Buyers - Frequently Asked questions

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Does it cost money to use a Realtor? How does commission work?

 In most states, traditionally the seller agrees to the commission that will be paid to the agent that is working for them. From there, once the listing is posted publicly on the Multiple Listing Network, the commission that the agent will pay to a cooperating broker is posted there. Essentially, this means that both buyer and seller agents are working for free until the deal is closed! The buyer will almost never write a check to pay a broker, and the agent working for the seller is paid out of the proceeds of the sale. For rentals, the way the market is right now, the tenant is usually charged a fee of one month’s rent that is often split between two cooperating brokers. One thing to keep in mind is that your agent may have insight into larger buildings that are offering to pay brokers fees and offer other incentives, especially when they are first opening. 

What are the upfront costs of buying a home?

 Inspection – Inspection costs vary based on the area, size of the home, and the services the inspector is providing. For a standard home inspection for a condo in the city or a single-family just outside of it, a buyer should budget $400-600. Of course, other inspections require additional fees, so if you’re thinking about a lead inspection you should budget $400-500 at a minimum, an additional pest inspection will be additional, and so on. Lender Costs/Fees (Appraisal, Credit Report, etc) – These fees are often lumped into your closing costs that are paid at the end of the transaction, but sometimes are charged up front. Expect to pay about $390 for an appraisal. Attorney/Legal Fees – Real estate attorneys traditionally charge a flat fee and do not charge by the hour. A real estate attorney that is able to work on behalf of your lender will often waive the personal representation fees on your behalf, as they will be compensated by the lender and/or title company. Expect to pay about $1,000- 1 ,200 for attorney fees, with some additional recording fees up to $500. Downpayment – The largest chunk of money that you will pay, your downpayment is broken up into two deposits and a final payment. You’ll need to bind your offer with a deposit, typically $1000-5000, but sometimes higher depending on purchase price and the situation. The same is true for binding the purchase and sale agreement, where the buyer will traditionally place the remainder of half the total downpayment amount into escrow as the second deposit. The remainder of the downpayment will be brought to closing as cleared funds, either via a wire into the attorney’s account or via a bank check. Any small adjustments at closing can be made via personal check. We traditionally speak of down payments as percentages (5% down, 10% down, 20% down, 30% down, etc). 

How much do I need for down payment?

 This is an interesting question because there are actually some loan programs out there that require 0% down! There are a number of first-time buyer programs that require between 3-5% as well. That being said, many homes end up with multiple offers and financing is a big consideration as to the strength of an offer, so oftentimes if a buyer has the ability to do so, a 10-30% downpayment will help strengthen an offer. In addition, putting more than 20% down is often advantageous as it helps borrowers avoid private mortgage insurance which can be quite costly. 

What's the difference between assessed, appraised, and market value?

 Assessment/Appraisal Difference We get asked all the time about the different values assigned to a property, and why they often seem to be so substantially far apart! Here’s a quick rundown: Market Value: Simply put, this is what a buyer is willing to pay for a property. A real estate professional will use their knowledge of the market as well as a comparable market analysis to give a range of value for a specific property; however, there is both an art and a science to this process so each real estate professional may have a different opinion of value. Appraised Value: An appraisal takes place if there is financing being obtained on a home (or some other situation arises, such as for estate/probate purposes). Basically, a lender wants to be sure that the home is worth what the buyer is paying (and what they are lending), as they will be holding a mortgage on the home as collateral for their loan. Appraisers traditionally will create a radius around a property and select 5-6 comparable properties that have sold, and add or subtract value based on the finishes, overall condition, and basic specs of a property. If financing, it is important that the property appraises. If it does not, the lender may deny the loan. Assessed Value: An assessment is done for tax purposes. The city/town assessors’ office places a value on each property in the municipality each year in order to ascertain what the tax on each property should be. 

Where do my offer check and deposit go?

 Only licensed escrow agents can hold deposits for real estate transactions. When you give your offer or purchase and sale check to the agent working for the seller it will be deposited in the company’s non-interest bearing escrow account. Some companies do not act as escrow agents, so the attorney working for the seller will occasionally hold escrow for the transaction. Your deposits are usually protected by contingencies, such as an inspection and/or financing contingency. These contingency periods expire on specific dates, but should there be any issues with either prior to the contingency date put forth in your offer, the deposit would be released. The deposits are applied towards the money that the buyer is paying for the purchase, specifically the downpayment. Just prior to closing (a minimum of three days), the buyer and seller will each have a chance to review a closing disclosure, which breaks down all of the finances of the transaction. 

“I’ll get a better deal working with the listing agent, directly, right?”

 Usually – wrong. A listing agent is better defined as “the agent working for the seller”. When the listing contract is signed the commission being paid by the seller to the listing firm is legally bound; therefore, generally speaking, the only entity that would benefit from working with the listing agent directly would be the agent working for the seller’s pocket. In addition, when the listing contract is signed it also creates a fiduciary responsibility between the agent working for the seller and the seller. What this means is that anything the agent working for the seller learns about you, they are required to disclose to the seller (unless you and the seller sign a dual agency agreement which basically makes the listing agent a messenger between the two parties). Simply put, if you work with the listing agent directly, you have no representation or advocate in your corner. 

Why shouldn’t I wait to buy once the market cools down?

