It is known that buyers, sellers and investors of properties have many frequently asked questions. Partially because real estate transactions can be very complicated and no two are alike. Whether you have done lots of transactions or are on the first one there will always be questions. Because of the differences in transactions all questions will be answered differently and many should get the advice of your lawyer, title company or realtor. We will try to list some of the more frequent questions with some possible answers to help, however always be sure to seek the advice of professionals before proceeding with any transaction.
- What price range of home can I afford?
That all depends of course on your income, financial obligations and debt to income ratio. There are many online mortgage calculators, Realtor.com has one as does many other websites but its best to choose the bank you wish to use and get pre-approved for a mortgage, this way you will know what your budget is. That way when you go home shopping you have a idea what to look at, that way when you find a home you love you can make a offer. Often times the seller does not want to wait for loan approval of a buyer, in competitive markets it is often who can come up with the money first. That’s why its very important to get pre-qualified.
It is also very important to contact a tax professional to discuss the benefits of being a home owner. There are many tax advantages to be a property owner, knowing what they are will help to get receipts, keep records and take advantage of all the advantages that are available.
- Can I sell my current home and buy one at the same time?
If your income allows you to get approved for a mortgage while maintaining your current mortgage you can do this, however this is a risky way to go. If you can not sell the home you currently have after buying the new one you may get stuck paying both mortgages. This put a financial strain on your budget, even worse if the housing market changes in the area while this is happening it could be hard to sell the first home. It is possible to rent the first property and create income to pay for the second, it depends on the area, what houses rent for and if you want to deal with renters. This can be a good strategy to create wealth for the long term.
- How many homes should a person look at before buying one?
That really depends on the individual, their needs and wants in a home and the type of homes available in the area. However it is very important to look at a good number of properties before deciding on one. Local real estate associations often have home shows when people can look at new and refurbished homes, get a feel for what’s out there and meet different agents to judge what they want. It is often said to look at 100 properties before buying, especially for the investor but a person may find a property they like right away or it may take a while. It is important to trust your feelings on selecting and buying properties.
- What is a fair price to offer the seller?
A fair price for a home or property depends on the area, condition and how long it has been on the market. That is one main reason to look at many homes to get a feel for what they are going for in an area and what is a fair price. It does not hurt to offer 5-10% below the asking price to see what the seller will say. It at least starts a line of communication and lets the seller know there is someone interested in their property. If a compromise can not be reached then move on to another property. It also depends on the market that the property is in, if the market is hot then the seller may have multiple offers and not have to negotiate, if the property has been listed for a while then it may be possible to get it at a better price.
- How does a buyer know if a home is a good deal for the area?
There is not one way to know if a home is a good deal for a certain area and will appreciate with time but with research and knowing the market you can keep surprises to a minimum. One of the benefits of working with a great real estate agent is they can pull comparable (comps) homes in the area to see if it is priced fairly against other homes in the area. One great thing about comps is that they can be done on homes that have actually sold so the buyer can see what has actually sold not just what is listed. There is a difference between what is being asked for homes in a area and what they sell for many times.
- Is in necessary to get a home inspection?
It is not necessary to get a home inspection before buying but it is a very good idea to protect the buyer from problems that can not be seen just walking thru. A home inspection is cheap insurance to make sure there is no hidden damage that can come up after the home is bought. No inspection can find everything, some times there may problems with the utilities or the city water sewer that the inspection will not find but a good home inspector will usually find electrical, plumbing and structural problems. Then the price can either be negotiated or the current owner can fix them before the sale goes thru. A home inspection also give the bank doing the mortgage assurance that the property they are loaning on does not have major problems.