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Buying a Home
Kara's Commitment to Buyers
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Why Use a Realtor to Buy a home?
Common Home Buying Mistakes
| FAQ's For
Buyers |
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FAQ'S
FOR BUYERS
1.
What
benefits do real estate agents offer?
2. How to buy a house?
3.
What
information must the seller provide?
4.
What is involved in making an offer on a house?
5.
What is a Residential Purchase Agreement and Receipt for
Deposit?
6.
Can I change
my mind?
7.
Why is a home inspection worth getting?
8.
Where should I get a loan?
9.
What happens in
the "closing" of a home?
10.
How should
I hold the title to my new home?
11.
Should I get title
insurance?
1. What
benefits do real estate agents offer?
A local real estate professional can make finding a
home that meets your specific needs much easier and more enjoyable
for you. They should be able to answer any question or concerns you
have about buying a house.
Typically when buying a house the
agent's fee will be paid by the seller when you complete the
purchase of the home. You will have no personal fees due to
your real estate agent after the sale is complete unless the buyer
has agreed to paying a fee in the buyer/agent contract that should
be established before any agent services have been performed.
A real estate agent should
know the area that they work in well. They should be able to
provide
information about the home and community that might be difficult for
you to find on your own. A real estate agent should have access to
databases about homes for sale that you might not know about or be
able to access without a real estate agent. Lots of houses get
sold before getting marketed to the general public because licensed
real estate agents can see new listings the day they are put on the
market with a seller's agent. It usually takes several
days for houses to hit the publications for the general public.
Without an agent you might miss out on the house of your dreams or
the deal of a lifetime.
Here is the kind of information to give your agent so they can do
the legwork for you:
-
Price Range
-
Type of house (layout, two story, ranch
style, basement, etc...)
-
Number of Bedrooms and bathrooms
-
Sq. footage wanted
-
Size of property in acreage you want
-
Location Preferred
-
Preferred schools you want your children to
attend
-
Luxuries wanted (types of fixtures, carpets,
hardwoods, appliances etc...)
You should provide specific
information on what you are looking for to your agent. This
will provide them with your specific needs to effectively keep you
informed on any home that you may be interested in. They will
then make appointments with the sellers and have a personal
walkthroughs of the homes you are interested in. A real estate
agent will take care of all communications nescassary and act
as a mediator for you and the seller.
Your agent should be able to help you in negotiating the price,
assistance on finding a loan, local community information,
home inspections, finalizing and closing your new home.
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2. How to buy a house?
Keep yourself informed, buying a
house is one of the most complicated and expensive purchases you
will ever make. Like most purchases, you will get exactly what you
pay for. View and compare many homes in different locations. If you
find a home to your liking, ask yourself some questions. How far
will you have to travel to work? Are the services you need available
near you? What is the quality of the schools that are available?
If you have children will your kids be able to attend the school of
choice? Is traffic bad? Does the neighborhood suit your needs
and wants? What types of crimes have occurred in the recent
past? Are there any sexual predators in the surrounding area?
Always make many visits to the neighborhood at different times
throughout the day. Remember that location is one of the biggest
factors of setting the price of the home.
Checking the condition of the items that you want
included in the sale such as appliances, washers/dryers, air
conditioner, etc.. You may want to consider a home warranty.
Usually for a small fee,
a home warranty company will insure that the house and the
appliances are in good and working condition. Many companies will provide
coverage for washers, dryers, pools and pool equipment, air
conditioning, and some roof repairs. Your agent should be able to
provide you with information on home warranty options.
Before making a written offer, know what you are buying and what the costs will be after you
purchase it. It is always a good idea to find out what you will
need to prepare financially for property taxes, utilities, insurance and
maintenance costs. There could also be an Association Fee if the
home you are choosing has a homeowner's association. Make sure that
you ask if there are any special assessments besides the regular
property taxes and also ask if there
are any assessments scheduled to be placed on the property in the
future.
