Buying a Home FAQs
Considering buying a home but don’t know where to start?
We can help you find answers and peace of mind by working with Dickson Realty, Northern Nevada’s leading real estate company. Our FAQ section will help you in launching your new adventure. Click on question and get an answer below.
- Before getting started, what are some tips that every buyer should know?
- What are some important rules in house hunting?
- Beyond the house itself, what should I look for in the property?
- Why should I use a real estate agent?
- Who pays the fee of a buyer’s agent?
- Are there guidelines to how much a buyer should offer?
- Who pays for the inspection?
- Who should attend the inspection?
- What happens if the inspection uncovers problems?
- What happens after I present my offer?
- What do I need to know about the closing process?
- What are some typical closing costs?
- What should I expect at the final “walk through”?
Before getting started, what are some tips that every buyer should know?
If you think it's about time you bought a home instead of renting, a little homework before you start looking will increase your odds of finding the best buy for you. Here's how:
Dig up your down payment
Know where your down payment cash will come from. If it's coming from stocks, go ahead and sell them. If Aunt Jessie is loaning the money, get it in hand so you are ready to go.
Nail down your financing
It's tough to home shop if you don't know what you can afford. Together with a reputable lender, we can help you determine how much home you can afford and which loan program will maximize your buying power.
Take your time
Don't jump at the first home you see. Let us introduce you to different areas and home types to see what suits your needs the best.
Do your homework
Once you've found the home you want, ask us to run a competitive market analysis of other homes that have recently sold, so you'll be able to make a sensible offer to purchase.
What are some important rules in house hunting?
Privacy
Consider how much privacy the house and lot provide and how much privacy you prefer.
Drive the commute before you buy
Check morning and afternoon drive time to work, schools, shopping, etc.
Look for an established neighborhood that will be enhanced by future growth but not inconvenienced by it.
Look out for resale value
Seek a prime neighborhood where houses sell well in any market.
Check out location
Consider availability of all aspects of transportation, even those you may not use.
Schools are important
Check for quality public schools, whether or not you have school-age children.
Green is good
Look carefully at the lot for trees and greenery to buffer winter winds or summer heat.
Make room for visitors
See if ample guest parking is available for you and your neighbors.
Beyond the house itself, what should I look for in the property?
Once you've found the right home, take a good look at the land it's built on before you buy. Check for:
Easements
Whose are they and where are they located? Will you be able to build a garage, shed, fence or other improvements while avoiding the easement areas?
Flood plain
Is part of the lot marked for flooding areas? How often and for how long is the area under water? Has the house ever been flooded or threatened by high water?
Boundaries
Where are the true lot lines? Is the fence properly placed within the lot? Will there be room to build a deck or addition to the house later on?
Utilities
Where are they located? Will it be possible to add phone lines or upgrade electrical capacity later?
Hydrant
How close is the nearest fire hydrant? This, and the proximity of the fire station, are often important when purchasing homeowner's insurance.
You may have to do a little research to answer some of these questions, and may want to make any contract contingent upon your being satisfied with the results.
Why should I use a real estate agent?
As professionals who specialize in real estate, we complete the home-shopping puzzle. We can help open up the possibilities for your next home with a variety of services:
Financing
We can help you evaluate your financial circumstances, help you decide how much house you can afford and help you select the best financing plan.
Housing needs analysis
We can help you sort out housing priorities, the expenses involved in buying a particular home and what steps to take to reach your goal.
Home search
We can show you what properties are on the market in your price range and take you on a guided tour of the homes you're interested in.
Contract
We can make sure you understand the terms and conditions of a contract when you are ready to make an offer on a home.
Loan application
We can help you select the best financing option, help you choose the lender with the best rates and service record and help you prepare your mortgage application.
Inspection and Closing
We will assist you in a pre-settlement inspection to be sure the terms of the purchase contract are kept, and we'll follow through to all the way to settlement.
Who pays the fee of a buyer’s agent?
Your purchase offer looks good to the sellers. They are ready to accept it, but you are using a buyer's agent (also called buyer's broker). You know that sellers pay their agent, but what about yours?
