What to Know & Questions to Ask When Buying or Selling a House – FAQ
- Can a home depreciate in value?
Generally, real property never depreciates in value, or more so, it is not very common for property to depreciate. This is why it's a great investment. Make sure you carefully consider location and community when choosing a home, it can effect the homes future value greatly.
If you are in a newly developed area, do some research on the construction of the surrounding areas being developed to determine if they may effect your homes value.
- Is an older home as good a value as a new home?
This is one of the most common questions to ask when buying a house. This is really just a matter of preference, but both newer and older homes offer distinct advantages, depending upon your unique taste and lifestyle. Older homes can generally cost less than new homes. There are many cases where new homes can also cost less than older homes. Most new homes will not have any backyard landscaping and some do not include any front landscaping either. With an older home, the landscaping is normally already completed and could have tens of thousands of dollars in landscaping done, which is included in the purchase price and something to know when buying a house.
When forming your questions to ask when buying a house, keep in mind that taxes on some older homes may also be lower. Some people are charmed by the elegance of an older home but shy away because they’re concerned about potential maintenance costs. Consider a home warranty to get the peace of mind you deserve. A good Home Warranty plan protects you against unexpected repairs on many home systems and appliances for a full year or more after you move in.
In a new house, you can pick your own color schemes, flooring, kitchen cabinets, appliances, custom wiring for TV's, electrical, computers, phones and speakers, etc. Remember when developing questions to ask when buying a house that modern features like media rooms, extra-large closets and extra-large bathrooms and tubs are also more attainable in ground-up construction. In an existing used home, you rely largely on the previous resident’s tastes and technological whims, unless you plan to invest thousands into a remodeling and rewiring.
Knowing whether or not a new or older home is best for you is one of the best things to know when buying a house. New-home designers can use new building materials such as glazed Energy Star windows, thicker insulation and other technology that will lower future energy costs for the owner. Most states now have minimum energy-efficiency requirements for new construction. Kitchens and laundry areas in new homes are designed to house more efficient energy-saving appliances. When asking questions when buying a house, new or old, remember that older homes, unless they have undergone an energy retrofit, usually cost much more per square foot to air-condition and heat. Builders have to follow very strict guidelines in new-homes and additions, especially in the West and Northwest, where earthquake safety standards must be observed. In general, new homes are usually more fire-safe and better accommodating of new security and garage-door systems.
Older homes can be better judged for their quality and timeless beauty. New homes that now possess a smooth veneer might reveal the use of substandard building materials or shoddy workmanship over time.
Still have questions to ask when buying a house? We understand. As you can see there are advantages and dis-advantages to each, but it really comes down to what fits you and what you are looking for in a home.
- What are closing costs?
Closing costs are expenses incurred by buyers and sellers in transferring ownership of a property.
- What does FSBO mean?
FSBO stands for For Sale By Owner. A for sale by owner property usually indicates that the property is being sold without a real estate agent.
- What is a "One-Time Show" listing?
One of the questions to ask when buying a house that not many people think of. With this type of listing the homeowner signs an agreement with the agent. What this agreement declares is the homeowner will provide the agent with a commission for selling the property. This agreement also states the homeowner cannot negotiate with the buyer at a later time to avoid paying a commission. This type of listing is most often used by agent showing FSBO (for sale by owner), and is something to know when buying a house.
- What is a broker?
An agent who is authorized to open and run his/her own agency. All real estate offices have one principal broker.
- What is a contingency?
A contingency is a provision included in a sales contract stating that certain events must occur or certain conditions must be met before the contract is valid.
- What is a debt-to-income ratio?
A common question people ask when buying a house, a debt-to-income ratio is the percentage of a person's monthly earnings used to pay off all debt obligations.
- What is a Multiple Listing Service (MLS)?
A multiple listing service is a computerized listing of the homes for sale in an area listed with a realtor. Agents are granted access to the MLS and can use it to find a house in a particular price range or area.
- What is a REALTOR®?
A REALTOR® is an agent or agency that belongs to the local or state board of REALTORS and is affiliated with the "National Association of REALTORS" (NAR).��They follow a strict code of ethics beyond state license laws and also sponsor the Multiple Listing System (MLS), which is used to list houses for sale.
