TimLordRealtor.com - Buyers

Buyer FAQ’s

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I want to buy a home…How should I get started?
You could just start driving around the areas you like looking for houses
for sale, calling the listing agent, ask questions and have them show it to
you. There is a much better way. Talk to a Realtor® first and tell them your
needs. They will help you determine the price range you can afford, give
you listing sheets and show you houses within you parameters. This can
save you lots of time.

What does loan per-qualified/pre-approval involve?
Usually a phone call to a bank or mortgage company giving them
permission to check your credit. Depending on your credit and income,
they will be able to tell you how much of a mortgage you can afford.
When offers are made on houses, the seller wants to know if the buyer
can get a loan. By getting pre-qualified or pre-approved first you get a
document that can be given to the seller at the time of the offer that says
you can get a loan.

What are the most important things in searching for a new home?
LOCATION, LOCATION, LOCATION! After that comes price and
amenities. You generally have an idea as to what area you want to live. A
Realtor® can tell you if the house you are looking at is priced right, what
will affect property values in a community, can determine historically if a
neighborhood is stable and homes retain value, should be able to tell you
the zoning of the empty field behind the house you are looking and how it
could affect the house value. They can also tell you what features of a
house will help in the future resale.

What is a daily automatic MLS search and how will it help me?
A Realtor® can set up a daily automatic search for you so that anything
new on the MLS that meets your parameters is sent to you by way of
email. This will keep you on top of all new listings and give you the edge in
seeing it first.

What should I expect of a buyers agent?
A buyer’s agent represents you as a client. They should be able to help
you through the whole buying process, finding houses for you to see,
helping you find satisfactory mortgage companies, inspection companies
and anything else that you might need in the home buying process. A
buyer’s agent represents the interest of the buyer as a buyer’s agent when
showing other agents listings. A buyer’s agent owes duties of trust, loyalty,
confidentiality, accounting and disclosure to the buyer. However a buyer’s
agent must deal honestly with a seller.

Who pays the commission for the buyer’s agent?
Usually the seller pays all commissions. If the buyer has signed an
exclusive buyer’s agency agreement then they could be responsible for
some or all the commission. This is not customary in Indiana but still
happens occasionally.

Will the buyer’s agent show me “For Sale by Owner” homes?
Realtors® don’t generally work for free. If the FSBO owner is willing to
compensate the Realtor® if you were going to buy it then the buyer’s
agent could show you the home. If the buyer were willing to compensate
the Realtor® on the sale of the FSBO then it could be shown.

How do I know which neighborhoods I want to live in?
First find out through your Realtor® which neighborhoods you can afford
to live in. Then drive through them looking for things you like. Are yards
and gardens kept up? Do driveways have 6 cars parked in them? Are
there basketball goals setups at the curbs? Are there a reasonable
amount of houses for sale in the community? Do you want lots of kids in
the neighborhood? Are the common areas kept up? Sometimes it is wise
to drive through the neighborhood at different times during the day. You
can see what traffic is like on the main roads. The real answer is “What is
important to you?” Ask your Realtor® to help you.

What are the most important factors in picking a house?
Location, price and amenities. You want to find a house that is in the right
location in the neighborhood, priced right and has the amenities that you
want. Amenities can be a club house, community swimming pool,
community tennis courts, playgrounds etc. Also when buying a house,
consider the resale value. If you plan to live there 10 years it is not as
important. If you plan to sell within 5 years it can become very important.

Are school districts important?
It depends on the buyer. It can be important then again some buyers don’t
consider it. There are many websites where you can go to check out
school systems. One of the websites is www.greatschools.net

I have narrowed my search down to three homes. How do I pick one?
Flip a coin?...Just kidding! It really depends of your motivations. How long
do you plan on living there? Is resale important? Is the neighborhood
stable? Which house fits my lifestyle the best? Are all the houses in move
in condition or do they need work and can you afford the time and
expense of having work done before you move in? Ask your Realtor® to
help you with this. They may be able to find things about each house that
you are not aware of.

I have found the home of my dreams but I want the curtains and appliances.
How do I get them with the offer?
Ask for them!!! Sometimes sellers are willing to give them up just to sell
the house. Sometimes they can be negotiated by house price. Sometimes
the seller won’t give them up under any circumstances. You would be
surprised what can be negotiated in the sell of a home when the seller is
motivated.

I am ready to make an offer. Should I ask List Price?
First off, ask your Realtor® what the list price to sale price ratio is in the
neighborhood. This is the percent off list price that past sellers in the
neighborhood have taken on the sell of their homes. This can range from
0% to 10 percent% depending on the neighborhood. If you are not asking
for anything else then getting the ratio percent is usually acceptable. If the
Realtor® finds out there are possible multiple offers because of the
property, it is wise to offer list price or as close to list as possible. If you
really want the house, it is not unusual to offer over list. The big
consideration here is, will the property appraise for that amount. If you are
asking for closing costs and repair allowances then it is wise to ask close
to list price or even list price. There are many things to consider and a
Realtor® can help you with this.

What happens if there are multiple offers?
(Two of more offers at the same time)
The seller usually chooses the one that gives them the most money or the
best deal. Sometimes the seller will tell the buyers agents that they have
multiple offers and they are not going to accept any of them. They then
ask for the buyer’s agents to again get with their buyers and write up their
best deal for the house and submit it. The seller then decides. This forces
the buyers to give their best deal for the house or walk away from it.

