augmented by
access to complete, regularly updated information about every home
listed by area sales professionals through the Multiple
Listing Service (MLS). As you'll see in the following
questions, such professional expertise and services can be of
considerable help throughout the buying process.
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STARTING
THE BUYING PROCESS
- Where do I begin the process of looking for a home?
The first thing you should do is to begin focusing on what you're
looking for in a home. You can start by establishing priorities in
the following three areas:
Location: Are you relocating to a new town because of a
new job or to be closer to your current job? How will the location
of schools, shops, and transportation affect your choice of
neighborhood?
Personal Tastes: How large of a home do you need? What
style of architecture do you prefer? What type of lot do you prefer?
Depending on where you move to, you may have a choice of homes in
dozens of styles, sizes, and settings.
Budget: How much home can you comfortably afford?
As you consider these issues, do a little research of your own.
Look through magazines for ideas about home styles and features.
Drive through neighborhoods that appeal to you to see what's
available. Read the real estate listings in the newspaper to learn about current prices in the areas you're
considering. Talk to friends about the features that you'd really
like to have in your home. The more knowledgeable you become, the
better your final decision is likely to be.
Then sit down and consider carefully all the things you're
looking for in a home. The Homebuyer's Wish List worksheet later in
this section is a good starting point. When you've filled it out,
you'll begin to get a good idea of what you'd like your dream home
to be.
- How do I find the right sales professional to work with?
The key word here is "right." While there's certainly
no shortage of qualified sales professionals to choose from, it's
important that you find one who can fully understand your wants,
needs and individual tastes, and whose personal and professional
judgment you respect.
Today's buyers also have more choices when it comes to choosing
the sales
professional who can best represent them in a real
estate transaction. Until recent years, virtually all
real estate professionals involved in a given transaction worked for
the seller. However, a growing number of today's home buyers are
choosing to be represented by a "buyer's
agent," who represents the buyer in contrast to
the traditional seller/sales professional relationship.
Many real estate companies throughout the United States have both
buyer and seller agencies. A sales professional should present you
with a disclosure statement before any working relationship is
created. That statement should explain what a buyer's agent is and
does, what a seller's
agent is and does, and what dual
agency means. It is very important to remember that
real estate firms are governed by laws that can vary by state.
Disclosure laws also vary by state.
- How do I know how much home I can afford?
We've found that affordability is probably the single biggest
concern of today's first-time home buyers. Given the wide range of
media coverage regularly devoted to the issue, it's not surprising
that many young families wonder how long it will take them to afford
their first home.
Our advice: Don't sell yourself short. Talk to your real estate
professional. A good sales professional is committed to honestly and
responsibly working with you to determine your affordable price
range. There are many financing options available today, and some
include low down
payments. Your sales professional will help find an
option that fits your budget, and you may be surprised at just how
much home you can afford.
For tips on various mortgages
and more, see the "All About Financing" section.
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RENTING
VS. BUYING
- How does buying compare to renting?
Renting offers a lifestyle that's nearly maintenance-free. That
may appeal to you, but consider that renting offers you no
equity,
no tax benefit, and most likely no protection against regular rent
increases.
If your rent has averaged $700 a month for the last 10 years,
you've spent $84,000 with nothing to show for it. Isn't it time you
invested in yourself instead of your landlord?
Several financing options hold special advantages for first-time
buyers or families with limited cash reserves. FHA-insured
and VA-guaranteed mortgages can minimize or even eliminate your down
payment. You may also consider a lease-purchase
agreement, or borrow cash for a down payment from
life insurance, profit-sharing or a retirement account.
In addition to tax deductions you'll likely receive that can
partially offset the cost of real estate taxes, insurance and home
maintenance, your home may appreciate in value. If you purchase a
home that costs $100,000 and the property increases in value only
two percent each year, your potential appreciation in just two years
is nearly $4,200. And due to changes to the tax code, subject to
certain restrictions, up to $250K (or $500K if married filing
jointly) of the profit you make when you sell the house is tax-free
as long as you own the property for a minimum of 24 months.
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CHOOSING
A COMMUNITY
BUYING
TIP
If commuting time is important to you, take a "test
drive" — get up extra early a few days and drive to
work from the home you're considering. |
- What should I think about when I'm deciding which community I
want to live in?
