Elizabeth Leanza, Realty One Group - Realtor Your Choice for Real Estate Services In Middle Tn Frequently Asked Questions We Answer Your Important FAQ's FAQ for Real Estate Realtor Questions & Answers Why should I use a Real Estate Agent? A home is quite possibly one person’s largest asset they will own in their lifetime, so why not entrust a true professional to handle the purchase or sale for you? It is so much more than just looking at houses online and dreaming. There is a whole process and a lot of hoops to jump through from the moment the offer gets written, accepted, and to the closing table. There are legally binding documents to sift through and understand. Your agent is there to guide you and advise you, negotiate the BEST deal on your behalf, and ensure the transaction goes smoothly for their client, from start to finish. Hiring a true real estate professional to work on your behalf and guide you, is one of the most valuable tools in your tool-belt for the sale or purchase of your home. How long should I expect the entire process to take? Buying a home is a huge investment and many are super excited to start this journey. However, it does take time to get approvals and the paperwork around. If you have cash, then the process will take a little less time. However, many of us do not purchase property with cash. There are a lot of variables that contribute to the length of time it takes for a purchase of property to close. However, a commonly estimated time-frame utilizing mortgage financing is roughly 35-40 days from going ‘Under Contract’ or “In Escrow. If I’m buying a new construction home, why should I have my own agent vs using the builder’s agent? New construction is one of our largest sources of inventory currently due to a shortage of available existing homes, so it’s safe to say we are seeing more and more of our buyers gravitate toward new construction homes. It is imperative to have your own representation as the buyer on a new construction home purchase. The reason being, the Builder’s Representative is just that, the “Builder’s” Representative. They represent and negotiate on behalf of their client, which is the builder. Most new construction communities even have their own specific purchase contract, and it is very common for the verbiage to fall in favor of the builder in many instances. It is only wise the buyer has their own representation, to review the contract, ensure they are being advised and a professional is there to negotiate the best deal on their behalf. My recommendation is to always secure buyer representation PRIOR to touring a model home or meeting with the builder’s agent, some builder communities will refuse your choice to secure buyer representation if your agent is not present at the initial meeting! What is the first step in becoming a homeowner? The very first step of the home buying process is to find a true real estate professional to help you! The reason for this is an experienced agent is well-connected in many ways. We are there to recommend the best Mortgage Lender to get you pre-approved, which is the second step in the home buying process. This is a very important component since you won’t know what your purchase power is as a buyer until you speak with a lender. I will help you find a great lender that will work with you on recommending the best loan program that meets your financial requirements. Some lenders are more strict than others, should you have a unique situation such as you are a business owner. To determine what sort of payment you would be looking at and what amount of loan you can afford, there are online calculators that can help, but your lender will go over this in detail with you. Error on the high side to ensure that you can afford the payment. This pre-approval is important as most sellers require one as it protects the sellers from showing their home to people that are not actually even interested or qualified to buy and waste their valuable time. When should I talk to a lender? It is never too early to speak with a Lender regarding your pre-approval! A good rule of thumb is about 6 months-a year prior to when the buyer would like to look into purchasing a home. A common misconception is people need to “get things in order” before making that call. What they do not realize is most quality Loan Officers will assist the buyer in that process. Most have resources, such as credit repair companies, if the buyer’s credit is below the minimum requirement. How much home can I afford? This is the Million Dollar Question! The best way to truly find out what your purchasing power as a buyer is to speak with a Mortgage Lender. A loan officer will work with you in finding how much home you can afford based on numerous factors regarding your financials. This pre-approval step is crucial in the home buying process, as you wouldn’t want to fall in love with a home that is outside of your budget. The pre-approval process is actually much simpler and quicker than people think and starts with an online application. And with all of my years of experience, I have great lender recommendations! What is the difference between a Real Estate Agent and a Realtor? Both Real Estate Agents and Realtors are licensed in helping people buy and sell real estate. They are both bound by state licensing requirements; however, the main difference is that a Realtor is held to a higher set of standards than a real estate agent. A Realtor is bound by a Code of Ethics, which in turn typically results in above-and-beyond service for not only their clientele but for all parties to the transaction. What is the difference between a buyer's and a seller's market? When we see a “Buyer’s Market”, we usually have roughly 90+ days of inventory on the market. It means there are more homes available than there are buyers, which gives the buyer’s more options to choose from and more room for negotiation on their behalf. When it’s a “Seller’s Market”, it means there isn’t enough inventory to support the amount of available Buyer’s, thus resulting in bidding wars/multiple offer situations, and homes tend to sell above asking price when this happens You want to buy during a buyers market if possible. That means that the home values are down and there are a lot of homes on the market. This usually happens during down economic times. During this time you might see a short drop in interest rates to try to lure people out and purchase. However, typically in a buyer’s market, the interest rates are up to try to slow the sales. During a seller’s market, you will find fewer homes on the market. The market is for the sellers and the prices are a bit higher. The interest rates are down to try to seek out more buyers. This usually happens during good economic times. What is a stratified market? A stratified market is a market that is divided but in the same area or city. This could mean that the higher more luxurious homes are in a buyer’s market while the more