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3. What
information must the seller provide?
In the state of
Tennessee A Transfer Disclosure Statement or TDS must be provided to
you in most cases when looking to purchase a home. Not all states
have seller disclosure requirements, although there is a movement in
this direction nationally. Some states have voluntary seller
disclosures. In states that don't have disclosure requirements, some
real estate companies require sellers to complete a company's seller
disclosure statement as a condition of the listing agreement.
This is a pre-printed form
that lists many features or conditions about the home, the land, and
the area where the home is located. The seller must list on this
form any possible problems he or she is aware of that might affect
your willingness to purchase the home. This includes, for example,
easements, rights of others to control how you use the property,
environmental problems, nonfunctioning equipment, zoning and
building violations, and special assessments. The seller's agent
must visually inspect the home and report all facts that he or she
feels might affect your decision to buy this property. If you want
information that is not covered in the Real Estate Disclosure
Statement or additional information that is disclosed, put your
questions in writing and ask the seller to respond in writing.
You should review the Disclosure Statement
immediately and carefully. In most instances, you will have a
limited period of time to decide whether you wish to proceed with
the purchase despite the stated disclosures. Depending upon your
purchase agreement, some sellers will require a written acceptance
of the conditions contained in the statement. Other sellers will
consider your silence as acceptance of all of the conditions
contained in the Disclosure Statement.
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4. What
is involved in making an "offer" on a house?
When you
find the house you want, you can't just hand over a crumpled wad of
tens and move in. Instead, you have to make an offer on the house.
To make a fair offer, ask your agent to provide you with a
Comparable Market Analysis
(also known as a CMA) of the house you want. A CMA will tell you
what similar houses in that area sold for in recent months. Seeing
how the house you want compares with others like it will help you
determine if you are dealing with a motivated seller (someone who
needs to sell fast) or someone who is just putting a ridiculously
high price on their home to see who might go for it. Take note:
EVERYBODY asks for more than they are willing to take. It's part of
the game.
According to the Home Buyer's
Information Center, items that should be addressed in your offer
are:
-
The price (your offer).
-
Any concessions you want from the seller,
such as installing a shower.
-
Any financing contingencies that might
affect your ability to pay your
mortgage.
-
Anything that found in the
home inspection
that needs repair, like a big gaping hole in the bedroom ceiling
where the mirrors used to be.
-
Being really clear about what is included
in the sale (like appliances, light fixtures, etc.). You don't
want to move in and find out the groovy chandeliers are gone.
-
The
deposit you're willing to put down with the offer.
Once you've given
your offer, it's now up to the seller to accept it, reject it, or
make a counteroffer. If the seller accepts it, then your offer
essentially becomes a legally binding contract for you to buy to the
house. However, if the seller rejects it or makes a counteroffer,
then it's time to negotiate. The main thing to keep in mind during
negotiation is to stay realistic about it and don't get caught up in
the moment. If there are multiple offers on the house, you could
find yourself part of a bidding war. Your first reaction may be to
beat out the competition. However, once the dust has settled and
you've "won" the house with the highest bid, you may find that
you've grossly overpaid. On the other hand, if you bid too low, the
seller may not take your bid seriously and decide not to deal with
you. Tough, ain't it? A good
real estate agent will help
you through it.
Either way, you should always be prepared to
walk away. If you can't make a good, reasonable deal on the house,
then face it: you're getting ripped off. You have to feel you made
the right deal. If you go into negotiations prepared, you should be
able to make the deal you want.
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5. What is a
Residential Purchase Agreement and Receipt for Deposit?
This agreement is an
offer which, upon acceptance by the seller, results in a binding
contract. It should cover all of the important terms of the sale.
