Is a new home purchase in your future? Shopping for a new home can be an exciting time, and it’s easy to get swept up in your emotions. But remember that buying a home is one of the biggest financial transactions you’ll ever make. While it’s natural to get emotional over the decision, you also need to cultivate some practicality. That’s why you should always ask these five questions before buying a house. They will help you avoid any unfortunate surprises after the deal has closed.
Why are you selling?
There are many reasons why a seller has decided to move. This could include needing more room for a growing family, relocating for a job, or downsizing after retirement. If the seller is willing to share this information with you, it may give you some clues as to how open they are to negotiating. The more motivated the seller is to move, the more likely you are to get a better deal.
What’s included in the sale?
It’s important to be very clear about what is and is not included in the sale of the home. Generally speaking, anything that is permanently affixed to the home is included, which might include kitchen faucets and window shades. However, some items fall into a gray area, such as lighting fixtures and appliances. If there’s any confusion, it’s best to have it spelled out clearly in the contract. You don’t want to show up to your new home on moving day to discover that the previous homeowner has dug up and moved all the rose bushes.
Are there any problems or issues with the house?
Sellers are required to make certain disclosures about a property, but those disclosures vary from state to state. When in doubt, ask the seller if they’ve had any problems or issues with the house. Is there a window that just won’t open, a door that doesn’t lock properly, or even an “otherworldly” tenant? While the seller may not be required to disclose this information to you, it doesn’t hurt to ask so you can be prepared.
Have there been any major repairs or renovations?
Ask the seller if any major repairs or renovations have been performed on the house. Even more importantly, find out who did those repairs and renovations. Did a licensed contractor complete the repairs? Or was it a DIY project that the homeowner did? Ask to see building permits, especially for renovations like additions, a new roof, or adding electrical or plumbing systems. If no permits can be produced, check with your local building department. If a permit was supposed to be issued and wasn’t, the current homeowner is responsible for satisfying the code requirements. This will be you if you buy the house, which could become expensive.
What is the neighborhood like?
Finally, if you have the chance you should ask the seller about the neighborhood. While you might not get a comprehensive answer, you could discover that the neighbor has a barking dog, there’s traffic noise during the day, or the streetlights are very bright at night. You could also learn practical information such as when trash is collected, the best pizza place nearby, and where to take your dry cleaning. These useful bits of information will make settling into your new home that much easier.
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You’ve been searching for a new home for weeks, and you finally found “the one.” You submit an offer and start to daydream about life in your new home. Unfortunately, you get a reply back from your agent saying your offer has been rejected. Though this is a common occurrence, it doesn’t remove the sting. If you’re wondering why your offer was rejected, here are seven common reasons.
Your offer was too low
It’s not unusual for a seller to reject an offer if they feel it was too low. This is especially true if the home just came on the market and you didn’t offer the full listing price. The seller still has plenty of time to see if other, better offers come in that are closer to the price they’re willing to accept. Conversely, even if the home has been on the market for some time, your low-ball offer may not be accepted simply because the seller is insulted. It happens.
You’re not pre-approved for a mortgage
One of the most important things you need to do before you begin searching for a home in earnest is to get pre-approved for a mortgage. Getting pre-approved signals to the seller that you’re a serious buyer. It demonstrates that you’ve been vetted by a lender and will be able to secure financing. In a competitive market, it’s essential that you get pre-approved.
You asked for contingencies
It’s typical for offers to contain contingencies. For example, the sale could be contingent on the home inspection, adequate financing, or sale of your current home. If your offer contains several contingencies for the sale, this could be of great concern to the seller. They may question whether or not you’ll ever make it to the closing table. Even if you offer more money that any other buyers, your offer could be rejected if there are too many contingencies.
Your earnest money deposit was too low
When you make an offer on a home, you will often put down an earnest money deposit once the offer is accepted. This is usually two or three percent of the purchase price, and shows the seller that you are serious about buying the house. This money is held in escrow until closing. If your earnest money deposit offer is lower than what is considered normal, this could cause the seller to reject it.
You requested concessions
Concessions can be anything from asking the seller to pay some of the closing costs to requesting that all the appliances be included in the sale. Concessions can really chip away at what the seller will make on the sale, so it’s not unusual to have your offer rejected because it contains too many concessions.
The seller has unreasonable expectations
We don’t live in a perfect world, and sellers are human just like everyone else. Even if you know that the offer you made was on par with comps in the area, it could still be rejected because the seller has unreasonable expectations about what their home is worth.
Someone made a better offer
Finally, your offer may have been rejected because another buyer put in a better offer. In this case, it’s best to accept that this house wasn’t meant to be yours and continue your search.
