We know for a fact that if you are a home buyer, especially a first time home buyer, one thing you have is QUESTIONS. Lots of 'em. Well don't feel bad. That's why you have a REALTOR®, and if you don't have one, we can help with that. We encounter many of the same FAQs, (Frequently Asked Questions), and are glad to answer them.
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Q. What can I buy with what I've have?
A. That's a tricky question, because you probably don't realize just how MUCH you actually have.
The answer lies amongst a pile of factors, including your income, financial situation, spending habits and debt obligations. The best place to start with this one is with a lender. Meet with a lender to get pre-approved (NOT just pre-qualified) before you go house shopping. This will save you a lot of chasing around looking at homes you may not be able to afford, and a lot of disappointment when you find out you can't buy them. The bonus is that having a pre-approval letter in hand when you start makes you a lot more attractive to sellers. Your REALTOR® will appreciate it too, because they won't spend time showing you homes that are out of your price range.
Q. Can I sell my current home and buy another one at the same time?
A. If you're a gambler, technically you can, but...
there's an obvious risk. If your current house doesn't sell before you close on the new one, you'll be paying two mortgages and will probably be financially overextended. Conversely, if you sell before you can get into another house, you may be stuck renting somewhere temporarily, or moving back in with Mom and Dad.
You can set a contingency for buying a house on the sale of your other one. But this is not a good idea. Few REALTOR®s will sell on contingencies, and in a bidding war, yours will usually be the least attractive offer.
Q. How many houses should I see?
A. As they say in the UK, "How long is a piece of string?"
There are hundreds of homes on the market in any given city. You can look at them online and draw up a short-list to start. Your REALTOR® will have more in-depth knowledge of the inventory and what homes more likely meet your needs. On average, buyers typically look at about ten or twelve properties before settling on one or two. But others take months, some years of wandering the open houses before they pull the trigger. (Although that last category includes mostly recreational home "snoops" who just like walking through people's homes.) If you can't find a match in a reasonable time, maybe it's time to expand your search to other neighborhoods. Rely on your REALTOR® to tell you when they think it's time to move on.
Q. How much will the seller accept as a fair price?
A. It depends on how much the seller wants to sell.
Depending on the seller's motivation, it could be anywhere from 5% to 15% off listing price. If the sellers are eager or forced to sell, they may snap up the closest offer they can get, and you'll get a great deal.
Q. How do I know when I see a great deal?
A. You know if you've done your homework.
Check out comparable homes in the neighborhood that have sold recently. Check clerk records to see if prices are appreciating or dropping in your selected area. Your REALTOR® will be able to provide that information and will be happy to do so.
Q. If my offer is accepted now, when do we close?
A. Ask me in 30 to 45 days.
That all depends on the lender, who is jumping through his own hoops getting the loan put together, appraisals done and approvals written up his chain of command. You'll be busy too, getting your loan completed and having an inspection scheduled and done. Typically it takes 35 to 45 days, but nothing is guaranteed. We don't know when the closing is until the fat lady has sung and the lender informs us of date, time and location.
Q. Do I really need a home inspection?
A. Yes. Absolutely. It will make or break the deal.
For a few hundred dollars for a home inspection, it provides the buyer with a professional's opinion on the condition of the home's structure, roof, plumbing, electrical, heating, ventilation, air and cooling systems. As an added bonus, if your offer is contingent upon a good inspection, and it doesn't pass, you can either make the seller fix it, or get a price concession from the seller to have the problem fixed yourself. If not, you can back out of the deal with no penalty.
Q. What other situations allow me to back out of the deal if I want to?
A. Backing out is easy. Backing out without losing your deposit or down payment can be tricky.
An inspection contingency as mentioned above, is one way. A "Subject to Appraisal" clause in your offer is another. It means that if the lender finds the property not worth the amount of the mortgage, you can cancel the deal.
There are obviously lots more questions buyers ask. Many questions are subject to a buyer's particular situation or plans. Ask your REALTOR® about any concerns you may have in the buying process. Making a home purchase as transparent as possible keeps buyers happily informed and confident in their decisions.