For example, it should include a complete description of the
property and of any personal property that will be sold with the
house, such as window coverings, kitchen appliances, washers and
dryers. It should state the exact purchase price, including the
amount of your initial deposit, any increases in that deposit, the
amount you will pay in cash, check or wire transfer, and the amount
you will need to finance to complete the purchase price. This
agreement should also list any conditions that may allow you to back
out of the contract. You will want a condition that allows you to
cancel the contract if you cannot obtain a loan on favorable terms
or if the inspections reveal substantial defects or problems with
the home. You may also need a condition that allows you to cancel
the sale if you cannot sell your current home. Please understand,
however, the more conditions you have, the less likely the seller is
to accept your offer.
This agreement should also set forth what will
happen to your deposit if you cancel the sale, what will happen if
you and the seller have a disagreement over the terms of the sale,
and how the brokers will be paid. The agreement should also indicate
whether you are purchasing the property in "as is condition" or the
seller is warranting the condition of the property. Take the time to
go over each and every term of the agreement with your agent before
you sign the agreement.
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6. Can I
change my mind?
You should not make an
offer to purchase a house unless you are serious about buying it.
You can, however, revoke your offer before it is accepted by the
seller. This revocation should be in writing. If your offer has
already been accepted by the seller, you may be able to terminate or
revise your offer if you are unhappy with what your inspections
reveal or if other conditions of the offer are not met.
The Residential Purchase Agreement and Receipt for Deposit contains
several provisions that discuss what will happen in the event the
sale does not go through. There is a mediation provision, an
arbitration provision and a
liquidated damages provision.
The liquidated damages provision can result in you losing most if
not all of your deposit (up to 3 percent of the contract price) in
the event you elect not to complete the purchase price, and your
election is without good cause. There is no provision in the
standard contract for liquidated damages in favor of the buyer in
the event the seller wrongfully refuses to go through with the sale.
You do not have to agree to this provision. Carefully discuss the
pros and cons of initialing this provision with your agent or
attorney.
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7. Why is a home
inspection worth getting?
A home inspection prior
to purchasing a home or condominium can bring peace of mind when you
sign the sales contract. Knowing what to expect both inside and out
will help you make an informed decision about the value of the home
and the future upkeep.
A home inspection accomplishes
two important goals. First, it gives you a chance to determine the
condition of the house, its structural soundness, and the condition
of its mechanical systems. Second, it brings any problems to the
seller's attention at a time when they can be resolved before
closing a sale.
If you sign a contract before inspection, consider including a
clause that the sale is contingent upon a satisfactory structural
inspection, and specify when the inspection is to be carried out.
That way, you are protected.
A comprehensive inspection includes a visual examination of the
structure from top to bottom, including the heating, air
conditioning systems, the interior plumbing and electrical systems,
the roof and visible insulation, walls, ceilings, floors, windows
and doors, the foundation, basement and visible structure.
Following the examination, the inspector will provide a report that
not only points out possible defects or areas of concerns, but also
the positive aspects of the structure as well as the type of
maintenance that will be necessary to keep the home in good shape.
Even the most experienced homeowners lack the knowledge and
expertise of a professional inspection firm. For example, watermarks
in the basement may indicate a chronic seepage problem, or simply
may be a result of a single incident.
A professional assessment will provide complete information about
the condition of the property you are considering and will help
avoid any unpleasant surprises after the sale. In addition, a home
inspector can remain totally objective, while you, as a prospective
homebuyer, may be emotionally involved.
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8.
Where should I
get a loan?
Most home loans are
made by financial institutions such as banks, savings and loan
associations, and credit unions. Other sources of loans are
insurance companies, mortgage bankers, finance lenders, mortgage
loan brokers, pension funds and investment trusts. Lenders charge
different fees and offer different interest rates so it pays to shop
around. Your agent will be able to recommend lenders in your area.
When you apply for a home loan, the lender will check your credit
rating and review your past employment, income history, and credit
and debt obligations. It will also obtain information about the
property that will be security for the loan. This will include an
appraisal
or estimate of the fair market
value of the home, a review of
the preliminary report prepared by the title insurance company to
determine what liens, easements and other conditions will be
superior to its loan, and a review of any taxes, assessments and
zoning regulations that affect the property.