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You’re so close to closing day, you can practically feel the keys to your new home in your hand. But not so fast! There’s one important step that should be completed before you start signing all that paperwork. The final walk-through is your last chance to have a look at the home and make sure it’s in the condition that has been agreed upon in the contract. While you may be tempted to opt out of the final walk-through, it’s an essential part of the process that should not be overlooked. Here’s what you need to know.
It’s not an inspection
Let’s be perfectly clear – a final walk-through is not an inspection. The home inspection happens earlier in the process and helps to reveal issues that need to be addressed before closing. The final walk-through is your chance to ensure that all the agreed upon repairs have been made. It generally occurs anywhere from a few days to 24 hours before the closing, and takes about 30 minutes. Your real estate agent should accompany you for the final walk-through.
Bring your contract
There’s going to be quite a bit to take in during the walk-through, and it’s possible you’ll be excited or nervous. Take your contract with you so you can refer to it. That’s your guide to help you remember what was agreed to so you can check to make sure everything is in the appropriate condition.
Check these items
In addition to bringing your contract with you, bring a checklist of things you’ll want to examine so nothing is forgotten. Your list should include:
- Turn all lights on and off to verify that they are functional.
- Check to see if any fixtures have been removed that are supposed to stay with the house, like a chandelier.
- Check the heating and air conditioning to make sure they work.
- Check all the major appliances.
- Check all water faucets to make sure they run and that there aren’t any leaks.
- Flush all the toilets.
- Open and close all the doors and windows and make sure they all lock.
- Check storage areas to be sure nothing is being left behind by the seller that wasn’t agreed upon.
- Visually inspect ceilings, walls, and floors to make sure there are no new leaks, cracks, or other damage.
- Check garage door openers.
- Turn on garbage disposal and exhaust fans.
Don’t forget the exterior
While you are examining the house, don’t forget the outside. On rare occasions, a seller may dig up plants or make other changes to the landscape. If it wasn’t agreed to in your contract, that’s an issue you’ll want to bring up.
What if there are problems?
So what happens if you discover a problem during the walk-through? Typically, it could delay the closing until those problems are addressed. Another option is for the seller to make financial concessions to the buyer instead of fixing the issue. If those choices don’t pan out, a portion of the proceeds can be held in the escrow account until all the problems have been resolved.
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Do you dream of owning your own home, but feel like you’ll never have the money for a down payment? While saving for a down payment can seem like a daunting task, it isn’t impossible. In fact, there are ways to begin saving right now that won’t put a crimp in your lifestyle. Here are the best sneaky ways we’ve found to save money for that down payment.
We’ve gotten so accustomed to paying with credit and debit cards, having cash on hand can seem like a real hassle. But it’s so easy to spend more than you think you are when you’re swiping that card. Instead, opt to pay with cash. You’ll have a better sense of how much money you’re actually spending, and will spend less on impulse purchases.
Limit food waste
How much food do you end up throwing away in a typical week? If it’s more than you’d like to admit, perhaps it’s time to curtail those food expenses. In fact, according to the National Resources Defense Council, the typical American wastes a whopping 40 percent of the food they buy. Think of how much money you can save by only buying what you can actually eat.
Adjust your thermostat
As the temperatures rise over the summer, you may be tempted to crank that AC. But think about how much extra money you’re spending just to lower the temperature by a degree or two. If you have a programmable thermostat, set it so that the house is warmer while you’re away. Keep curtains closed on sunny days. According to the Department of Energy, you could save up to three percent on your energy bill for every one degree you change your thermostat.
Set up automatic savings
Help yourself get into the savings mindset. Instead of only saving what you have left over from your paycheck each month, decide how much to save in advance. Then set up an automatic transfer from your checking to your savings account, and watch the dollars add up.
Don’t chase trends
Is it really necessary to have the latest phone or wear the newest clothing trends? See if you can resist the urge to go shopping for new things. Instead, make do with what you already have or shop second hand. You’ll begin to see that not only will you save money, but you’ll also be happier as a result. It’s exciting to see your savings grow as you edge closer and closer to your goal.
Compete with your spouse
If you’re buying a house with your partner, why not introduce a little friendly competition? This is a great idea, especially if one of you is very competitive. Have weekly challenges to see who can save the most money or the largest percentage of their paycheck. The loser each week then makes dinner for the winner.
Cancel unused subscriptions or memberships
Did you get that gym membership hoping it would inspire you to exercise more often? If it’s just sitting there unused, then cancel it. The same goes for magazines you don’t read and any other recurring payments for goods or services that aren’t meaningful to you. While those celebrity tabloids can be fun to read, by giving them up you’ll realize your dream of home ownership a little faster.