How can I make my offer look good from the start?
If the house is priced right, a full price offer would not be out of the
question. Offer as much earnest money as you can. This shows that you
are serious with your offer. Don’t ask for any closing costs or allowances.
Traditionally the buyer pays for the closing cost fee, survey and the
buyer’s mortgage insurance policy. The cleaner the offer (not asking
anything from the seller) the better the offer will look to the seller.

What happens during negotiations?
Your buyer’s agent has given the offer to the seller’s agent who in turn
gives it to the seller. The seller likes the offer except for a few items. The
seller’s agent then writes a counter offer that the seller likes and gives it to
the buyer’s agent who in turn gives it to the buyer. The buyer can accept it
or have their agent write another counter offer that the buyer likes. This
can go on 5 or 6 times or if the parties are not coming close to a deal they
walk away without an agreement. Every negotiation is different.
What are the general time lines between an accepted offer and closing?
Traditionally in the MIBOR area it is 30 – 45 days. It can be done in as
little as 10 days and as much as 4 months. This depends of what the
buyer and seller agree to.

What is a pre-closing walk-through?
Typically one of the contingencies in a house sale is an inspection done
by a licensed inspector that shows no major defects. Usually during the
inspection other things turn up that need to be repaired. If the seller
agrees to have them repaired, the buyer has the right to do a pre-closing
walk-through to make sure the repairs have been done.

Once a closing date has been set, can it be changed?
Usually anything can be changed as long as the seller and buyer agree to
it in writing and signed by each.

What can I expect at closing?
In Indiana closings take place at Title Companies. They are usually held in
small conference rooms with the seller, their agent, the buyer, their agent
and the closer from the Title Company. It is not unusual for the buyer’s
mortgage company representative to be present. Indiana state law
requires the seller’s and buyer’s real estate agents to be present. The
closer is in charge and goes through a stack of documents that need to be
signed by both parties. The buyer should be prepared to sign about 30-45
documents. Once all documents are signed, the closer leaves the room to
get copies made and checks for the different parties. The seller then gives
the house keys to the buyer. The closing is done.

What are typical closing costs and can you explain them?
Closing costs can vary depending on Mortgage Company and Title
Company. Here is a general breakdown;
Mortgage Company
Loan origination fees
Loan discount fee
Appraisal fee
Credit report fee
Underwriting fee
Tax service fee
Application fee
Prepaid items
Interest
Hazard insurance
County property taxes
Title Company
Closing fee
Survey fee
Document prep fee
Title insurance fee
Courier fee
Recording fee
These fees can vary greatly but generally in total are in the $1500 to
$3500 range for a house priced at $100,000 with good credit. The higher
the loan amount, the higher the mortgage company fees will be. Loans
fees can also be based on credit scores. The lower the score, the higher
the fees.

Many times the deal can be made where the seller pays closing costs or a
good portion of them and the buyer needs very little money to close the
deal.

How do I find a good mortgage company?
Ask your Realtor® for names of companies that they have used in the
past. Realtors® usually have good recommendations because their
business depends on good mortgage companies. Visit them and find one
that you are comfortable working with.

What kind of mortgage loan do I want?
One that you are comfortable with. Mortgage companies today have many
different products. Discuss your needs with the mortgage officer and see
what they can offer.

How much can I afford?
A good rule of thumb is 2.5 times your yearly income. This can vary
depending on your credit score and type of loan.

Do I have to have a down payment?
Not always. Again depending on the loan type. Sometimes you can get
the seller to make your down payment for you.

Suppose my credit is not very good?
A mortgage company can check your credit and tell you how to improve
your credit score over 6 months to a year.

The house I want needs a lot of repairs. Can I borrow money
for the house and the repairs?
There are certain types of loans that will allow you to do this. Talk to a
mortgage company and see what they have to offer for this type of house.

Will I need mortgage insurance?
If there is a mortgage, the mortgage company will require a mortgage
insurance policy. Usually the cost is between $125 and $200.

What is the debt-to-income ratio lenders use to qualify borrowers for loans?
Your debt-to-income ratio should be less than or equal to 36 percent. This
means that your bill payments should not be more than 36 percent of your
income.

Will I be able to see the results of the appraisal?
The mortgage company will require an appraisal of the property to make
sure it is worth the money they are lending. The buyer usually pays for it
and is their property. You will be given the appraisal at closing or it will be
mailed to you by the mortgage company.

Suppose I don’t have any existing credit?
Today there are lenders that will give you a mortgage if you don’t have
any existing credit but have a credit score and pay for public utilities. Ask
your Realtor® for their names.

If the appraisal comes in lower that the price we offered, and we
want to back out of the deal, can we get our earnest money back?
Generally yes. The purchase agreement states that the deal is contingent
on the buyer getting financing. If the buyer can’t get financing because the
property won’t appraise, then you should be able to get your earnest
money back.

If I make an offer on a house and it turns out that I can’t get a
mortgage, can I cancel the deal and get my earnest money back?
Generally yes. It is the same answer as above question.

Is a survey necessary?
It used to be yes. Now, not so much anymore. If it was necessary, it would
be a mortgage company requirement. Today most mortgage companies
don’t require surveys if the property is in a plotted community. They most
likely would require a survey if the house was on many acres of land or it
was on unimproved land.

What does a loan application look like?
Since most loans are eventually sold to Freddie Mac and Fannie Mae,
they require a uniform residential loan application. This has become the
industry standard. See the form here
www.TimLordRealtor.com/buyers/1033.pdf