Some lenders will charge you a loan application
fee, document preparation fee, appraisal fee and other fees to
consider or close the sale. You should discuss these fees with your
lender before you submit your application.
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9. What
happens in the "closing" of a home?
For the protection of
the seller and the buyer, a person or company that has no connection
with you or the seller holds the money and papers involved in the
purchase. This procedure is called escrow. The escrow holder's job
is to make sure that all of the terms and conditions of the
agreement are met. He or she will also coordinate all of the
activities of the broker, the lender and the title insurance
company. The escrow holder will deliver the deed to the county for
recording when it can pay the seller the money. Escrow services can
be provided by title companies, banks, savings and loan
associations, independent escrow companies, realtors or lawyers.
The escrow holder does not act as a mediator, a
lawyer or an advisor. The escrow holder is required by law to remain
neutral. Its only job is to carry out the terms of the escrow
instructions. Make sure your Purchase Agreement does not conflict
with your escrow instructions. If they do conflict, the escrow
instructions may be considered your final agreement as to the terms
of the purchase. If you are uncertain as to what the instructions
say, discuss them with your agent, your lawyer, and the escrow
holder.
After the close of escrow,
the escrow holder will provide you with a
Settlement Statement.
This document will show you, as the buyer, all of the costs incurred
by you in purchasing the property. You should review this document
carefully and save this statement for later. Many of these costs may
be deductible from either your state or federal taxes. If you have
any questions or concerns about the charges you incurred, contact
the escrow holder immediately and ask for an explanation.
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10. How
should I hold the title to my new home?
Prior to the close of
escrow, the escrow holder will ask you how you wish to hold title to
your new home. How someone holds title will affect what will happen
to the property in the event of the death of one of the owners. It
also will affect whether certain taxes will be incurred or whether a
probate of the estate will be necessary. You should discuss your
options with a tax specialist and your agent before you make your
selection.
You can hold title to the
home by yourself, as separate property, with your spouse, as
community property, or with your spouse or a third party, as joint
tenants or tenants in common. You can also hold title to the
property in a family trust.
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11.
Should I get
title insurance?
Title insurance is
necessary for your protection when you buy a home. It is, however,
not a guarantee that problems will not arise after the close of
escrow. When you make an offer to buy a home, you, as the buyer,
have the right to choose the title company. This decision should be
based on the local office's expertise, and the company's record for
fairly handling claims under its policies. You should discuss these
issues with your agent.
Once you have chosen a
company, you should make one of the conditions of the close of
escrow clear title
to the property. "Clear title" means
that when the sale to you is completed, the title to the property
will be free from liens, judgments and other claims that you have
not agreed to accept. You should also discuss with your agent the
need for a survey of the property and title insurance coverage for
boundary line disputes. In many instances, especially in rural
areas, boundary lines are not where they should be. A survey and
survey coverage can help eliminate future disputes with your new
neighbors.
Before a title company
issues an insurance policy, it will make an investigation to find
out if anyone besides the seller claims to own the property. It will
also search the public records for claims against the property. The
title company will provide you with a report, called a
preliminary report.
You should carefully review this report to determine if it describes
all of the property you are interested in buying. You should also
review this report and determine what items you are willing to
accept when you purchase the property and what items you wish
removed or taken care of as a condition of the close of escrow. If
you are uncertain as to what the report says, you should discuss the
matter with your agent, the escrow holder and/or your attorney.
There are different kinds of title insurance
available. Often the difference in cost for the better policies is
nominal. "Basic" or "Standard" coverage is, in most instances, not
the best policy available. For an additional one-time cost or no
charge at all, you can obtain protection for losses resulting from
illegal construction, zoning violations, unrecorded liens,
prescriptive easement claims, and post policy forgeries. Be aware
that different companies charge different rates. Discuss with your
agent and the escrow holder what policies are available in your area
and the differences in prices on each of the policies.
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