FAQs when Buying Real Estate
Do you have questions about buying a home?
Buying a home:
- Should I buy or continue to rent? Some of the factors involved in deciding that question is what is your short term need vs. your long term need; your budget and what you are paying for rent versus what your house payment is. Typically a home loan maxes out at about 2 to 2.5 times your yearly salary. So if you make $5,000/month or $60,000 / yr you can spend between $120,000 to $150,000 on your home purchase depending upon your other debt. One good location to use for calculations is Bank Rate Calculator
- What if I decide to buy? What is the first step? It is always a good idea to determine your price range that you can afford. It is never a good idea to shop for houses outside of your budget. That is a sure way to have disappointment. The other factors such as where you want to live, size of house, number of bedrooms, baths, etc is always a good starting point. The next step is to actually talk to a realtor who can guide you through the process. Many realtors have mortgage lenders that they have worked with in the past and know that those lenders can help and guide you through the process.
- How do I know what type of a mortgage I can qualify for? There are a variety of mortgage products available–some of which allow for renovation dollars being part of the loan. For info on that the HUD website is a good location HUD.gov/program203k. A good mortgage lender will give you information on the different types of loans available from Conventional to FHA to VA. In the San Antonio area the FHA loans are the most used type of loan. In some areas such as the County and other rural defined areas there are USDA loans which are a no down payment loan. The lender will guide you based upon your income and credit and down payment on the best type of loan for your family.
- How do I pick a Mortgage lender? Most real estate agents have worked with various lenders over the years so have several lenders that they have found to be reliable and they will give you the names of ones they know. It is always a good idea to shop more than one for rates and terms and types of loans plus how comfortable you are discussing your situation with them.
- Do I really need a Realtor when buying a home? Yes, that real estate agent represents your best interest as the process of purchasing a home is completed. They advise you and guide you through the whole process from start to finish. In Texas there is what is called representation which means that when a seller chooses an agent to list or sell their home that agent has a fiduciary duty to the seller and what is disclosed to the listing agent by the seller is confidential and not disclosed to anyone else without the permission of the seller. The same applies when a buyer “chooses” and signs an agreement with a real estate agent to represent them to buy a home. That agent has a fiduciary duty to you as the buyer. What you speak about is confidential and is not disclosed to other parties without permission. Texas also allows an agent to act as an Intermediary which sounds much like other states’ dual agency. That means the listing agent also handles the buyer. Notice I did not say represent. That happens some when people call the number on the house sign. Any time you are calling the sign be aware that agent represents the seller. Anything you say to that agent is NOT confidential; it can be repeated to the seller. If you were to call on a sign and decide to work with that listing agent, it can be handled in various ways depending upon several factors. One of which is what does the broker allow? My current broker StepStone and my previous Keller Williams office did NOT allow us as one agent to handle both parties. My prior Re/Max office allows this type of transaction. IF an agent acts as an intermediary and handles both the seller and the buyer sides of a sale transaction which is considered double siding a transaction they cannot give advice to either party and both parties have to agree to let the agent handle both sides of the sale. Again the agent must treat each party fairly but cannot give advice to either party. If the buyer is wanting advice then they can request another agent from the same brokerage to represent them or can find their own agent. KW would make exceptions if the buyer insisted they did not want their own agent but that buyer had to sign an agreement that stated he was aware that the listing agent WAS NOT representing him in this purchase. What these brokerages such as StepStone and Keller Williams normally do is assign another agent out of their office to represent the buyer. That way the buyer has someone who can advise them during the process. The traditional method of having a listing agent and a buyers agent, it becomes each real estate agent’s duty to represent the person that they have a signed agreement with in the best possible way. One way I explain it to my clients is “The listing agent’s job is to get the best price (highest) for the seller and the buyers agent’s job is to get the best price (lowest) price for the buyer.” While the highest or lowest price available is not always the end goal, the most important goal in a transaction is for both parties to be happy and feel they got a good deal. That causes a win-win situation for all.
- Who pays the Realtor fees when buying a home? The listing agreement set forth the fees the seller will pay. The listing agent then shows the buyers agent’s compensation on the MLS so that when the transaction is closed, the title company disburses the funds collected from the seller based upon their instructions on the contract.
- How do I pick a real estate agent? Many people rely on referrals from friends. Another is real estate company brands such as the big box real estate offices. Another is real estate websites but be aware places like Realtor.com, Zillow, Homelight, TopAgentsRanked, etc all charge fees to agents to advertise on their sites so the names you are getting from those locations are not necessarily all the agents available for you to use but only the ones who are paying the dollars to get in front of the public on that website. While you may get a good agent that way there isn’t a way to know that for sure. Another website where real estate agents gather to talk and discuss the market and market conditions is ActiveRain Blogs It is a good place to read and see what the agents think and how they operate. Search the city or zip code you want to buy in and the agents that work in that area will show in the results. It is a really good place to see how they interact and how they do business. Some of the agents may no longer be working as agents because the business is hard but there are a lot of active agents on the site.
- How do I pick an area that I might want to live in? That is always a personal preference for each person. It depends on your work commute, the school district your family might want, the size homes, maybe how close the area is to amenities such as restaurants, day care centers, shopping, entertainment, other subdivisions, whatever you like to be around. Do you like city living, country living, do you have horses, animals, do your children participate in extracurricular activities? Plus the cost of the area such as the home prices, taxes, etc is also a factor. A real estate agent or Realtor® (member of the National Association of Realtors) can guide you in this area.
- How do I do things like research an area? Schools? Crime rates? Flood zones? There are a number of sites that will give you those types of statistics if you Google them but the ones I use are these: FEMA flood zones School-Districts Around San Antonio Crime: SAPD: Crime-and-Call-Information Bexar Co Crime-Statistics Neighborhood scout crime and real estate info
- Once I pick a house what happens next? You and your agent will discuss the value of the house and what you want to offer based upon market conditions such as hot sellers market vs. hot buyers market and the other factors that you want in your offer such as the amount of concessions, the option period, the earnest money (down payment in real estate terms) and any other items you want to address.
- How long does the seller have to respond to my offer? The seller may take several days to respond but normally you will have an answer within a couple of days at the most. If it is a very hot market the seller might take a bit longer to respond in the hopes that they will get more offers. The seller is not obligated to accept any offer and does NOT follow a first come, first gets it situation. They can look at multiple offers at one time and choose the best offer for them. That is why if it is a home a buyer really wants they need to make a good offer the first time.
- What if my offer is rejected? In the event that a buyer’s offer is rejected, it is possible that the seller will counter or will use a state contract form that defines what is an acceptable offer or terms to the seller. At that point the buyer has a choice to make: to accept the terms the seller wants, to continue to negotiate or to search for another home.
- What if my offer is accepted? Your agent collects your earnest money (down payment) and option check to receipt at title, your lender goes to work and you start the process of checking out the house with a home inspection and any other type of inspections that you need to get done.
- When can I move in? A closing date will be determined by the contract. Both the seller and the buyer will attend closing, sign all the required paperwork, the paperwork is sent back to the mortgage lender to review and when approved, the mortgage lender will send the funds to the title company. At that point, it is called “funding the loan” and title can disperse the proceeds to whomever is due money be it either the seller or the sellers home loan company. At that point, the buyer is given keys to the property.