Buyer’s FAQs

1. What kind of offer should a buyer make?

An offer must be reasonable. It is recommended that you discuss with your agent the price range of this property by comparing with recently sold or newly listed properties in the same area. Given the price range you must decide whether you are really interested or not and whether you are willing to pay a reasonable price within the price range. The direction of the market must also be taken into account when purchasing a home. When the market is strong, you might want to offer a little more than the price range in order to compete with other customers. When the market is declining you may want to offer a little less than the property’s price range. Just make sure it is a property that you truly desire and that your offer is reasonable given the circumstances.

2. What is the best time to purchase a home?

It depends on your purpose for purchasing a home. If you are purchasing a home as your primary residence, then my suggestion is to purchase a home as soon as you can afford one. Once you find a property you like, if you can afford the down payment and are qualified for a loan, you should purchase the property immediately. Do not hesitate just because the value of the property might go down in the near future, those are only short term market fluctuations. In the long run, the value of your property will appreciate. Another thing you should keep in mind is not to wait and save up for a dream home. Chances are that dream home’s value will appreciate faster than you can save up the additional money. Just buy a starter home and you can start saving money and gain equity on your starter home. If you are purchasing property as an investment, then a variety of factors will constitute when you should purchase a property. The concept of investing on properties is much more complicated. Many factors such as what type of investment you are making (long-term or short-term) what direction you or whoever you are consulting has forecasted for the future market, among many other things are all taken into account.

3. What are the benefits of actually owning a home?

The most important advantage in owning a home is the sense of security that you get. As opposed to renting a property, you will have control over your property. You can live comfortably and make changes as you please without having to deal with the hassles of having a landlord. There are also a number of economical considerations. If a homeowner has secured a fixed-rate loan, they can make additional investments or purchases freely knowing that their monthly housing costs will not change substantially. In addition, buying a home serves as a long-term investment. You can build up equity as your home appreciates over time.

4. How much can I afford to spend on a home?

Before, spending 1/3 or less of your monthly salary on your mortgage payment would be considered buying an affordable home. Nowadays, spending up to half of your monthly salary is considered normal. Some buyers are even willing to pay more. In order to get a loan, a down payment of 20-30% used to be required. Now lenders are willing to lend you money even if you are putting 0 down as long as you have a steady income, however, putting 0 down usually leads to an increased mortgage payment. This is why it is common to find buyers paying 50% or more of their monthly salary on mortgage. Another option on making mortgage payments is to pay interest only. This method is less costly and is usually used when the buyer is planning to sell the house in the future for profits.

The price you can afford to pay for a home will depend on six factors:

  • Gross Income
  • The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender.
  • Your outstanding debts
  • Your credit history
  • The type of mortgage you select
  • Current interest rates

5. What are the standard ways of finding out a property’s value?

The two standard ways of discovering a property’s value are C.M.A. (comparative market analysis) estimates and appraisals. C.M.A. estimate is the process of estimating a property’s value based on comparable sales in the same or similar neighborhoods. This type of estimate is done by an agent and can include an on site evaluation. An appraisal is similar to the C.M.A. but instead it is done by a certified appraiser for a fee of $200 to $300. Appraisers also use comparative techniques to analyze a property but they include a set of guidelines that affect a property’s value such as a certain value for every square-foot and added values for certain types of upgrades

6. What is the difference between C.M.A. estimates and appraisals?

Normally a seller would request an agent to do a C.M.A. estimate for their property. A seller would want to know what an agent thinks their property is worth based on the agent’s experience and familiarity with the area and the current market. A buyer, on the other hand, usually hires a certified appraiser because it is requested by the bank. When a buyer applies for a loan to purchase a home, the bank will ask the buyer to get the property appraised. This is because the bank will only loan out an amount consistent with what the property is appraised to. Both methods are accurate but sometimes the value estimated by an agent and appraiser can differ greatly. That is because an agent estimates of what they think the property can sell for based on the market’s current status. An appraiser appraises a property based on previous sales without taking the market’s direction into consideration. Depending on the market, an appraised value can either be a good amount higher or lower than an agent’s estimate.

