The home buying process can be very overwhelming and demanding. And irrespective of how long or how many times a person has been involved in the process before, adequate knowledge and proper preparation are required for effective and smooth navigation through the process.
Besides, home buying is arguably the biggest investment an individual will make in their lifetime, so it is only wise to be painstaking when venturing into it to avoid making hasty decisions.
This is why there are usually many questions on the lips of prospective home buyers prior to the home-buying process while house-hunting, during placement of order and through to the closing.
Below are the top questions frequently asked by homebuyers.
Is it necessary to contact a bank before house-hunting?
Yes, you should talk with a bank before looking for a house, especially if you are a first-time home buyer. This will help you understand how much you can afford and the exact costs that are associated with buying a home. Getting this understanding will in turn prevent you from looking for homes that are beyond your reach financially.
A mortgage professional will explain the different terms you will come across to you like down payment, pre-paid items, and escrows. You will also get the much needed advice on home financing – the type of financing you need, and if you need to obtain a seller’s concession.
Can I find a rent-to-own property?
It is possible to get a rent-to-own property although the probability is not that high. But before you settle for this option, you must consider the pros and cons. Rent-to-own financing terms often favour the home owners since they will be taking on a high risk. This means the terms will be less favourable for the buyer. You may be required to provide a considerable amount of money down and a higher interest rate than what a lender is offering.
Purchasing a home through mortgage is better since the terms will be more favourable for you as a buyer.
Is the service of a realtor really important for me when buying a home, and who pays the fees?
The role played by a realtor in real estate transactions cannot be over-emphasized, so it is recommended you have one to represent your interests when buying a home. Realtors absorb the stress and chaos so that their clients do not feel the pressure. They help you find a home and secure the property with an executed sales contract. Basically, they walk you through each step of the transaction – from the beginning on to closing, performing various responsibilities. Trying to buy a home without a realtor can make the process more tedious.
You must, however, be careful when choosing a real estate agent, and ensure you learn how to interview prospective realtors in order to differentiate between the real and the unreal.
Another question home buyers usually ask is, ‘who pays the realtor’s fees?’ This question comes because most home buyers do not understand the commissions paid for the services of a realtor and if they or the seller is responsible for such fees.
In many parts of the world, the home seller often pays the real estate agent’s commission at the settlement table. The fee is represented as a percentage of the sales price, and is subtracted from the latter. However, in Nigeria, the buyer pays the realtor’s fee after settling the seller of the property. This has not been without disgruntlement, though.
What is a short sale?
As it is with the home buying process itself, it is essential you understand what short sale is before getting yourself involved with it. A short sale is one in which a homeowner sells their house for a price that is less than the amount still owed on the mortgage. It can be regarded as ‘distressed sale’ carried out when the current market value of a property is below the amount owed to a lender. The lender forgives the remaining balance of the loan.
The downside is that many short sale properties are usually not in good condition. So, you must be patient and not in immediate rush to move. Also, you can consider a foreclosure if it is still possible.
What is a foreclosure?
A foreclosed home is a home that is seized and put up for sale by the lender. The lender takes control of the home after a mortgagor is unable to keep up with their mortgage payments as agreed in the mortgage agreement.
Buying a foreclosed home is different from buying a home from a homeowner. The lender usually clears the title and evicts the current homeowners before putting the house up for sale. If you are considering this option, talk to an experienced realtor as finding one may not be easy. Also, such homes are sold as-is. This means that the lender will most likely not do any repairs on the house before closing. You can arrange with your real estate agent to view the home and order an inspection before closing.
How is the area or neighbourhood? What are the additional or utility fees payable?
When considering the right neighbourhood or area to buy a home, do not forget to get all the important information that will help you to make informed decisions. Check if the neighbourhood is a good fit. Safety comes first; choose an area where you have peace of mind and that is probably under homeowner association.
A question related to neighbourhood frequently asked by home buyers is on utility bills. It’s important to know addition costs that will be in the monthly mortgage payment. You can ask about the utility bills paid in the area from your potential neighbours or local utility companies.
How are the amenities?
Amenities in our neighbourhood enhance our lives, and impact property values, no doubt. Questions on amenities are thus as important as that on neighbourhood. Before buying a home, check the features and amenities available within the area. Consider good road network, exercise facilities, water features; service centres such as gas and fuel stations, grocery stores; restaurants, hospital or clinic, entertainment, sports facilities, community parking lot, schools, shopping malls, banks, and others.
These amenities make your neighbourhood a desirable place, add joy and convenience to your lifestyle. An experienced realtor should be able to help you when determining this.
How many houses should I look at before putting in a purchase offer?
Actually, there is no limit to the number of homes you can check before buying a home. You may feel you’re making a mistake by purchasing the first house you check but then, it’s possible to look at 30 homes without making a decision or being convinced.
While Placing a Purchase Order
How much should I offer the seller?
The person who determines how much you can offer a seller when buying a home is you. You know how much you worth, how much you are willing to pay, and the mortgage you will be able to repay without much hassle. It is, however, recommended you seek professional advice or guidance from your realtor.
How long does the seller have to respond to me?
The time a seller has to respond to you is not specific. Every purchase offer has a ‘life’ which can vary as it can be affected by several circumstances such as how long the property has been listed and the location of the seller when the purchase offer is being made. This is another reason it is important to work with a professional realtor. Your realtor should know how long it will take you to get a response from the seller. As a standard, it takes between hours to about 4 days.
What is an earnest money deposit?
An earnest money deposit is a payment you make upfront when buying a home. It demonstrates your commitment and seriousness to purchasing the home.
It also tells the seller you are willing to comply with the terms of the purchase and sale agreement. In most cases, the larger the deposit, the stronger your purchase looks. The money that you deposit is subtracted from the final figure that you pay at closing.
Can I conduct any inspections?
You have the right to perform several forms of inspections when buying a home. You cannot buy a home without inspecting to ascertain its condition. At the end of the day, it is up to you to accept it. You can go through pest inspection, home inspection, and many others. It is recommended you perform at least two rounds of inspections before closing – before placing an offer and prior to closing.
After a Purchase Offer is Accepted
What is the next step?
Now that your purchase offer is accepted, does it mean the home buying process is completed? The answer is NO! There is still a lot to be done as many things can go wrong between offer acceptance and the closing date. Do the inspections, and expect your lender to require documentation, letters and other items from you to ensure you satisfy all necessary conditions. So, be ready to provide such and do not be surprised if requests keep coming.
Is a final walk through necessary?
When buying a home, you have the right to perform inspection for the last time before the closing. And this is necessary! Why? A lot could have happened during the several weeks between your last inspection and now. The final walk through enables you to check the furnace, toilets, and other features before receiving the keys.
When is the closing date?
It is not strange to be excited and anxious at the same time about when you will be able to hold the keys to your dream home and move in. Though the target closing date is always specified in the purchase offer, the actual closing might not happen until a later date. There are many factors that can delay a real estate closing. Work with your realtor to ensure that these issues are guided against or mitigated.
Before buying a home, learn the nitty-gritty of the process, what can go wrong, what you need to do, and who you need to work with. Apart from this, do not believe you know it all. So, ask questions from professionals, no matter how silly you think the questions are. Be sure you are on top of your game; be focused, and organized all through the process.