Good city services, nice parks and playground facilities,
convenient shopping and transportation, a track record of sound
development and good planning — these are just a few
considerations that are important to many people when they choose a
community in which to live.
As for individual neighborhoods within a village or city, there
is no better source of information than your real estate professional.
Sales
professionals know the people and the communities
they serve, and chances are they can help you find a neighborhood
that really fits your family's needs.
- Where can I get information about local schools?
Again, a good real estate professional is perhaps your best
source. They know where the local schools are and can provide you
with valuable information about school districts, including test
scores, extracurricular activities, bus service and more. If you're
relocating, a sales professional may even be able to put you in
touch with teachers and principals when you visit the area. And if
you want to do a little searching on your own, the Internet may also
be a good place to start.
- How can I find out what homes are selling for in a given
neighborhood?
In most areas, home sales are a matter of public record — you
can get all the information you want about recent sales, including
prices and listing times, by calling the county Recorder of
Deeds.
An easier way is to ask your real estate professional. If you're
interested in a particular home, a sales professional may be able to
provide you with a list of comparables
— sale prices of homes in your area that are roughly the same size
and age as the home you're considering. Although there will
certainly be some differences between the homes — the house next
door may have an extra bedroom, or the one down the block may be
older than the one you're looking at — it's a good basis for
evaluating the seller's asking price.
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PROPERTY
TAXES
- How can I find out what my property tax bill will be?
Usually, the total amount of the previous year's property taxes
is included on the listing
information sheet for the home you're interested in. If not, ask to
see the seller's receipt.
Remember, tax rates change from year to year, so the previous
year's bill should be considered simply as a "ballpark"
figure of what you would pay. For a more precise projection, call
the local assessor's office for assistance, or ask your real estate professional.
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UNDERSTANDING
LISTINGS
- If I'm moving a considerable distance, is there any way I can
screen homes before I start traveling?
Yes. Today's Multiple
Listing Services (MLS) — which include as much as
90 percent of the homes listed in any given community — have made
it relatively easy for buyers to access detailed information on
homes for sale practically anywhere in the country.
BUYING
TIP
Pay attention to the original listing date of the homes you
look at. Sellers tend to be more flexible the longer the
house is on the market. |
- Real estate listings and ads seem to have a language all their
own. What do all those abbreviations mean?
Abbreviations are a necessity in real estate advertising because
so much information must be communicated in so little space. Some
common abbreviations and their meanings:
| ba |
bath |
fin ll |
finished lower level |
mstr |
master bed room/suite |
| blt |
built-in |
fpl |
fireplace |
mtg |
mortgage |
| br |
bedroom |
fml |
formal |
pvcy fence |
privacy fence |
| brk |
brick |
fr |
family room |
sec sys |
security system |
| bkporch |
back porch |
frog |
finished room over garage |
scrnd porch |
screened porch |
| bldrs redo |
builder's
renovation |
fsbo |
for sale
by owner |
th |
townhouse |
| cac |
central air conditioning |
gmt kitchen |
gourmet kitchen |
txs |
taxes |
| dr |
dining room |
ingrd pool |
inground pool |
wbs |
wood-burning
stove |
| dk |
deck |
lr |
living room |
w/o |
walk-out |
| fdr |
formal
dining room |
mk |
modern kitchen |
u/g sprk |
underground sprinkler system |
| fha/va |
qualifies for
FHA/VA financing |
meik |
modern eat-in kitchen |
yd |
yard |
If you run across any other abbreviations or terms you don't
understand, don't be embarrassed — after all, you don't buy a home
every day. Contact me and I would be happy to "translate"
for you.
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HOME
HUNTING TIPS
- When I start visiting homes, what should I be looking for the
first time through?
The house you ultimately choose to call home will play a major
role in your family's life. A home can be an excellent investment,
but more importantly, it should fit the way you live, with spaces
and features that appeal to everyone in the family.
As you look at each home, consider these important factors:
- Is there enough room for you now and in the near future?
- Is the home's floor plan right for your family?
- Is there enough storage space?
- Will you have to replace the appliances?
- Is the yard the size that you want?
- Are there enough bathrooms?
- How much maintenance and/or decorating will you need to do
right away? Later?