Who represents whom?
A buyer's agent is retained by a buyer to look out for the buyer's interests and to negotiate the best price from the buyer's point of view. Just as the agent who lists the seller's house owes the seller complete loyalty, the buyer's agent owes the buyer the same degree of loyalty.
What do sellers do?
Sellers generally indicate on the listing agreement whether the seller is willing to pay the buyer's agent. Most sellers choose to work with a broker who splits the commission with a buyer's agent even though that agent does not represent the seller's interests. This, of course, maximizes the number of potential buyers for the home. Because the listing broker is already prepared to share the commission with a seller's agent who produces a buyer, most sellers don't mind when their broker, instead, shares the commission with a buyer's agent.
Buying a home directly from the owner will save on the cost of the house, right?
Wrong! The "for-sale-by-owner" sellers are doing their own marketing to save the commission a professional real estate agent would charge. So what is left for you to save? In fact, you might end up paying more. Beware of these costly pitfalls:
Pricing: In a for-sale-by-owner situation, buyers often purchase homes that are overpriced.
Confusion: You end up dealing, in many cases, with an untrained novice who is not familiar with real estate law or the real estate code of ethics. Something might be overlooked that will cost you money later.
Additional legal costs: You will need a lawyer to draw up your sales contract, which should include safeguards for you that an experienced agent would typically suggest, such as making the contract contingent on a home inspection and approval of your mortgage loan.
You will have to be your own negotiator: Without agents involved, you would have to conduct your own negotiations on the contract and make sure all the details are taken care of before closing.
Are there guidelines to how much a buyer should offer?
Now you've found the house you want, how much should you offer to pay for it? This can be a tricky puzzle, because there are no carved-in-stone guidelines. Some homes are overpriced, while others are a "real steal" at the full asking price. So here are some tips to help navigate your way through the negotiation process:
Ask your agent for comparables
To determine a fair purchase offer, ask your real estate agent to prepare a written comparative market analysis showing the sales prices of similar neighborhood homes that recently sold and the asking prices of comparable homes currently on the market.
Compare the details
To calculate your best offer, compare the features of the home that interests you with the features of similar homes that have sold recently in the same neighborhood.
Who pays for the inspection?
The buyer usually pays for the inspection, which can cost several hundred dollars. The seller generally wants the inspection completed within a short time period, say five or ten days. For this reason, when you start shopping for a home, also look around for a good home inspector and ask your agent for several names.
Who should attend the inspection?
You. You'll learn a lot about the house that could soon be your home. If it's practical, your real estate agent and the seller should also accompany the inspector. Wear old clothes and comfortable shoes, as a complete inspection goes from attic to basement. The inspector should check for structural defects, plumbing and wiring problems, dampness in the basement, leaks from the roof, termites, lead paint, dry rot, energy efficiency and compliance with local building codes. Any visible and accessible problems should be noted immediately and then included in the report.
What happens if the inspection uncovers problems?
If you put an inspection clause in the contract, you may back out of the deal if serious defects are found. What happens more frequently is the buyer will negotiate with the seller to have the problem repaired or the sales price adjusted.
What happens after I present my offer?
When a buyer presents a purchase contract, it is usually the starting point of negotiations, so keep your mind sharp and your pen handy. The seller can accept, reject or modify the contract. Most often changes are negotiated and the sale goes forward. Here are some points to remember:
Keep the calculator handy
Both the buyer and seller should total up the value of negotiable items, and keep in mind how the price bid by the buyer compares to recent sales of comparable homes. If the bid is already low, the seller may not be willing to pay points or closing costs, but when a home price is a little high, the seller has room to offer financial considerations.
Try to nail down intangibles
Other negotiable items may be hard to quantify, such as including the drapes or a special chandelier, or the 5-year old washer and dryer. Anything pertaining to the sale is up for negotiation and has a value. For example, changing the date of settlement to accommodate one of the families or inserting a mortgage approval contingency can be discussed.
