How do real estate agents get paid? Generally, both the seller’s agent (listing agent) and the buyer’s agent are paid from the listing commission negotiated by the seller and seller’s agent. Any other fees must be discussed prior to entering into any contract.
What is the earnest money deposit? When you find the property you want, the seller typically expects you to show good faith by providing an amount of money, to be held in escrow by the listing company, which, should all the terms and conditions of the contract be, goes toward your purchase. This is your money unless you default on the contract, in which case, the seller keeps your deposit. Either way, the check will be cashed right away and held in escrow. Depending upon the purchase price, you should be prepared to have a minimum of $1,000.00 available, often more.
What do home inspections cost? Home inspections can vary tremendously in cost. There are a wide variety to choose from—for example, will you have a general home inspection or will you hire an engineer? Do you want a broad-spectrum water test or the minimum required by financing? Do you need a septic inspection? Are you going to test for radon or for lead paint? How about heating efficiency? Your choices will depend upon each individual house. Generally, the costs are from a low of $600 to a high of $1,500+.
Who pays for the appraisal? An appraisal is required by all lenders when borrowing money to purchase property. The bank needs to make sure they’re lending you money to buy something with equal value so they will send out a 3rd party to research the sale and come up with a dollar amount. This is always paid by the buyer but you may have the option to pay up front or roll it into your closing costs. The dollar amount from the appraisal must be greater than or equal to the purchase price in order for the loan to be funded. If the appraisal comes in lower than the purchase, you may have the opportunity to walk away or renegotiate. You could also decide to pay the difference of the purchase price and appraisal amount out of your own pocket. The bottom line is – the mortgage company will not lend you more money than what the appraisal says the home is worth.
An important part of every transaction is TIMING. Dates within the contract are negotiable until they are written into the contract, but you need to consider some basics. Are you currently renting? Do you have a lease? How long will you be obligated to pay rent? How much notice do you have to give your landlord? Do you have a house to sell in order to pay for the home you’re buying?
What about your financing? The fastest timing from contract to closing is 21 days—and that can only take place if you have everything in order for your lender. Most transactions take anywhere from 30 to 60 days, depending on the season. Dates often depend on how quickly a home inspection and/or an appraisal can be completed.
Are there any events coming up which require your commitment? A prepaid vacation, someone’s wedding, the birth of a child . . . What you do when you have time to do it will determine how well it goes when there is no time left!
Find a good REALTOR that you trust to educate you and guide you through the transaction.