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Buyer FAQs

BUYER FAQs

Q: Why is the pre-approval process so important?

Q: long does getting pre-approved take?

Q: Once I get pre-approved, must I stay with that lender?

Q: What’s the difference between pre-qualified and pre-approved?

Q: What’s the average amount of houses people see before buying?

Q: Why should I work with a buyer’s agent and what’s the difference?

Q: If a buyer’s agent is still paid on commission, wouldn’t he or she want me to pay a higher price so they get more money?

Q: How many houses can I see in a day?

Q: When is the best time to buy?

Q: Do I have to put down 20%

Q: How long does it take to close on a home?

Q: How much are sellers willing to negotiate?

Q: Do I need an attorney?

Q: Why is the pre-approval process so important?
A: Many reasons. First it let’s you know how much you can afford. A good loan consultant should not just discuss the overall maximum price you could borrow, but break it down to where the monthly payments are what you are comfortable with. Obviously, it also will answer any/all credit issues you may have. Goes without saying that in today’s world things happen you have no control over. You may think you have perfect credit, but until you check, you never know for sure. Lastly, when you find a home you like, you need a pre-approval to submit with the offer. Why should a seller accept your offer if he/she doesn’t know you can afford it.

Q: How long does getting pre-approved take?
A: Varies a bit, but don’t believe the commercials that say they can pre-approve you for a mortgage in 5 minutes.
A good pre-approval, one you can be confident in, will take between 45 minutes to an hour for the application process and then generally a day or two to verify all the information.

Q: Once I get pre-approved, must I stay with that lender?
A: No. It’s perfectly within your right to shop around. I would recommend, however, once you have an accepted offer on a home, to have your financing in place for the Purchase & Sales Agreement.

Q: What’s the difference between pre-qualified and pre-approved?
A: Being pre-qualified means basically nothing. Typically, it does not involve gathering all the required information and is almost always un-verified. A solid pre-approval in the beginning will save time and potential hassle in the long run

Q: What’s the average amount of houses people see before buying?
A: Naturally, this depends. However, if you have seen more than 6 and absolutely nothing is even close to what you would consider buying it might be time to take a step back and reassess what you are looking for or how you are looking. With every property you visit you should be making note of what you like and dislike, especially the later so you do not waste time viewing other houses with the same aspects. On average, our clients view between 10-15 homes before making a decision.

BONUS ANSWER: May sound crazy or just like a typical sales person, but do not automatically discount the first home you go to see. Naturally, you may not offer on it right then and there, but experience has shown us that people’s instinct is usually pretty good and the house that gets them out to look in the first place is the one best suited for them. What happens is, people automatically say, “It’s great, but we can’t just buy the first one we see!” Then they proceed to see a dozen more homes over the next few weeks and the first is still the best, but now it’s off the market to another buyer.

Q: Why should I work with a buyer’s agent and what’s the difference?
A: Essentially, there are two main types of agents out there, buyer and seller (or listing agent). Any real estate agent can perform both roles it just depends on the type of client he or she is working with (i.e. buyer or seller). When you have an agent representing you as a buyer, the benefits are many. First and foremost, it does not cost you, the buyer, anything for the services of buyer representation. Buyer agents are paid from the listing company as a part of the overall commission charged to the seller. In addition, “The agent owes the buyer undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability, provided, however, that the agent must disclose known material defects in the real estate. The agent must put the buyer’s interests first and negotiate for the best price and terms for their client, the buyer.” That is the technical definition. The practical side is beneficial as well. For example, if you have 5 properties you would like visit and did not use a buyer’s agent, you would have to call all 6 listing companies or agents to schedule them. Needless to say, trying to get to see all 5 in a row on a Saturday morning would be quite difficult if you are arranging it with 6 different agents. A buyer’s agent on the other hand, can make all 5 appointments for you and get you into all 5, one after another, saving you considerable time and aggravation. Lastly, if you were to find a property you wanted to purchase and saw it with the listing agent, where does that agent’s loyalty lie? It’s with the seller as they already have a signed contract. Of course, all agents are supposed to treat you honestly and fairly and with full disclosure. However, they have already agreed to negotiate on behalf and with the sellers best interests in mind. Having a buyer’s agent simply makes sense so there’s not even a hint of impropriety.

Q: If a buyer’s agent is still paid on commission, wouldn’t he or she want me to pay a higher price so they get more money?
A: We, of course, cannot speak for every agent out there. However, our answer is this, NO! First off, we are a company with agents here for the long haul. By giving you the best service and getting you the best price possible, we feel will pay off many times over with referrals and repeat business.

Q: How many houses can I see in a day?
A: Unless you absolutely have to find something and find something immediately, we recommend 4, maybe 5. Experience has taught us that after that number, clients typically have a harder time keeping track of what they have seen. Details get forgotten or mixed up and ultimately, nothing seems to stand out from the day.

Q: When is the best time to buy?
A: Simply put, there is no ‘best’ time to buy. There is, however, a best time for you. For example, purchasing in the winter months can be advantageous as there are fewer buyers (i.e. competition) out there and thus, sellers tend to be more flexible in negotiating. However, fewer new listings come on the market as well. So, there might be limited inventory in the area and/or price range you are looking in.

Q: Do I have to put down 20%
A: No. There are still plenty of loan options available that start as low as 3.5% down.

Q: How long does it take to close on a home?
A: There are certainly some variables; however, the typical transaction lasts about 6 weeks.

Q: How much are sellers willing to negotiate?
A: This will vary from house to house and seller to seller. Your agent can and should provide you with some type of market analysis prior to submitting an offer on any home and one of the most telling statistics is Sale Price to List Price Ratio or Sale Price to Original Price Ratio. Simply put, how much are homes selling for in relation to how much the sellers are asking for. This should give you a good idea of where you should think about starting with your initial offer. Factors that may effect how much a seller is willing to negotiate would include, how long the property has been on the market, how much activity the property has generated since being on the market, the competition (how many other choices are there for buyers in this area/price range?) and whether or not the property is occupied are to name some.

Q: Do I need an attorney?
A: No. However, a good percentage of buyers do end up using the lender’s or bank’s attorney. There is just one thing as a buyer you want to be aware of and that is ultimately the lender’s attorney represents the bank and not you. Now, in many instances, the bank’s interests are also your interests and in most cases there is not a problem. Most lenders’ attorneys will still review the P&S and make any necessary changes that are not in your best interests. Also, they will review (if applicable) any condo documents and/or association budget to find any potential issues. Keep in mind, however, in regards to condo documents, they will not always know how every by-law directly effects you. A rule may be, “no pets” for example, but the attorney has no idea if this applies to you or not and would probably not point it out. So, it’s also highly recommended that you also read the condo documents for those type rules that may or may not be of concern to you. If you do decide to hire your own attorney, it’s also recommended that you use a real estate attorney. It is a specialized practice that not all lawyers are familiar with.

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