Frequently Asked Questions (FAQs)

HOME

• When looking at houses, isn’t it easier to just call the listing agent?

The listing agent’s sole duty is to the owner to represent the owner’s best interest, and will be neutral at best when representing both you and the owner. A good way to picture it is going to court with the same lawyer representing both parties. It is in a buyer’s best interest to have their own representation. A quick call to an agent you trust can make a world of difference.

• If I am going to build a new home, should I just go directly to the model home myself?

Typically, builders have their own agents and they represent the builder’s best interests. Having your own agent looking out for your best interests will benefit you without increased costs. Builders have their own contracts and a well trained agent will know what pitfalls to look for and questions to ask. Some builders will not include your agent if they are not with you on your first visit. This means more money that can be kept by them, but no benefit to you.

• 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.

• Can I back out of my contract with one buyer and accept a new, higher offer from a second buyer?

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?

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. You may also give counter offers to one or more of the potential buyers.

• 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 impact property values. So it is critical to determine your listing price based on the most recent comparable sales in your neighborhood. It would be a good idea to get a CMA, also known as Comparative Market Analysis, which I provide for free with no obligation.

• 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. Once a counter offer is made, the terms of the previous offer are replaced and cannot be reverted to without agreement of all parties.

• Who is responsible for making repairs, if any, as a result of home inspection reports conducted for the buyer?

The purchase contract states the property is being purchased as-is. The buyer may order one or more home inspections, but this does not obligate the seller to make repairs or modifications as a result of those inspections. However, it is common for inspection reports to be used to negotiate repairs of major problems, including environmental or safety hazards that may be noted.

• Can a home depreciate in value?

Historically, 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. 

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 affect your home’s value.

• Is an older home as good of a value as a new home?

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 usually cost less up-front than newer homes, but often have maintenance items happening sooner and more frequently.  Most new homes will not have any backyard landscaping and some don’t include any front landscaping either. With an older home, the landscaping is normally already completed and included in the purchase price.

New-home designers can use new building materials such as energy efficient windows, thicker insulation and other technology that will lower future utility 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. Older homes, unless they have undergone an energy retrofit, usually cost more per square foot to air-condition and heat.

As you can see, there are advantages and disadvantages to each, but it really comes down to what fits you and what you are looking for in a home.

LENDING

• Why does credit score matter when buying a home?
• Credit scores are merely an assessment of risk for those providing a loan. The lower a score is, the more risk a lender is taking on. Typically, a higher score will allow you to obtain the best terms, including interest rate, on a loan.
• What are closing costs?

Closing costs are expenses incurred by buyers and sellers in transferring ownership of a property.

• What is the difference between being pre-qualified and pre-approved for a loan?

If you’re pre-qualified it means that you could POTENTIALLY 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 pre-approval.
If you’re pre-approved, it means that you have undergone an extensive financial background check which includes looking at your credit history, previous tax returns, and verifying your employment. Basically, the lender is willing to give you a loan, meaning you’re approved!
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 pre-approved because they know that there will not be any problems with the purchase of their home.

• What is an appraisal?

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.

The lender receives a copy of the complete report, showing the basis for the appraiser’s estimate, then provides this report to the buyer.

• What is a rate lock?

A rate lock guarantees a certain interest rate for a certain period of time before finalizing the loan.

• How can I avoid private mortgage insurance?

The easiest way to avoid PMI is by putting 20% on a down payment; PMI can also be avoided if you only have 5% or 10% for the down payment. There is also the option of buying out your PMI at the beginning of the loan. This may be a good idea if you plan on keeping the same mortgage for a long period of time.

• How is interest calculated on a mortgage loan?

Most mortgages originated today calculate interest in arrears, unlike consumer loans which calculate interest to the date of payment receipt. As an example, when borrowers pay their February mortgage payments, they are paying the January interest. This method of calculating interest is based on a 360 day year in which each month has 30 days.

• How long does the loan process take?

The number of days from application to closing can vary from just a few days to 45 or more days, depending on a number of factors. Some of the factors include: loan type, whether an appraisal is needed, and title clearance. Time delays also occur if outside sources or the borrowers do not promptly provide documents to the lender.

• What is an escrow officer?

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.

TITLE

• 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.