7. Is there anything important I need to know about estimates or appraisals?

Time is always of the essence with property values. It does not matter whether your property’s value is appraised or estimated, it will not hold forever. Because the market is constantly fluctuating, your property’s value will not remain constant. A property’s value is highly dependant on supply and demand. It is also important to know that the agent giving you the highest estimate is not necessarily the most qualified agent to sell your property. Everyone would like to sell their property for more but some agents will give higher estimates as a form of “buying” listings. You should choose an agent you know that is experienced and reliable and then have that agent make an estimate for you knowing that you can trust them.

8. What is the difference between listing price, sales price, market value, and appraised value?

The listing price is the seller’s advertised price, a rough estimate of what the seller would like to get for his or her property. Sellers usually make their listing price either a bit higher, lower, or close to what they hope to get. A sales price is the actual price a buyer will pay for the property. Depending on the market, a sales price can be higher or lower than the asking price. Various sales prices and listing prices of properties from previous listings and transactions ultimately determine the market value (how much a property is worth at a given point in time) of a similar property because a value is determined through a comparative market analysis. The appraisal value is a certified appraiser’s opinion on what the property is worth after careful analysis. This value usually determines how much a bank is willing to loan for the purchase of a property.

9. Is it better to save for your dream home or to buy a less expensive starter home?

It is important that you buy a home you can afford as soon as you are able to afford one. Prices of property usually appreciate faster than you can save money. If you wait to save for your dream home, you may find that a few years from now, the home is less affordable than it was before. If you buy an affordable home when you have the money, you will build up equity as your home’s value appreciates. In addition to the built up equity you can also be saving money on the side increasing your chances of achieving your dream home in the future.

10. Are there different type of agents? What do they do?

There are generally three different types of agents. Which type they are depends on who they are representing. A listing agent represents the seller and lists the property for him or her. They look out for the best interests of the seller when negotiating with selling agents. Selling agents also known as buying agents represent the buyer. There job is to look out for the best interest of the buyer by negotiation for the best purchase price and terms. Often times an agent can be put into the role of a dual agent, one representing both the buyer and the seller. This scenario usually results from an agent who is hired by a buyer to search for a property coincidentally similar to one that he or she is already listing. Because of potential conflicts of interest that are created during dual agency, the law states that a dual agent cannot disclose to the buyer that the seller will accept less than the list price, or disclose to the seller that the buyer will pay more than the offer price without express written permission.

11. The internet provides many tools to search for a home, if I can find a home on my own, why do I need an agent?

It is true that you can find a desirable home on your own but an agent, as a professional, has the resources and experience to find you a home more efficiently. In addition an agent will make your transaction as smooth as possible which is the toughest part of buying a home. They will make sure you complete everything required by law, help you negotiate for the most favorable terms as the transaction proceeds, and explain to you anything that might confuse you each step of the way. If you do not understand the ins and outs of real estate, buying a home on your own will leave you stressed out, tired, and maybe still without a home

12. What is the best way to find a suitable real estate agent?

You can begin by asking people you know who have recently sold or purchased a home to refer you. Also try looking around your local area for any advertisements of agents who cover your area. After you’ve generated a list of names, interview each of these agents and take some time to decide who is most suitable for you. It is important that your agent has a good reputation and that their area of expertise is the one you are interested in. An agent who has actively concentrated in one area will typically know specific details of that area and be aware of every little change that occurs. Hiring an agent with that type of knowledge and experience provides you with the greatest opportunity to complete a satisfying transaction.

13. Who gets the furnishings when a property is sold?

It depends on the type of furnishings. Any fixtures or personal property that is permanently attached to a property such as built-in furnishings usually stay with the property unless specified otherwise in the sales contract. Anything that is not permanently attached is negotiable. Example of such items would include appliances such as washers, dryers, refrigerators, etc.

14. What is the job of a home inspector?

A home inspector is a professional trained to check the safety of a home. They search for any problems or defects in a property that could lead to devastating consequences in the future. They focus mainly on the mechanical systems, structure, and construction of a property. It is important to understand that a home inspector is only responsible for checking for problems at the time of their inspection. They are not responsible for any new problems that arise after their inspection

15. If the property’s condition looks pretty new, would it be ok not to hire a home inspector?

It is not mandatory to hire an inspector but in order to minimize risks, you should. If any major defects are detected you may decide that you do not want to purchase the property. It is also possible that the seller will not adhere to your requests when an unforeseen defect or problem is discovered. To be on the safe side, a home inspection is recommended.