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As if buying or selling a home weren’t complicated enough, you also need to be vigilant about scams. There are scams everywhere, and some are sophisticated enough to look real. With so much information available on the Internet, it’s getting easier for scammers to con innocent people. Here’s what you need to be on the lookout for so that you don’t become a victim.
Down payment scam
In the down payment scam, a scammer hacks into a real estate agent’s email account. After reading through their correspondence, they target buyers who are about to close. Then, posing as the agent, they send you instructions on where to wire the money for your closing. Once you’ve wired the payment, it’s never seen again. The best way to avoid this scam is to either use encrypted email or get all wiring requests and instructions from your agent over the phone. Then confirm with the bank you are wiring to over the phone as well.
The inspection scam
If you’re looking for a fixer-upper, beware of the inspection scam. In this scenario, a seller agrees to a lower price on the condition that you forgo an inspection. If this happens to you, it can be a red flag. The seller may be aware of a serious problem with the property that they are trying to cover up. This could include expensive problems like issues with the foundation or pest infestations. Never agree to give away your right to a professional inspection.
The mortgage rate scam
If the rate you’ve been approved for on your mortgage seems too good to be true, it probably is. In this particular scam, a shady lender agrees to a very low rate on your loan. Then, once it becomes too late to back out, they jack up the rate. While you have the right to cancel the deal, it could cause a serious loss of time. These lenders may also charge upfront fees in order to lock in the low rate, which is money you could lose if you cancel. Don’t agree to pay fees upfront and be cautious about rates that are much lower than other lenders have quoted to you.
The real estate agent scam
In this scam, an agent takes the money that is to be deposited into an escrow account, and deposits it into his own account instead. The easiest way to avoid this costly mistake is to work with a licensed agent and research any complaints that may have been lodged against them in the past.
Finally, even if you’ve made it through the real estate process unscathed, you need to be aware of moving scams. One scam that is common is when moving companies offer you a great price on a move, only to significantly increase that amount once the truck is packed. They may also hold your possessions hostage until you agree to pay them more money. And unfortunately, there are some scammers out there who will pack up your truck and drive away, never to be seen or heard from again. Always be sure to thoroughly vet a company before signing a contract.
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If you’re preparing to buy or sell a home, you may have questions about real estate commission fees. Who pays them? How much are they? Can they be negotiated? When are they paid? Even if you’ve gone through this process before, you may not have all the answers. Let us clear up any confusion by explaining the nuts and bolts of commission fees.
How much are the commission fees?
Let’s begin with the basics. In general, commission fees total approximately five to six percent of the sales price of the home. In most instances, the buyer’s agent and the seller’s agent will split this evenly between them.
Can the commission be negotiated?
A seller and their agent should agree to the details about the commission in the listing agreement. The agreement will outline what services will be provided by the agent. It is possible for the seller to negotiate the fee that is paid. Some agents will agree to lower commission fees, especially if they are representing the buyer as well. Be aware, however, that some agents will not be open to negotiating.
Who is responsible for paying the commission?
Generally speaking, the seller is responsible for paying the commission fees. Buyers are usually off the hook, though they are still responsible for other closing costs. However, in a competitive market, a buyer may offer to pay for a portion or all of the commission fees in order to make their bid more attractive.
When is the commission paid?
Commission fees are paid during the closing of the house, when all the details of the sale are finalized.
How is the commission paid?
The commission is paid at closing to the brokers that employ the agents. The brokers then pay the agents their shares. How much the agent receives can depend on how long they’ve been with the brokerage, how much was spent on advertising and marketing, and general office expenses.
What do the commission fees pay for?
Commission fees pay for the work that the agents are doing on behalf of the buyer and seller. This includes taking listing photos, scheduling viewings and open houses, negotiating the contract, coordinating inspections, creating online listings, and much more.
What happens if you don’t buy?
If you end up not buying a home, then the agent you’ve been working with will not get paid for the time they’ve invested helping you with your search. However, if you decide to work with a different agent during the process, you may have some difficulties if you’ve signed a contract with the original agent. If you’re buying, take time to properly vet and interview potential agents.
What happens is the sale falls through?
Whether or not the selling agent gets paid even if the house doesn’t sell is dependent on a few things. If you decide to back out of a sale after an offer has been accepted, you are still likely responsible for paying the commission fees. If the buyer backs out, you may still have to pay the fees, but you can take legal action against the buyer. If your contract with your agent expired and the house didn’t sell, you usually aren’t required to pay. However, if you sell at a later date to a buyer that the agent originally found, you may have to pay. The bottom line – always read the fine print of any contract you sign.
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