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Version: 2.1

Buyer FAQ's

Why use a Realtor to buy a home?

The biggest reason why you should use a Realtor to help you buy a home is to make sure that during the buying process that you have a professional whose obligation it is to represent your best interests.  If you purchase a home directly from the listing agent, that agent can't have you best interests in mind as their primary duty of loyalty lies with the seller.  If you, as the buyer, tell anything to the listing agent, the listing agent is obligated to relay that information to the seller no matter how much it damages your negotiating position.  If you use a buyer agent to represent you in the transaction, the agent will act as the liaison between you and the seller's agent.  Anything discussed with the agent including potential negotiating strategies shall be held in the strictest confidence.

Additionally, negotiating the initial contract is just one of the many steps of negotiation in the home buying process and if you do not have a buyer|s agent, many things can happen that can increase the cost of purchasing a home.

What do I look for when selecting an Agent?

  • If you're looking for an agent to list your home, be wary of anyone who suggests they can get an unreasonably high sales price. An agent might use a high listing price to secure a contract, only to seek a lower price later, after little traffic is generated at the initial price level. Meanwhile, you've lost what can be the most critical time period in selling a home - the first weeks immediately after it's listed.
  • Check on experience and productivity. As with most professions, experience pays in real estate. Experienced agents know the market and the marketing process. They'll have the best chance of quickly and smoothly helping you to buy or sell your home.
  • The number of transactions an agent is handling monthly or yearly is going to give you an indication of how committed the agent is to the profession. Is the agent a part-timer who's just dabbling in real estate sales - or is the agent a full-time professional whose livelihood depends entirely on an ability to successfully and repeatedly close real estate transactions?
  • If you're a buyer - does the agent offer buyer agency? More and more buyers are deciding they want full contractual representation on the same level as the seller. Be sure to discuss buyer agency with any agent you're thinking about working with.
  • Does the agent know the market? Is the agent active in soliciting business?
  • Is the agent part of a national network? This can be especially important if you're selling in one city in preparation of moving to another. Your selling agent can refer you to a professional, compatible agent in your destination city - and keep in close contact with that agent so both your selling and buying efforts are closely coordinated.
  • And a final point: Does the agent seem primarily interested in sharing expertise and market knowledge in an honest and straightforward manner? Or does the agent seem more interested in telling you what you want to hear - or spend a lot of effort trying to market additional products and services? The worst time to secure the services of a "yes-man" or an agent who seems to have a bit too many irons in the fire is when you're entering a transaction involving something as expensive as your home. You need straightforward, reliable information - even if it's not necessarily flattering regarding the home you're selling - or very encouraging regarding a home you think you might want to buy.
    Is a low-ball offer advisable?

    A low-ball offer is a term used to describe an offer on a house that is substantially less than the asking price. While any offer can be presented, a low-ball offer can sour a prospective sale and discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be rejected.

    You should always do your homework about comparable prices in the neighborhood before making an y offer. It also pays to know something about the seller's motivation. A lower price with a speedy escrow, for example, may motivate a seller who must move, has another house under contract or must sell quickly for other reasons.While your low offer in a normal market might be rejected immediately, in a buyer's market a motivated seller will either accept or make a counteroffer.

    Full-price offers or above are more likely to be accepted by the seller. But there are other considerations involved:
    * Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, a low offer, even at full price, may not be as attractive as an offer without that condition.
    * Is the offer made on the house as is, or does the buyer want the seller to make some repairs or lower the price instead?
    * Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.

    What contingencies should be put in an offer?

    Most offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction.

    A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract. The purchase contract must include the seller?s responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.

    What is a house worth?

    A home is worth what someone will pay for it.  Everything else is an estimate of value. To determine a property's value, most people turn to either an appraisal or a Competitive market analysis.

    An appraisal is a certified appraiser's estimate of the amenities, energy efficiency, and the quality of the home at a given point in time.  To make their determination, appraisers consider square footage, construction quality, design, floor plan, neighborhood and availability of transportation, shopping and schools.  Appraisers also take lot size, topography, view and landscaping into account.

    A Competitive market analysis is an informal range of market value, based on comparable sales in the neighborhood, performed by a real estate agent or broker. You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder's or assessor's offices, through private companies or on the Internet.

    What is the best time to buy?

    Because many buyers prefer to move in the spring or summer, the market starts to heat up as early as February. Families with children are anxious to buy so they can move during summer vacation, before the new school year begins.

    The market slows down in late summer before picking up again briefly in the fall. November and December have traditionlly been slow months, although some astute buyers look for bargains during this period.

    What is the difference between list price, sales price and appraised value?

    The list price is a seller's advertised price, a figure that usually is only a rough estimate of what the seller wants to get. Sellers can price high, low or close to what they hope to get. To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area.

    The sales price is the amount of money you as a buyer would pay for a property.

    The appraisal value is a certified appraiser's estimate of the worth of a property, and is based on comparable sales, the condition of the property and numerous other factors.

    How is the price set?

    Setting the price of the home is important for the seller, but understanding how it is set is even more critical for the buyer. It is essential to price a home appropriately relative to current market conditions.  Because the real estate market is continually changing, and market fluctuations have an effect on property values, it's imperative to select a home with a list price based on the most recent comparable sales in your neighborhood.

    A Competitive market analysis provides the background data on which to base your list-price decision. Study the comparable sales material presented to you by the different agents you interviewed initially.  If the analyses are more than two or three months old, have your agent update the report for you. If all agents agreed on a price range for your home, go with the consensus.  Watch out for an agent whose opinion of value is considerably higher than the others.