Put it all in writing
Be sure all changes to the contract are made on the original form, no matter how messy it gets; important items can be missed during retyping.
What do I need to know about the closing process?
Once you've signed a contract to buy a house, the preparation for settlement begins. Settlement, or closing escrow, is the process of transferring the title (ownership) of the home from seller to buyer. Often, the real estate agent involved in the sale helps you take care of these arrangements. But the buyer and seller are ultimately responsible for attending to these details. Here are the basics:
Buyer's Responsibilities
Getting financing
The buyer must first secure the financing to buy the house. Usually this means taking out a mortgage loan. Most lenders require a complete financial picture, including income and expenses, and a credit check. In addition, most want an up-to-date appraisal of the home, a survey of the property and, often, some inspections (for termites, radon gas, etc.). Some lenders specify which service providers they want the borrower to use. Once all the paperwork is in, the borrower should keep in touch with the lender until receiving a loan commitment.
Buying hazard insurance
The buyer needs to purchase a hazard insurance policy (also called homeowner's insurance), usually bringing proof of coverage to settlement. If the buyer wishes to bring an attorney to settlement, arrangements should be made 30 to 60 days in advance.
Expect an estimate of closing costs
A few days before settlement, the buyer should receive a Good Faith Estimate of settlement costs. In addition to the loan commitment letter, the buyer must bring a certified or cashier's check for the down payment and any other costs due at settlement. These costs include mortgage interest from the closing date to the first payment due, escrow for property taxes and insurance, and various taxes and recording fees. Be sure to bring your regular checkbook in case miscellaneous costs need to be paid.
Plan ahead for settlement
Both the buyer and seller need to give the settlement agent all pertinent information requested. And, since many long and detailed forms are usually signed at settlement, you might consider requesting copies of the basic settlement forms several days in advance to read them and familiarize yourself with the process. The focus at the settlement table will be on checking the exact figures to be sure everything is accurate.
Send a representative if you can't attend
If you cannot come to closing, be sure to notify the settlement agent in advance so a Power of Attorney can be prepared. Once the papers are signed and money paid, the keys are handed over to the buyer and the sale is complete.
What are some typical closing costs?
When you apply for a mortgage, the lender must respond with a Good Faith Estimate of Closing Costs, which explains the costs you will likely have to pay at settlement. Remember that the numbers on the form are estimates, and the final tally could be higher or lower. Some of the more common charges include:
Loan Origination Fee: Usually 1% of the loan
Loan Discount Points: A form of accelerated interest; each point is 1% of the loan amount (who pays points is negotiable between buyer and seller)
Appraisal Fee: The charge to have a professional appraiser certify the value of the property being purchased
Credit Report: The cost of getting a credit history from a credit service
Tax Service Fee, Document Preparation Fee: Charges to set up a tax escrow account and prepare mortgage documents
Title Insurance: Charges for insurance to guarantee the validity of the property's title for the lender; buyers can also purchase title insurance at settlement to protect their interests
Recording Fees, Tax Stamps: Local charges to officially record the deed and mortgage, and transfer taxes
Survey: The charge to verify the boundaries of the property being purchased
What should I expect at the final “walk through”?
Whether you buy a new house or one that has been occupied before, you want to make a final inspection before settlement. The "walk-through" should be scheduled long enough before settlement so any problems can be solved before you receive the keys.
Examine the house closely
Examine the house closely to see that any contingencies the seller had agreed to have been attended to. Look for any flaws that might have escaped your notice earlier, for instance, how does the house look without your predecessors' furniture? Has the builder made any changes since you saw the house before? Are the items that are supposed to remain still there?
Negotiate problems
In some cases, problems will have to be taken care of after settlement. Just make sure you have a written agreement to that effect (with a timetable specified), to prevent misunderstandings.
Ask all your questions
Don't be shy about asking questions during your final walk-through. Make a checklist of questions and answers and put your requests in writing as soon after the inspection as possible.
Get some help if needed
If you're not sure what questions to ask, take your agent or an experienced inspector along with you, or consult a home maintenance book ahead of time to alert you to problem areas.
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