REALTOR is a trademark of the National Association of Realtors.
- What is an escrow officer?
Something to know when buying a home, an escrow officer is the person that walks you through the closing process. They are usually employed by the title company that you are working with. They are a neutral third-party, responsible for overseeing the escrow process. They typically perform the title searches, prepare final paperwork, witness the document signings as well as ensure that the transaction is executed properly and legally.
- What is homeowners association (HOA)?
A good question to ask when buying a home, a homeowners association is a nonprofit association that manages the common areas of a condominium or "planned unit development" (PUD). Unit owners pay a fee to the association in order to maintain areas such as a pool or playground that are owned jointly.
- What is the difference between being prequalified and preapproved for a loan?
The difference between prequalified and preapproved is absolutely something you need to know when buying a home. If you're prequalified it means that you POTENTIALLY could get a loan for the amount stated to you, assuming that all of the information you provide to the bank is accurate and true. This is not as strong as a preapproval.
If you're preapproved, it means that you have undergone the extensive financial background check, which includes looking at your credit history, previous tax returns and verifying your employment - and the lender is willing to give you a loan, basically meaning you're approved! If not, another question to ask when buying a home is what you can do to get approved in the future. Your mortgage lender will be able to help.
You will usually be provided an accurate figure which shows the maximum amount that you are approved for. Most sellers prefer buyers that have been preapproved because they know that there will not be any problems with the purchase of their home.
- What is title insurance?
Title insurance is insurance that protects the lender and buyer against any losses incurred from disputes over the title of a property.
- What's the Difference between a "Listing Agent" and "Selling Agent"?
A typical question to ask when buying a home, Listing Agents usually deal with sellers, and are the ones who will list a property for sale on the Multiple Listing Service.
Selling Agents (also Buyers Agents) mostly deal with the homebuyers, usually only listing just a few homes for sale. They will sell the homes (which have been placed in the MLS) via the listing agents.
The majority of agents will focus on one or the other. Another thing to know when buying a house is that some agents will also divide their time between sellers and buyers and are usually regarded as the best ones since they are dealing with both sides of the coin.
If you phone an agent from a magazine or newspaper ad, you are usually contacting the listing agent. These agents will place ads to show the seller that they are making an effort to sell their home. Also their advertising efforts can draw others who may decide to sell their homes.
- Why should I use a real estate agent?
Likely the most common question people ask when buying a house. A real estate agent is more than just a sales person. A real estate agent may act on your behalf, providing you with advice and guidance when buying or selling a home. Due to the constant changing of the market, the information available on listings is not always 100% accurate. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with a real estate agent.
If you are in the market to buy, it would be advisable to use a Buyer's Agent. They can make recommendations on what terms and prices to offer as well as negotiating a deal with your best interest in mind.
- Can I back out of my contract with one buyer and accept a new, higher offer from a second buyer?
While tempting, something to know when selling a house is that it would be very unwise to try to back out of the contract because a purchase offer that's accepted is a legal contract that the buyer can seek legal remedies to enforce.
- Do I have to sell to the person with the highest offer?
One of the most common questions people ask when selling a house. Simply put, no. If you prefer a lower-priced offer, perhaps with a better-qualified buyer and/or more attractive terms, you can accept that offer instead. Or you can give counteroffers to one or more of the buyers.
Beware, however, that if you turn down a full-priced offer, you may owe your agent a full commission even if you decide not to sell your home.
- How should I price my home?
You must take into account the prevailing state of the real estate market and especially local market conditions. The real estate market continually changes, and market fluctuations affect property values. So it is critical to determine your listing price based on the most recent comparable sales in your neighborhood.
As this is a very common question people ask when selling a house, it would be a good idea to get a Home Value Request, or CMA, also known as Comparable Market Analysis.
- Is there a "best time" to put my house on the market?
An important thing to know when selling a house, along with economic factors such as supply and demand, the time of year you choose to sell can impact both the length of time it takes to sell your home and its ultimate selling price.