 This is a common question given the market that we work in. With rising prices all over the area, it can be daunting to think about making such a large investment. There are a couple of variables to consider here: 1. Interest Rates: As interest rates continue to rise, buying power decreases. The negative correlation of rising rates outweighs the impact of a market slowdown. When you look at the overall cost of interest rates rising, for every .5 rate increase, it represents an additional 5.5% that you'll be paying each month. To put this into perspective - for a 30-year loan on a $500,000 purchase with 20% down, you're looking at an additional $43,000 in mortgage payments over the term of the loan for each .5 rise. 2. Do you have something to sell?: If you are planning to leverage equity from a current home, or need to sell before you will buy, keep in mind that should the market cool down, so does your investment. Talk to a mortgage professional sooner rather than later to discuss various scenarios for your next purchase. 

Is a condo or single family more liability?

 It’s not necessarily a matter of “more” liability, it’s a matter of how it’s shared. With a single-family home, your homeowner’s insurance will be more expensive than a condo policy, and general maintenance and repairs are solely the owner's responsibility, so there could be more work/additional cost associated with a single family home. A condominium spreads the liability and burden of maintenance and repair costs across all of the owners, and your condo insurance policy is generally less expensive as the association’s master insurance covers a lot of the larger ticket items (roof, etc). It’s important to work with your agent and lender to understand the implications of each when deciding which is a better fit both financially and from a maintenance standpoint longterm. 

What do I need for a pre-approval?

 This is a common question given the market that we work in. With rising prices all over the area, it can be daunting to think about making such a large investment. There are a couple of variables to consider here: 1. Interest Rates: As interest rates continue to rise, buying power decreases. The negative correlation of rising rates outweighs the impact of a market slowdown. When you look at the overall cost of interest rates rising, for every .5 rate increase, it represents an additional 5.5% that you'll be paying each month. To put this into perspective - for a 30-year loan on a $500,000 purchase with 20% down, you're looking at an additional $43,000 in mortgage payments over the term of the loan for each .5 rise. 2. Do you have something to sell?: If you are planning to leverage equity from a current home, or need to sell before you will buy, keep in mind that should the market cool down, so does your investment. Talk to a mortgage professional sooner rather than later to discuss various scenarios for your next purchase. 

Sellers - Frequently Asked Questions

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How much needs to be done to prepare my home for listing?

 There are quite a few things that you can do to prepare your home for the market. At the minimum start by patching holes in the walls, fixing leaky faucets and replacing anything visibly broken. It’s also a nice touch to clean carpets, removing any wear or stains, and to repaint any bold colors a warm, neutral tone helping the overall value of your home.

Looking to increase the value of your home before putting your home on the market? We recently wrote a blog about the 5 renovations that bring in the highest return on investment, click here to see what you can do to increase your home’s value.

How much is my home worth?

 The answer here takes into account the neighborhood, condition of the home, market fluctuations, and so much more. We’re happy to put together a custom report for you on your home’s value! Get started by filling reaching out to us on the contact us page. 

How long will it take to sell my home?

 Great question! This process varies from month to month, but we want to sell your home as quickly as possible. We consider ourselves a very tech-savvy Real Estate team and we have an in-depth Marketing process that we want your home to be apart of! 

Should I be present when buyers view my house?

 The short answer? No. 

If a seller is present while a potential buyer comes to see the home this can create a sense of awkwardness for both parties. The buyer tends to feel uncomfortable speaking candidly about the listing, and the seller’s involvement may potentially disclose unnecessary information that could further affect the sale of the home. 

How much is the agent's commission?

While usually commission is negotiable and depends on a few different factors, the normal rate is right around 6%. 

We’re happy to talk more about our commission process as well as all of the services that we offer to our sellers. Let’s set up a time to chat here.

Is there an ideal time to sell my house during the year?

 Yes and no! Properties will continue to sell year-round but there are periods of higher demand. Depending on when you decide to sell could directly affect the amount of time on market and the final sale price of your home. 

Weather conditions, according to area, play a role in popular times for buying/selling. Generally speaking, spring is a season in which the market picks up. Towards the latter of summer, the market demand can get substantially slower as buyers and realtors take their summer vacations. 

Same goes for the fall. A second demand occurs up until about November, prior to the approaching holidays. The upside to keeping your home on the market during the holidays could be directly related to supply and demand, as there are constantly buyers in need of homes. Seller competition is substantially lower.  

What are my obligations to disclose to buyers?

 In general, you have the obligation to disclose anything that may be a potential problem or affect the value of the home. 

In most states, it’s illegal to directly conceal or lie about any major issues going on in the house such as termites, roof damage, or lead paint. Things like HOA fees and rules, neighborhood meetings, and zoning requirements should also be noted. You may want to disclose anything of the paranormal variety or if someone has passed away in the home.

Can I determine how much my home is worth from an internet website?

 Once again, the short answer is NO! If you have purchased a home, sold a home, or just hunted for homes, you have most likely used third-party real estate search engines to search for homes. These sites provide estimated values of homes for nearly every home in the United States. However, these are not always accurate home values for your local market. All estimates are based on calculations and formulas that do not necessarily provide accurate information. These online guesstimates can be deceiving and lead to both upset buyers and sellers. You can receive a more accurate value of your home by speaking with a top Realtor in your local area, not a third party real estate website. If you are looking to see an accurate and up-to-date evaluation of your home's current value contact us today.