- Will your present furniture work in this home?
- How many bedrooms should I be considering?
Whether you are married or not, or have kids or not, spare
bedrooms come in handy when family and friends come to stay. And
when you're not having guests, extra rooms are useful as a library,
den, or TV room.
Another good reason to choose a home with extra bedrooms: extra
space will make your home more appealing to a larger number of
interested buyers when it comes time to sell.
- Is an older home as good a value as a new home?
It's a matter of personal preference. Both new and older homes
offer distinct advantages, depending upon your unique tastes and
lifestyle.
New homes generally have more space in the rooms where today's
families do their living, like a family room or activity area.
They're usually easier to maintain, too.
However, many homes built years ago offer more total space for
the money, as well as larger yards. Taxes on some older homes may
also be lower.
Some people are charmed by the elegance of an older home, but shy
away because they're concerned about potential maintenance costs.
Consider a home
warranty to get the peace of mind you deserve. A home warranty protects you against unexpected repairs
on many home systems and appliances for a full year or more after
you move in.
BUYING
TIP
You can assume that any appliances listed "as is"
are on their last legs. |
- What do I need to bring along when I'm looking at homes?
Bring your own:
- Notebook and pen for note-taking
- Flashlight for seeing enclosed areas
- Tape measure for checking room sizes, clearances, etc.
- Camera (digital or 35mm)
Be prepared to investigate a little. After all, you want to know
as much as possible about the home you buy. Sellers understand that
because their home is on the market, it will be looked over pretty
thoroughly.
If you need to go back to a home for another look, your
sales
professional will be happy to schedule an
appointment. Also, be sure to ask any questions you have about the
home, even if you feel you're being nosy. You have a right to know,
and the serious seller will not mind making you feel more confident
that you've chosen the right house.
- What should I ask about each home that I look at?
As a rule of thumb, ask any questions you have about specific
rooms, features, or functions. Pay particular attention to areas
that you feel could become "problem" ones — additions,
defects, areas that have been repaired. And above all, if you don't
feel your question has been answered, ask until you understand and
are satisfied.
In most cases, your real estate professional will be able to
provide you with detailed information about each home you see. You
can also use a notepad to note room sizes, features
that need a second look, and other comments.
- What should I tell the sales professional about the homes I
look at?
Tell the sales professional everything you like and don't like
about each home you see. Don't be shy about discussing a home's
shortcomings. Is the home too small for your needs? Let the sales
professional know. Was the home perfect except for the carpeting?
Let the sales professional know.
However, remember that there can be two types of sales
professionals involved in a real
estate transaction; those working for the buyer, and,
frequently, those paid by and working for the seller. The seller's
agent is obligated to help secure the best price for
the seller. In addition, seller's agents may also report any
confidences you share with them — including any willingness to pay
a higher price should the seller not accept your initial offer(s).
This is why you may want to be represented by a buyer's
agent, because he/she will keep your input confidential. A buyer's agent puts the interests of the buyer —
not the seller — first.
- How many homes should I look at before I buy?
There is no set number of homes you should look at before you
decide to make an offer on one. That's why providing the
sales
professional with as many details as possible up
front is so helpful. The perfect home may be waiting for you on your
first visit. Even if it isn't, the house-hunting process will help
you get a feeling for the homes in the community and narrow your
choices to a few homes that are worth a second look.
If you're looking in more than one community, try to make the
most of each house-hunting trip. Stop by the local Chamber of
Commerce to pick up promotional literature about the community or
ask the sales professional for welcome kits, maps, and information
about schools, houses of worship, and recreational facilities. Also,
be sure to take along a camera and snap some pictures of all the
homes you're interested in. That will make it easier to remember and
reach a decision.
HOME HUNTING TIPS
When you find a home you may be interested in buying, make sure
the sales professional asks the owner the following questions:
- How much money do you pay for monthly utilities?
- Have you had any problems with water or dampness in the
basement?
- Are there defects or problem areas that need to be fixed right
away?
- How old is the furnace and the central air conditioning
system?
- How old is the roof? Have you experienced any leaking?
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APPRAISALS,
INSPECTIONS, LEGAL, INSURANCE
- How do I know I'm getting the best value for my money?