Typically, the real estate market picks up around February, continues strong through late May and June, and tapers off during July and August. The summer is usually the busiest time for moving since school is out and buyers may be looking to get their children in school before the new school year. However, another answer to this question people ask when selling a house is that September through November marks another rally, just one not as strong as late winter and spring, followed by a slowdown from Thanksgiving through and beyond the Christmas and New Year holiday period.
- What are comparables or comps?
These are referred to as recently sold properties that are similar in size, location, and amenities to the home for sale. These properties help an appraiser determine the fair market value of a property.
- What are disadvantages of pricing my home on the high end?
People ask this question when selling a house all the time. A higher price is better, right? Well, several factors may come into play:
• You might help sell similar homes that are priced lower.
• Your home may be on the market longer.
• You could lose market interest and qualified buyers.
• You might create a negative impression of the property.
• You could lose money as a result of making extra mortgage payments while incurring taxes, insurance and unplanned maintenance costs.
• You may have to accept less money.
• A potential buyer may face appraisal and financing problems resulting from the inflated price.
With these answers and more to a question people ask when selling a house, it is not recommended to sell your home any higher than the appraised value unless demand is high in your area. Ask you real estate agent which price would be right for your home. Also make sure you get a Home Value Request to assist in determining the best sales price for your home.
- What does an appraisal mean?
A report made by a qualified person setting forth an opinion or estimate of value. The term also refers to the process by which this estimate is obtained. Something to know when selling your house is what all is included in an appraisal.
In conventional mortgages and in the HUD-FHA Direct Endorsement Program, the lender receives a copy of the complete report, showing the basis for the appraiser's estimate.
Have a VA or HUD application processed by HUD? Another question to ask when selling a house is what comes within your appraisal, as the lender receives only a statement of the estimate of value, without any detailed supporting data.
- What is a counteroffer?
A counteroffer is an offer made by one party that makes changes to the original or latest offer of the other party.
- What is an "Exclusive Right to Sell" listing?
This type of listing is the most commonly used and is the most effective. With this type of listing the agent does the most work to sell your home they will usually advertise your home, place it into the MLS, market your home to other agents and even hold open houses for your home. Only with this type of listing does an agent expect to earn money back on their investments on selling your home.
- What is an "Exclusive Agency Listing"?
Another common question people ask when selling a house, An Exclusive Agency listing allows your agent to market your home and enter it into the MLS. The agent will receive a commission if your home sells through any real estate company or by another agent. Something to know when selling your house is that this agent will NOT receive a commission if you, the seller, find a buyer on your own. Because a commission is not guaranteed, your agent may not be highly motivated to market your property. Thus, this type of listing is not common and should be avoided.
- Who is responsible for making repairs, if any, as a result of home inspection reports conducted for the buyer?
A standard question people ask when selling a house. Because the buyer orders one or more home inspections doesn't obligate the seller to make repairs or modifications as a result of those inspections. Typically, however, inspection reports are used to negotiate repairs of major problems, or environmental or safety hazards that may be noted. The purchase contract should provide guidance for these negotiations.
- Why should I use a real estate agent?
A real estate agent is more than just a sales person. A real estate agent may act on your behalf, providing you with advice and guidance when buying or selling a home. Due to the constant changing of the market, the information available on listings is not always 100% accurate. There are times when you need the most current information about what has sold or is for sale, and the only way to get that is with a real estate agent.
Something to know when selling your house is that you don't need to use a commissioned real estate agent to sell your home, but you may want to consider the benefits of having a real estate agent versus not using a real estate agent. In addition, many people would rather use an Agent due to the complexities of modern Real Estate transactions since they usually incorporate legal and financial attributes, which takes them well beyond more simple transactions, such as the sale of an automobile.
There are several advantages when using a real estate agent to sell your home, such as - your listing will be added to the Multiple Listing Service (MLS) so that large numbers of buyers will have access to the seller's property. In addition, your real estate agent absorbs all of the cost of advertising and marketing, and the screening that will be done of potential buyers by Agents. The Agent will also handle the details of negotiation.
Deciding whether to use an Agent or not depends on if you feel fully confident that you can handle all of the details, then you may well want to attempt selling your house on your own. If not, you most likely will want to use a real estate agent and leave the details to them.