Home Buyer's FAQs: Questions on Buying a Home
I’m interested in new homes and the developers all say I can work directly with them.
You certainly can, but if you ever needed an agent it is when you are buying from a ‘professional seller’ such as a builder. My job is to protect your interests, point out the pros and cons of what the builder is offering, such as, Is the premium they are charging you for the corner lot really going to make sense when you go to re-sell? I can help you save thousands in the long run no matter what you’re buying by helping you buy smart and the price of the home remains the same.
I can find properties on the Internet, I just need you to ‘get me in the door”.
What you find on the Internet are the properties being advertised – not necessarily all the properties available. I not only have access to the MLS with up to date information on the latest listings but have relationships built with agents in other offices that may have listings that are not being advertised that might be just what you’re looking for. Even in a buyer’s market there are homes selling daily that you might never see if you wait for them to go on the Internet – they’re selling before they even get there.
What is a buyer’s representative?
Defined most simply, a buyer’s representative (also buyer’s rep, or buyer’s agent) is an advocate for the buyer—not the seller—in a real estate transaction. Real estate laws and regulations vary from state to state, but buyer’s representatives usually owe full fiduciary (legal) duties, including loyalty and confidentiality, to
How does an Accredited Buyer’s Representative (ABR®) differ from other buyer’s representatives?
An ABR® is a buyer’s representative who has completed advanced training and who has proven experience in serving the special needs of buyer-clients. In addition to knowing the dynamics of their local market, an ABR®-designated buyer’s rep can help you make informed decisions throughout the entire home buying process. An ABR® is also a REALTOR® (a member of NAR) and must abide by a strict Code of Ethics.
What services are provided by a buyer’s representative?
If you’ve established an agency relationship with a buyer’s representative, common services include:
What is the standard compensation structure for real estate professionals?
For the most part, real estate professionals are compensated by commission, based on a home’s selling price. Commission rates are not standardized, but vary, as does how the sales commission will be divided between the agents on the selling and buying side of the transaction. There is consistency, however, in how commissions are paid. When a seller signs a listing agreement, their contract is with a brokerage firm. All fees must pass through that brokerage firm. Typically, the seller’s representative—and your buyer’s rep—will be paid by the listing broker after the transaction closes.
Will I pay more to be represented as a buyer?
In the vast majority of cases, the answer is no. When a house is listed for sale, the seller’s contract spells out the commission rate that will be awarded to a buyer’s representative. This is known up front and typically covers all, or at least most, of your representative’s compensation.
If it doesn’t, the choice is yours. You can scratch this house off your list, or decide to view it, knowing that any remaining compensation will need to be addressed. But even if the seller’s listing contract doesn’t entirely cover your buyer’s representative’s compensation, and you must pay the difference, it’s quite possible that these relatively small differences will be more than offset by other purchasing terms negotiated with the seller.
Can I avoid real estate commissions altogether and buy directly from a seller?
Yes, this is an option that some buyers explore. However, it’s important to understand that nothing is truly free and this approach still carries a price. Unrepresented sellers (for-sale-by-owner properties) frequently lack adequate information about how to price their home, or attempt to inflate the price in lieu of paying a real estate commission.
As an unrepresented buyer, it will be much harder for you to know if you’re overpaying. Real estate professionals have developed keen pricing insights that go well beyond simply evaluating data through the Multiple Listing Service (MLS). And if you are overpaying, it will create further complications in securing financing.
For these, and many other reasons, a high majority of consumer-to-consumer housing transactions never reach closing. Real estate professionals play a valuable role in keeping your home-purchase on track, starting with selecting and touring properties and continuing through negotiations, inspections, financing and closing. This is especially true in today’s market, where alternative buying opportunities, including short sales, have added even more complexity to some real estate transactions.
How much house can I afford?
When evaluating how much you can afford for your home and mortgage, lenders usually use two rules of thumb:
1. Your maximum monthly mortgage payment should not exceed 28 percent of your gross (pre-tax) income.
2. Your maximum debt load, including your mortgage payment, should not exceed 30 percent of your gross income.
These ratios are typical of those required to secure a conventional mortgage. Lenders will be able to supply details about other types of mortgages, such as FHA or VA loans, which offer more flexible qualification standards. There are many types of mortgages and financial tools available that provide flexibility in interest rates, terms, and down payment requirements.
What’s the difference between being pre-qualified and pre-approved for a mortgage?
Typically you will first pre-qualify for a mortgage, then get pre-approved before you have found the specific home you wish to purchase. What is the difference?
Pre-qualification: An informal determination by a lender or mortgage broker stating how much mortgage you can afford.
Pre-approval: A guarantee in writing by a lender to grant you a loan up to a specified amount.
What are the advantages of being pre-approved?
There are two advantages of being pre-approved for a loan as early as possible in your home-buying process:
1. Sellers will find any offer you make more attractive if you are pre-approved for a mortgage.
2. The length of time before closing can be shorter if you’ve completed the steps to securing mortgage approval prior to signing a contract on a property.
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