Frequently Asked Questions
How long does the buying process take?
It depends on…
how realistic a buyer is about what s/he can afford versus what is available on the market
how much inventory is available
how quickly the buyer needs to make a decision
the buyer and agent having good communication about likes and dislikes and the agent HEARING feedback and incorporating that into suggestions for future showings
To find a home, it can take anywhere from a week to years, but most people fall into the 2 week – 2 month range.
After that, it takes anywhere from a day to a couple of weeks to agree on price and terms.
Finally, if the house is purchased CASH it can close usually within two weeks (sometimes less). If the house is financed, typically it takes 45-60 days to close. For a short sale, it takes 4-6 months to close.
Should I lock in my interest rate or should I float?
In this market a LOCK is preferable due to increasing interest rates.
How many homes does the average buyer look at?
How often do you find the perfect property on the first day?
Approximately 10-20% of the time.
When should I make an offer?
As soon as possible. The longer you wait, the more risk that someone else will fall in love with this house and turn it into a multiple offer situation.
What is the likelihood of a multiple offer situation?
In this market, with a properly priced home in good condition, it’s almost inevitable. It is less likely, the more overpriced or poorer condition of the house.
How much should I offer?
It depends! On whether the asking price is reasonable, on comparable sold values, on whether this is a multi-offer situation, on buyers’ vs. sellers’ market, on whether you have CASH, FHA, CONVENTIONAL or other financing…I could go on! The bottom line is it is almost never a “general rule” that you offer less than asking. This is something you WILL hear from well-meaning friends and family and it can cause you to lose out on a house you love.
What expenses are involved in buying a home?
Earnest Money Deposit (EMD) ($1000 minimum, amount will vary but 1-3% of the purchase price is a good guide): This is a deposit that will go towards the purchase of your home. It shows the seller your commitment to the purchase of the home. This is deposited into a non-interest bearing account with the title company.
Contractor’s Inspection ($450-550 including radon inspection): Inspection by a licensed contractor to introduce you to your new home and point out major structural, mechanical, or safety issues. This is due at the time of inspection.
Additional potential inspections (fees vary): pest inspection, structural inspection, sewer scope, fireplace inspection/scope, other – generally used only if indicated as necessary by contractor inspection.
Appraisal fee ($375-450): This is usually due up front to the lender.
Attorney or CPA fee (varies): This is rare but if there is a potential legal or tax issue or question you should seek the advice of a licensed, qualified professional.
Down payment (0%-20% depending on mortgage): Check with your lender on your options. Due at closing.
Closing Costs (approx. 3-6% of sale price): You should receive an estimate for these when you make your initial offer.
Will I get my earnest money back if the contract is not accepted?
Yes. The earnest money deposit (EMD) check is turned in to the broker where it is held in a safe until there is fully executed contract. At that point, by law, the EMD must be deposited within 2 banking days. Red Barn Realty deposits all EMD checks with the Title Company serving as Escrow Officer for the transaction.
What is the process to get my earnest money back if the contract is accepted and we need to cancel it due to inspection, appraisal, or other contingencies?
In order to get your money returned, there needs to be a Mutual Release form signed by the Buyer, Seller, and both Brokers. No money can be released without these signatures. Once the form is signed and returned it takes 2-3 business days for the title company to print/mail the check.
How long does the home inspection take?
This depends on the size of the house, but typically 3-4 hours (more for larger/older houses).
Do I really need a home inspector?
UNEQUIVOCALLY YES! And not your brother-in-law handy man (unless he is a LICENSED HOME INSPECTOR)
Can you recommend an attorney, home inspector or a lender?
Is there anything I should NOT do during the house hunting/purchase process?
Don’t take on any major debt (major purchases – cars, furniture, vacations, etc.)
Don’t change names
Don’t change jobs
Don’t NOT get an inspection
Don’t let input from friends who are not real estate experts cloud your judgement (and just because they have bought and sold a home or two before does NOT make them an expert)
How much money will I need at closing?
That depends on a lot of factors. The lender will prepare a general estimate at pre-approval. When we make an offer, the lender will prepare a more specific estimate for you that will have that information. Once an offer is accepted the lender will have an even more specific estimate which is usually very close to the finally numbers. Items you can expect to pay for at closing:
Down-payment & closing costs (described below) minus the EMD
Transaction fee to selling broker (buyer’s broker) ($195)
Approximately 14 months in property taxes (both through pro-rations to repay the seller for taxes already paid and to put the remainder into your escrow account).
Lender’s fees (recording, processing, etc.)
Pro-rated association dues (if any)
Homeowner’s Insurance Policy (full year, plus 1-3 months for mortgage escrow)
Title Company Closing fee
Is the closing date on my contract guaranteed?
NO. Closing dates can change for a number of reasons and OFTEN do. It is a goal to shoot for. However, if closing is delayed and the seller wants to get out of the contract, they can legally cancel the contract at that point (this is not common).
What happens at closing?
You will need to bring a cashier’s check made out to the title company (or have sent a wire transfer**) for the down payment and closing costs as well as your drivers’ license or picture ID. You will sign a pile of paperwork transferring ownership of the home, finalizing your commitment to repay the loan, and various accompanying docs related to the process. This generally takes about an hour to complete.
**WIRE TRANSFER FRAUD ALERT: This has become an unfortunately common and horrifying occurrence in today’s real estate transactions. You will get multiple notices throughout the process about how to avoid LOSING YOUR LIFE’S SAVINGS. Pay attention to these warnings!!
When will I get the keys?
Keys will be given to you at closing.