A professional appraisal
is the best way to tell if a home is priced fairly. A real
estate appraisal is an unbiased opinion of a
property's value based on its style and appearance, construction
quality, usefulness, and other factors, including the value of
comparable properties nearby.
When you apply for a mortgage,
the lender will have a professional real estate appraiser perform an
appraisal of the property.
- I'd like to have a professional look at the home before I buy
it. What does a home inspector do?
For your own safety, and to make sure you're getting your money's
worth in the home you choose, using a professional home inspector is
highly recommended. A home inspector will check a variety of things
such as your home's plumbing, heating, cooling, and electrical
systems, and look for structural problems like a damp or leaky
basement, etc.
Usually, you call an inspector immediately after you've made an
offer
on a home. However, before you sign any written offer, make sure (or
have your attorney make sure) that it includes an inspection
clause, which says that your purchase obligation is
contingent on the findings of a professional home inspector.
Your inspector will not tell you whether he or she thinks the
home is worth the money you are offering. Rather, the inspector's
job is to make you aware of repairs that are recommended or
necessary. A seller may be willing to renegotiate a price to
accommodate needed repairs, or you may decide that the home will
take too much work and money. A professional inspection
will help you make an informed decision.
In choosing a home inspector, consider one who has been certified
as a qualified and experienced member by a trade association. Your
real estate professional can refer you to qualified inspectors in
your area.
- Should I be present during the inspection?
Yes. It's not required, but it is very much to your advantage.
You'll be able to clearly understand the inspection report and know
exactly which areas need attention. Plus, you can get answers to
many questions, tips for maintenance, and a lot of general
information that will help you when you move into your new home.
Most importantly, you'll see the home through the eyes of an
objective third party.
- Are there any other inspections I need to have done?
In addition to the overall inspection, you may wish to have
separate tests conducted to check for insects, the presence of radon
gas, and the quality of drinking water, to name a few. Talk to your
real estate professional for information about these tests and
companies in the area that perform them.
- Do I need to use a lawyer to buy a home?
Because the legal contracts
and other paperwork involved in buying a home are complex and can be
confusing to the general public, many people prefer to work with an
attorney.
Your attorney will review contracts and make you aware of special
considerations and potential problems, and can accompany you to the closing
to help make everything go as smoothly as possible.
If you don't know a real estate attorney, ask your real estate
professional for help. Sales professionals work with many legal
professionals every month and can provide you with the names of
several attorneys in the community.
RELOCATION
TIP
If your move is work-related, many of your moving expenses
may be tax-deductible. |
- Do I need to talk to my insurance agent?
Yes, and the sooner the better. Your real estate professional can
help you with this, but most insurance professionals have a lot of
experience in working with homeowners and can offer useful tips
about homeownership, particularly regarding home safety and keeping
your premiums low.
Once you've found a home, work with your insurance agent to
develop a homeowner's policy that meets your individual needs.
You'll need to bring evidence of a fully-paid policy for your
mortgage lender when you come to closing. Make sure you take this
step with your insurance provider as early as possible; in many
locations you'll have trouble assuming title
if you don't have proper insurance in place.
BUYING
TIP
Measure all rooms for your furniture — don't try to judge
by looking at the current owner's placement. Anchor link:
Making an offer |
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MAKING
AN OFFER
- When I've found the home I like, how do I make an offer?
When you've found a special house you want to call home, you'll
probably feel excited and a bit nervous. Let the sales
professional know you're ready to write an "offer
to purchase" — a written document that declares how much you
are willing to pay for the home provided that certain conditions are
met. Because it's a legally binding contract
that you will sign and date, it may be a good idea to have a lawyer
review it, within the grace period noted in the contract.
This is the time when it is most important for you to keep in
mind that, unless you have specifically retained the services of a buyer's
agent, the sales professional is working for the
seller. As the legal agent of the seller, he or she is obligated to
help the seller get the best price, and will report to the seller
any confidence you share.
It's best to make your offer without sharing with the agent your
willingness to offer any higher price if the seller does not accept
your offer.
Your offer should have a time limit for the seller to accept it,
reject it, or make a counter-offer. If a counter-offer is made, you will have some time to respond.
Often, several offers go back and forth until an offer is accepted,
or one party decides to end negotiations.
- How do I determine the amount of my initial offer?