affordable and less expensive homes are in a seller’s market. This usually happens because investors are in the market. Sometimes these investors are foreign and living in completely different economic times than that of the local market. What are the costs as a buyer to a real estate agent? Typically, it is very little to no cost. In our current market, it is customary for the Seller to pay the Buyer’s Agent and Listing Agent’s commissions. What credit score will I need to purchase a home? This question is best answered by a trusted Mortgage Lender, as this can vary greatly between a lot of factors. However, a common pre-COVID minimum credit score was 580 depending on the loan type, and of course many other variables. The lenders are taking a huge risk by lending someone money to purchase a home. So, they do like to see higher credit scores currently. However, if you have a lower credit score but a nice down-payment, they may consider you as well but possibly with a higher interest rate. What is a typical down payment? A typical down payment in our market is 0.5-3%. There are programs out there that will offer you a loan with no down payment. However, these sorts of programs are usually more strict than others. Don’t get discouraged, there are lots of home loan programs out there. There are loans that you can take out with a significantly smaller down-payment, you would just have to purchase private mortgage insurance, which is another monthly cost that protects the bank or mortgage holder. Do I have to sell first in order to buy my next home? This will be determined by your current situation. Some people want to use the equity that they have built up in their home on their next home’s down-payment. Because of that, then you will have to certainly sell before you buy, to get the money in hand. However, some people want to keep their current home and rent it out, especially if it is paid off. This will give them income to help offset the new home payments. While this is an option, it will affect the loan approvals and application. You should speak with your loan officer for answers to your specific questions. What is the MLS? MLS stands for Multiple Listing Service. It is our professional database as Real Estate Agents for entering all the data for listed properties. Most 3rd-party syndicated websites pull information from the local MLS, which can, unfortunately, result in inaccuracies in the information. It is best to get in touch with a Realtor early in your home search, to ensure you see every home available in your price range. How many homes should I view before settling on one? This is entirely up to you but please remember the longer you view, the longer it will be until you are in your new home. While you can view and look at homes easily online, you really should step foot in the home, if possible, in order to get the feel of that home. What does FSBO mean? FSBO stands for “For Sale By Owner”, and it’s when a homeowner decides to attempt selling their home themselves without the assistance of a licensed real estate professional. The most common reason for this is to save the cost of paying the real estate agent’s commission. In most markets, it is customary for the Seller to pay both the Buying Agent and the Listing Agent’s commission. Depending on the negotiated percentage, this can be quite a lofty number depending on the purchase price. But what most homeowner’s don’t realize, is FSBO properties tend to sell up to 15% less than a property that was listed by a real estate agent! Not to mention the stress to market the property properly, be available to show the property, and go over contracts by themselves with no professional assistance. What are contingencies? Contingencies within the contract to purchase property are conditions that must be met to become an official agreed-upon contract by all parties. Common contingencies within purchase contracts are an inspection contingency and an appraisal contingency. What is earnest money? Earnest Money, Trust Money, or “good faith” money is a certain amount of money a buyer puts forth along with their offer. This money shows the seller that you, as the prospective buyer, are serious in their intent to purchase their home. The amount of money is negotiable and isn’t required in the state of Tennessee, however, it definitely helps in potentially setting your offer apart from the competition. The money is almost like a deposit and is utilized toward the purchase of the property upon successful closing. How long does the seller have to respond to an offer? Upon writing your offer with your real estate agent, you as the buyer will set a time that the offer will expire. You as the prospective buyer, are setting a time-frame for when you expect to hear back from the seller. In a competitive market, it is wise to not give the seller too much time to respond, as other offers could come in during that time. I usually recommend a 24 hr time-frame. What if my offer gets rejected? While some offers will be rejected, most of the time there is a counteroffer instead. While a counteroffer may be acceptable, it may not as well. This will be up to you and your agent to go over the offer. This means that the game is still on and you are still in it. The game isn’t over until the offer in play is either expired, or there isn’t a reasonable set of terms that is agreeable to all parties. Should I always do a home inspection? 100% yes! You are most likely purchasing the largest asset you will own in your lifetime; it is wise to have a professional inspector take a look at the home to ensure there aren’t any deal-breaker issues. Your real estate agent can then negotiate the seller to repair certain items that were found during your home inspection, giving you peace of mind upon moving into your new home. Even on new construction? Yes, especially on new construction as no one home is perfect! While there are code inspections and requirements that need to be met when building a new construction home, there is such thing as “human error.” You would not believe some of the things my buyer’s inspectors found on new construction homes! It is always my recommendation to get a professional home inspection regardless of the home’s age. Do I need to do a final walk-through? I always recommend a final walk-through with my clients. A final walk-through is needed to ensure that you are satisfied with the repairs requested and that nothing has drastically changed with the condition of the home. Sometimes there are repairs that are requested in the offer. This gives you time to ensure those repairs were done properly and to your expectations, and if not gives us time to have the issues remedied prior to signing the closing papers. Elizabeth Leanza, Realty One Group – Realtor 600A Frazier Dr, Ste 123 Franklin, TN 37067 Phone: (615) 490- 4953 Office: (615) 636-8244 HOME ABOUT FAQ BLOG CONTACT ADDRESS 600A Frazier Dr Ste 123, Franklin,TN 37067 CALL (615) 490- 4953