The processes of buying or selling a home can be extremely stressful, to say the least. As real estate agents, we've seen every level of calm and chaos on the client spectrum, and no matter what it looks like, it's always warranted. Between prep and closing, there are about a thousand steps to take, and each can take its own toll on those involved. But that's precisely why we're here....
We want to help you sidestep the chaos and experience the gratification that comes with moving to your next chapter.
We get a LOT of questions as we meet with clients, negotiate with other agents, slog through contracts, and sit down for closings. In the interest of education, we thought it might help to lay out the 10 most common questions real estate questions we get, along with the respective answers from our team of in-house, experienced agents!
THE MOST COMMON QUESTIONS (AND ANSWERS!) WE GET AS AGENTS:
Question: How much is my home worth?
Answer, HW agent Candace Fite: A home's value is determined by the willingness of a buyer and seller to agree on a price. An appraiser's job is to justify that price with three recently sold, comparable properties—these will be as similar in style, size, condition, layout, location, and stats as possible. This will be reduced to a price per square foot to find the average, after which it will be applied to your property. Realtors do a similar analysis—other considerations include the unique qualities of each home, as well as others currently listed and the current state of the real estate market. A marketing strategy should be tailored to each home.
Question: I've never bought a home before. Where do I start and how do I know what I can afford?
Answer, HW agent Melissa Lipani: We are here to guide you! There are no silly questions, and a reputable agent can help you with every step of the process. A great starting point is to connect with your agent regarding your wish list and to chat with some lenders to begin the pre-approval process (your agent will have a helpful list of trusted professionals who can quickly and easily help). Being pre-approved with a solid lender will streamline and accelerate your journey to home ownership, as well as help set some realistic expectations as you begin your search. Lenders can also assist with credit education and repair if you need to take some steps to get ready. Your agent and lender will work with you hand-in-hand, not only to understand your budget, but to ensure a timely, smooth transaction once you find your dream home!
Question: When is the right time to buy a house? Should I wait for the rates to drop?
Answer, HW agent Camilla Granasen: The right time to buy a home is when you find the right place for you and your circumstances. If you wait for the rates to drop, you'll be competing with many other buyers—this typically drives the prices up and increases competition. If you work with an experienced agent (nudge, nudge...wink, wink), we can help set you up with a great lender. This enables us to go cover the specifics of your situation, which can be accounted for when writing an offer (such as sellers paying for closing costs, buying down rates, etc.). There are lots of ways to get you into a place you can afford, after which—if/when rates drop—you can consider refinancing as an option.
Question: Do I really need 20% down to buy a home? I've heard that if you don't, your mortgage can be really expensive.
Answer, HW agent Keni Nelson: This is one of the most common questions I hear, and to be clear: you do not need 20% down. For most buyers, a lender will only require a minimum of 5% down—in the case of a $500,000 property, for example, we're talking about a down payment difference of $75,000, which is pretty significant. Depending on your circumstances, there are also financing options available with as little as 3%, or even 0%, down. When a lender looks to provide a loan to a buyer, the amount of down payment is just one part of the equation—your income, debt, credit score, and other assets all play an important role in how a lender analyzes your buying strength. That all said, a 20% down payment is often recommended largely because of mortgage insurance. This is an extra fee built into your monthly mortgage payment (again, determined by all the same factors that the lenders consider when determining your loan). For most buyers, this is a temporary fee that goes away as your equity in the home grows. So while your mortgage payments may be temporarily higher for a few years, it's still significantly less than the $75,000 you kept in your pocket by only putting 5% down. Sounds like a pretty good trade to me.
Question: What are some of the pros and cons of going with an FHA loan?
Answer, HW agent Adam Compton:
Pros: More flexibility in terms of credit score and debt-to-income ratio; minimum down payment required is as little as 3%; down payment assistance program options; co-borrower options; gift money options; excellent first-time home buyer opportunities; a foot in the door to home ownership.
Cons: Strict property condition standards (a good thing!); loan limits, currently $498,257 in Utah for single family, though higher for multi-units; tighter valuation required with certified FHA appraisers (extra protection from overspending on your home); sellers may be reluctant to accept FHA loans in a competitive market, should their agent be savvy to the implications.
Question: What if something comes up during inspection? How will buyers know how to fix it and what it will cost?
Answer, HW agent Liz Elias: Good realtors don't always know all the answers, but they know how to find them! We have an extensive list of experts and resources available to help find solutions and estimates for anything and everything that may come up during your due diligence period. For clarification, the "due diligence period" is the time during which we can identify any potential problems with the home, get pricing, and go back to the seller for repairs or credits so that buyers can proceed with the purchase feeling good about their future abode. Experience matters, and that's why it's important to choose an agent and brokerage that has seen it all!
Question: How much can I rent my home for?
Answer, HW Agent Candace Fite: The rental market is still currently strong and it depends on what's offered (one great example...landlords offering space for pets can usually charge more). Average rental rates vary, but it's worth a conversation. We always love seeing our clients add to their portfolio with a rental!
Question: Do I get my earnest money back?
Answer, HW agent Jenny Compton: Yes, you will be refunded your earnest money if you decide to cancel the contract before your contingencies deadlines have passed. Two common contingencies in a contract are the Due Diligence Deadline and Financing and Appraisal Deadline (more info below). A buyer will be likely to have forfeited their earnest money if the contract is cancelled after the buyer’s contingencies dates have passed or have been removed.
Due Diligence Deadline: With a due diligence contingency, a buyer who's under contract can decide against the house for any reason prior to the due diligence deadline—upon cancellation, their earnest money will be returned to them. Common reasons for this include inspections that reveal larger issues with the property—should the buyer and seller find that they're unable to reach an agreement when negotiating repairs, the buyer may cancel the contract and retrieve their earnest money.
Financing and appraisal deadline: Like the due diligence deadline, the financing and appraisal deadline enables an under-contract buyer to cancel prior to this deadline contingency and have their earnest money returned. Common reasons for this include loan terms that the buyer does not approve, loan denial, or a low appraisal that leads to a situation wherein the buyer and seller are unable to negotiate on a sales price.
Question: If I sign and go under contract, can I still back out?
Answer, HW agent Camilla Granasen: Yes, there are built in contingencies for inspections, reviewing of HOA documents (if applicable), appraisal, and loan. At each point in the contract, there are options for negotiations and/or options for withdrawal. An agent will help you navigate the process to ensure it's the right home for you, and they'll negotiate on your behalf to get you into the home under the right conditions.
Question: Is my bank the best place to get a mortgage loan?
Answer, HW agent Kayla Bobzien: It depends! I always recommend talking to multiple lenders and mortgage brokers. Your bank may be a good place to start, but often times, local financial institutions/brokers have specific programs and rates that may be a better fit in the area(s) you’re interested in. As agents, we can help connect you with mortgage professionals to find the best fit for your needs.
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