Real Estate FAQs
Buyers
There’s far more to lose than gain if you don’t have your own representation. In most cases, there is no cost to you because it is covered in the seller’s agreements. You want someone who is committed to protecting your best interests, has a fiduciary responsibility and is accountable to you.
Be sure to explore these few items:
- Make sure you’re working with an agent you like, respect and trust. Interview them carefully and be clear about your expectations. You want to make sure they are a good fit.
- Ensure you feel comfortable and do not feel rushed. This is a big money transaction. You want someone that will be patient with you. In time, you’re sure to find something that checks off all the boxes.
- Be 100% confident and secure your financials are sorted. This is important to do in advance and if needed, reviewed.
- Don’t compromise, even with a low inventory market —only pursue homes that inspire you.
• Does it feel comfortable and meet your and/or your family’s lifestyle?
• Walk through the entire home and envision how you would live there. Imagine dropping off your keys at the door, kicking off your shoes, or hanging your coat. Imagine the feel of preparing a meal in the kitchen. Is there enough storage? Perhaps you are concerned about where the sun rises. Or, how much privacy you have in the home.
• Be realistic, discriminating, and thoughtful on each home that meets your criteria.
• Leave negotiations and difficult discussions to your agent when assessing a home.
Touring other homes can help you narrow down your search. Searching in multiple neighborhoods will give you an idea of price points, travel times and overall value. Comparison shopping is a good approach to finding more than you thought you wanted in the first place.
These sites have become popular, however, their accuracy can be very erratic. Instead of an onsite inspection, they use algorithms to determine property value. There is a good amount of information missing. It’s best to work with your real estate agent to determine a home’s real worth.
The issues you will face during your ownership should be incorporated into your acquisition plan. Highlighting and discussing challenges such as, updates and repairs a buyer will face during the ownership stage. Taking into consideration something like an upcoming $20,000 foundation repair or an ongoing issue with flooding? The issues you will face during your ownership should be incorporated into your acquisition plan.
Standard appraisals and inspection fees are paid by the buyer. Rates vary, so please consult your mortgage provider for specific figures pertaining to your loan file.
While price is critical to sellers, other criteria can also weigh heavily in their decision, such as quick closing or if a home needs to be sold to make the transaction happen. A savvy real estate agent will engage with the listing agent to understand the seller’s criteria and help the buyer make better decisions.
Sellers
It’s hard to sell your home if you can’t put a price on it. Hiring a full-service real estate agent gives you access to “comps”, short for comparables to help narrow in an accurate range for what your home is currently worth. Agents also draw upon years of experience and local, neighborhood insight to price your home.
These sites have become popular, however, their accuracy can be very erratic. Instead of an onsite inspection, they use algorithms to determine property value. There is a good amount of information missing. It’s best to work with your real estate agent to determine a home’s real worth.
Contingent means that one thing must happen before another thing happens. In real estate transactions, certain conditions must be met, by the seller or the buyer, or the deal can fall apart. Sometimes referred to as contract “clauses”, contingencies are put in place to protect either party from not doing something, such as securing funding or not getting an inspection, etc.
Examples of contingencies are, for those utilizing a loan, a financing contingency. Or if you have to sell your home to purchase a new one, that would also be a contingency.
The home buyer pays for “closing cost” which includes items like, an application fee, credit report, title insurance, property taxes, escrow fees, origination fee, underwriting fee, etc. These line item costs make up about 3% of the selling price, on average. It’s best to check with your lender on several of the items.
Home sellers, pay at the end of the transaction. Items like a Title Owner’s Policy, deed transfers and the real estate commissions.
When the weather warms up, the real estate market heats up too. However, in this market (2022) it’s when you’re ready, because there is a shortage of homes.
A home appraisal is an approximation of your home’s worth. Home appraisals are generally performed by an appraiser after the purchase price has been agreed upon by both the buyer and the seller.
An appraiser’s main job is to walk through and around the entire home, taking note of what features the home contains and what condition they are in. They do not inspect. They simply vouch for the home’s value.
Simply put, the fair market value is the amount a buyer will pay and the amount a home seller will accept. However, homes don’t always sell for fair market value.
In certain cases, a buyer may offer more than the list price or more than fair market value if they are really interested in a property or a bidding war breaks out. On the flip side, home sellers may take less than fair market value if they are in a financial bind or similar situation.
There are many ways to add to your home’s value, including simply making your monthly mortgage payments!
Some of the more popular moves to make include making small upgrades to the bathroom and kitchen: change out handles and fixtures, put in low-flow toilets, and paint or stain cabinets.
An inexpensive way to spruce up your landscaping is to revive your lawn by laying new sod. A fresh coat of paint and new flooring will also go a long way in justifying your asking price.
Earnest money is a good faith deposit that is collected from the buyer by the seller once an agreement on price has been made. This is to ensure that the buyer is a serious buyer and isn’t just going around town making agreements with other home sellers.
The amount of earnest money varies, but 1-2% of the sales price is pretty standard. If for some reason the seller changes their mind or backs out of the deal for whatever reason, the buyer will receive their earnest money back. If the buyer backs out, dependent upon certain contingencies, they will forfeit their earnest money.
Once the deal is done, the earnest money will be applied towards the buyer’s closing costs.
A list price is how much the seller lists the home for, also referred to as their “asking price.” The sale price is the amount the home actually sells for.
Investors
The value of a real estate property can be determined using a number of methods. The most common method for determining how much a property is worth is by conducting comparative market analysis. This is an in-depth examination of recently sold similar properties in the same area. Your Realtor can help you with these reports.
Real estate investing offers many property investment options. The strategy will depend on the amount of time and money you are willing to invest. It is also important to consider your long-term real estate investment goals.
To be successful in real estate investing, you need to know how to find investment properties that are profitable. You’ll need to thoroughly evaluate the city, neighborhood, and investment property. There are online tools to help in this kind of analysis if needed.
Most investment properties will require a minimum of 20% down. However, if you don’t have the cash, there are programs out there to help with the difference:
- Real estate partnerships
- Hard money or private money loans
- Seller financing
- Wholesaling
- Home equity loans
Real estate investing for beginners is easier if you have equity in an existing property. This may be another investment property or your family home. With an already existing property, you may use it to borrow more and build a substantial real estate investment portfolio much quicker. However, it will ultimately depend on your investment goals and personal financial situation.
I have to answer – YES. The reasons are, working with an agent is a team member. They will handle the time constraints, analysis of properties, help with showings and many other items to negotiate the best deal for you. agents so as to choose one that is experienced and a good match for you.
The rental value of a property is critical. If over-estimated, the property may remain vacant for a long period of time. If it is too low, it may result in negative cash flow. To get a fair estimate of the monthly rental value, you will need to look for comparable properties (rental comps) in the area to see what they are being advertised for. You should also consider the local market conditions.
Most new property investors who ask such real estate questions are often looking for a way to get rich quick. Real estate investing can be a profitable business. However, it generally won’t make you rich overnight or even over the course of a few months. You will need to not only work hard but also be patient before seeing big returns. Your returns will also vary depending on your strategy and market conditions.
Even before you start searching for your first investment property, you will want to secure enough capital. You should also try to learn as much as possible about real estate investing. Attend seminars, buy books, read real estate blogs, etc.