Pinnacle Real Estate
The Peak of Real Estate Services
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Buyer FAQ'S

Whether you’re a first-time or repeat buyer who could use a refresher on how deals get done, here’s are some answers to the questions that come up most often.

 

1. What the first step of the home buying process?

Getting pre-approved for a mortgage is the first step of the home buying process.  Getting a pre-approval letter from a lender get the ball rolling in the right direction and will accompany any offer to purchase.

2. How long does it take from the accepted offer to closing on a home?

Under normal market conditions, the average time to complete the sale of a home is 30 to 45 days.  Well-prepared home buyers have been known to purchase properties faster than the averages.

Market conditions are a major factor in how fast homes are sold.  In hot markets buying a home may take a little longer than normal. That’s because several parties involved in the transaction get behind when business suddenly picks up. For example, a spike in home sales increases the demand for property appraisals and home inspections, yet there will be no increase in the number of appraisers and inspectors available to do the work. Lender turn-around times for loan underwriting can also slow down.

3. What is a seller’s market?

In sellers’ markets, increasing demand for homes drives up prices. Some of the drivers of demand:

  • Interest rates trending downward – improves home affordability, creating more buyer interest.

  • A short-term spike in interest rates - may compel “on the fence” buyers to make a purchase if they believe the upward trend will continue.

  • Low inventory - fewer homes on the market. Prices for existing homes may go up because there are fewer units available.

4. What is a buyer’s market?

A buyer’s market is characterized by declining home prices and reduced demand. Several factors may affect long-term and short-term buyer demand, like:

  • Economic disruption - big employer shuts downs or lay offs.

  • Interest rates trending higher – the amount of money the people can borrow to buy a home is reduced because the cost of money is higher.  Home prices drop to meet the level of demand and buyers can find better values.

  • Short-term drop in interest rates – can give borrowers a temporary edge with more purchasing power before home prices can react to the recent interest rate changes.

  • High inventory – a new subdivision and can create downward pressure on prices of older homes nearby, particularly if they lack highly desirable new features.

6. How much do I have to pay an agent to help me buy a house?

Home shoppers pay little or no fees to an agent to buy a home!

For most home sales, there are two real estate agents involved in the deal-one that represents the seller and another who represents the buyer.

Listing brokers represent sellers and charge a fee to represent them and market the property. Marketing may include advertising expenses such as radio spots, print ads, television and internet ads.

Agents who represent buyers (a.k.a. buyer’s agent) are compensated by the listing broker for bringing home buyers to the table. When the home is closed, the listing broker splits the listing fee with the buyer’s agent. Thus, buyers don’t pay!

7. What kind of credit score (FICO) do I need to buy a home?

Borrowers with higher credit scores represent less risk to the lender, often resulting in a lower the down payment requirement and better interest rate. Conversely, home shoppers with lower credit scores may need to bring more money to the table (or accept a higher interest rate) to offset the lender’s risk.

8. How much do I need for a down payment?

The national average for down payments is approximately 11%. But that figure includes first time and repeat buyers. While the broad down payment average is 11%, first time home buyers usually only put down 3 to 5% on a home.  Some programs require even less. VA loans and USDA loans can be made with zero down. However, these programs are more restrictive.  Conventional loan programs are available with as little as 3% down if the borrower adds private mortgage insurance (PMI).

9. Should I sell my current home before buying a new one?

Some home buyers decide to turn their current home into an investment property, renting it out. In that case, the current home will not need to be sold.  However, your loan advisor will still need to evaluate your risk profile and credit history to determine whether making a loan on a new home is feasible while paying the mortgage on the old home.

10. How many homes should I view before buying one?

That’s up to you!  For sure, home shopping today is easier today than ever before. The ability to search for homes online and see pictures, even before setting a foot outside the comfort of your living room, has completely changed the home buying game.

11. What is earnest money?

When you make an offer on a home, your agent will ask for a check to accompany it. Earnest money is made in good faith to demonstrate that the buyer’s offer is genuine. Earnest money essentially takes the home off the market to anyone else and reserves it for you.

12. How long can the seller take to respond to my offer?

Written offers will stipulate the time frame in which the seller should respond.

13. What if my offer is rejected?

Sellers can flat-out accept or reject an offer.  The most common third path is sellers will initiate a counter proposal. Remember-it ain't over till it's over.  So, if a counteroffer is presented by the seller, you’re still in the game.

14. Should I order a home inspection?

Yes, yes and yes!  Home inspections are highly recommended because they can reveal defects in the home that are not easily detected. Home inspections bring peace of mind to one of the biggest investments of a lifetime.

15. Do I need to do a final walk-through?

It’s not required, but it’s a good idea!  Final walk-throughs give buyers a chance to make sure nothing had changed since their first visit, and if repairs were requested, as part of the offer, a follow-up visit ensures that everything has been completed per the terms of the contract.

 

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