There is really no rule to use in calculating an initial
offer.
Naturally, the buyer wants the best value and the seller want the
best price, but negotiations can be influenced by many factors, such
as a seller who may be changing jobs and wants to sell quickly, or a
buyer who is set on a specific home.
After you've looked at the home's features, asked questions,
checked comparables,
and talked about it with your sales professional, you should have a
good idea of what the home's value is in the current market.
Consider what you can afford, and make an offer that you consider to
be fair.
Most buyers and sellers negotiate on price, with both sides
"giving" a little until both agree.
At that point, you typically will begin the process of arranging
for an inspection
and applying for a mortgage.
See the "Financing" section of this book for more information.
- What is "earnest money" and how much do I need?
When you sign an offer to purchase, your sales professional will
ask you for " earnest
money." This refers to a monetary commitment
that shows you are serious about wanting to buy. Usually, you will
be asked to write a check for one to 10 percent of the sale price.
This money will be held in a special escrow
account. If your offer is accepted, your earnest
money will be included as part of your down
payment. If your offer is not accepted, you'll get
back all your earnest money. But keep in mind that if you back out,
you may forfeit the full amount.
- Is there any way I can protect myself against emergency repair
bills in my new home?
Yes. Home warranties offer you protection against many
potentially costly problems not covered by your homeowner's
insurance. Such warranties have become increasingly popular in
recent years, and for good reason. The coverage can save you
thousands in the event of a major mechanical breakdown at a time
when your cash reserves have been depleted by your
down
payment and moving expenses.
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CLOSING
PROCEDURES AND MOVING
- There's so much to remember before I close. What do I have to
do?
Your sales
professional can help you with many of these
considerations:
- Are all the necessary inspections complete?
- Are all the required repairs complete?
- When will you conduct your final walk-through
inspection?
- Is your attorney satisfied that title
to the property is clear (no one else has a claim on it)?
- Have you confirmed a date, time, and place for your
closing?
- Who will conduct the closing?
- Is your insurance policy paid and ready to go into effect the
day you close? You'll need a receipt for proof.
- What form of check should you use (and who should it be made
out to) to pay for the closing
costs?
- Has your closing sales professional told you the closing
amount?
- Do you have receipts for the items you have already paid for,
including your deposit and inspection fees?
- Bring your checkbook to cover any last-minute extras that
might have been overlooked.
- What should I look for on my final walk-through?
In most cases, you'll be given the opportunity to inspect the
home immediately prior to closing.
At this time, it's important to check on any work the seller agreed
to have done in response to your initial inspection.
You should also carefully check the condition of walls and ceilings
from which window treatments, pictures, or any other attached
furnishings have been removed. If you find any problems, don't
hesitate to bring them up at the closing. It's the seller's
responsibility to correct them.
- What will happen on closing
day?
- The lender's
agent will ask for your paid home insurance
policy.
- The agent will list the adjustments.
These include the money you owe the seller (the remainder of the
down
payment; prepaid taxes) and what the seller owes
you (unpaid taxes; prepaid rent).
- You will sign the mortgage. This gives the lender legal rights
to the property if you don't make your payments.
- You will sign the mortgage
note (the promise to repay the loan in regular
monthly payments).
- You will get title
from the seller in the form of a signed deed.
- The lender's agent will collect the closing
costs from you and give you a settlement
statement of all the items you have paid for.
- The deed and mortgage will be recorded in the town or county
Registry of Deeds.
- Is there anything I should do immediately after closing?
The first thing you'll want to do is have the locks changed.
Also, put your deed
and other important paperwork from the closing
in a secure place, preferably a safe deposit box. Even though it's
all on file with the county, it's smart to know where your copies
are and have access to them at all times.
- Should I move myself or use a moving company?
In almost every case, you can save yourself time and energy by
using a reputable moving company to help you move.
Ask your sales professional, friends, and co-workers for
recommendations, then get estimates from several companies. Don't
choose a mover based on price alone — consider the reputation and
professionalism of the company, too.
Work closely with the moving company to coordinate your efforts
and your move will be achieved with maximum efficiency.
- Can a sales professional help with the move itself?
Yes. Most sales
professionals are more than willing to offer advice
and assistance to new homeowners; all you have to do is ask.
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