Frequently Asked Questions!
Cold, Hard, Facts in Real Estate Home Buying!

There are normally many questions that home buyers will have throughout the process. Even an experienced home buyer can forget exactly how the process works and what the proper steps are to ensure the process is relatively smooth.

Whether a buyer is purchasing their first home or their fifth, the home buying process can create many emotions and feelings.  One of the best ways to ensure the process is not overwhelming for a buyer is to be well educated and properly prepared for the process.

When buying a home, one of the most important things to understand is that “no question is a dumb question.”  If you’re unsure of something when buying a home, ask!

There are many questions that home buyers seem to ask quite often.  Some questions are before starting the home buying process, during a house hunt, while writing a contract, or after an offer is accepted.  Here are the top frequently asked questions from home buyers.

Click on the questions below, for answers and recommendations!.

1. “Caveat Emptor” (Buyer Beware) – What does it mean?

Many courts have held that caveat emptor (“buyer beware”) to be precedent law when selling existing homes. Everyone should be on notice that there is no warranty which comes with the sale of a used home. Buyers have a chance to inspect the property and should assume the responsibility of a purchase. Simply stated, this means that neither the Seller nor the Seller’s agents, unless asked, are required to disclose defects, except those which might pose an immediate health or safety risk to the buyers. While Sellers and their Seller’s agents must not misrepresent conditions they are asked about, it is most important that buyers perform their due diligence. To assist in verifying the condition of the property, we strongly recommend that you utilize the services of a Home Inspector when purchasing a home. The Standard Purchase Agreement approved by many Realtor Associations, contains numerous acknowledgements and releases that the Buyer is expected to sign….

For Example, as stated in the Standard Purchase Agreement: “Buyer hereby acknowledge and agree that they have not relied upon any advice or representation of the Listing Broker or Company or the Selling Broker or Company or any of their real estate agents (“brokers and agents”) regarding the Property, including but not limited to the condition of the heating, cooling, plumbing and electrical systems; any built-in appliances; the roof and basement, including leaks therein; the presence of asbestos or toxic mold; the presence of or damage from wood destroying insects and/or fungus; the presence of vermin or other pest infestations; the presence of arsenic in treated wood; the size and area of the Property; the quality of construction materials and workmanship, including floors and structural condition; availability of utilities, sewer or septic tank and condition thereof; subsurface and subsoil conditions, sinkholes and mining or other soil conditions including radon or other potentially hazardous or toxic materials and/or gases; Property access easements, covenants, restrictions or development structures; and any matters affecting the character of the neighborhood; the investment or resale value of the Property; the past, present, or future financial stability of the builder or developer or the future insurability of the Property; or the compliance of the builder or developer under any warranty or any related mortgage terms and conditions; or any other matters affecting the willingness of the Seller and Buyer to sell or purchase the Property on the terms and at the Purchase Price herein set forth. Seller and Buyer acknowledge and agree that if such matters are of concern to them in the decision to sell or purchase the Property, they have sought and obtained independent advice relative thereto. Seller and Buyer agree that neither broker nor agent shall be held responsible for any obligations or agreements that Seller or Buyer have to one another hereunder, and Seller and Buyer agree to discharge and release the brokers and agents from any claims, demands, damages, actions, causes of actions or suits at law arising in any way from this Contract or related to the Property or the condition of the Property.” A good Home Inspector and a skilled Real Estate Professional can represent you, assist you, help you, counsel you, and protect you. We will help walk you through all these issues and will help to verify these and other pertinent details that concern you, the buyer. You can’t necessarily trust what’s in MLS, Zillow, the Internet, etc. Many Realtors write down what the sellers tell them, without verifying the information. At Better Homes Realty, we are highly skilled professionals, who are trained to assist buyers traversing the mine-field of Buying issues. “Trust-but Verify”

2. Should I get Pre-Approved? What are my costs?

You must be Pre-Approved! It is a critical first step! As a buyer, you need to know how much home you can afford to buy, to secure a mortgage. This requires a Lender’s review of your credit, assets, debt and income. This is not a casual conversation with your Lender about what you think your credit is and how much money you make. The Lender must have their own eyes on what you verbalize. This is the only way in which to obtain a Pre-Approval. We recommend interviewing three different Mortgage Lenders. Try to stick with local lenders, who are familiar with Local and State Title and Lending Laws. Keep in mind that lenders are not all the same. Some are “Mortgage Brokers” who represent different Investment Groups, Hedge funds, Insurance Companies, Banks, etc, They may have different lending and qualification guidelines, and different Closing Costs. When interviewing different Lenders or Mortgage Brokers, check out their interest rates, down payment requirements, lending options, closing costs and pre-pay items. The term Closing Costs may be different with different lenders. Ask the question before you leave, “What will I need to write a check for, at closing” (to include closing costs, prepay items, etc). Sellers may agree to pay part of your costs, if negotiated with the offer to purchase. Sellers normally require a “Pre-Approval Letter” when making an offer, to determine whether or not you are qualified to buy their home. Your skilled real estate agent can advise you about different lenders.

3. Should I look at homes before being Pre-Approved?

As #2 discusses, getting pre-approval results in eliminating possible future disappointment for two reasons; looking at homes priced higher than what you can afford and losing the home you love because the seller required a Pre-Approval Letter with your offer to purchase. Nothing is worse than realizing that the home you fell in love with is out of reach and can never be yours. You may have looked at beautiful homes that were out of your price range and then have to adjust to look at homes priced lower, with features that are less than what you adore. In addition, sellers require Pre-Approval with any buyer’s offer. Without the Pre-Approval letter showing that you are qualified to purchase the home, the seller would probably accept another buyer’s offer over your offer, meaning you lost the home you wanted to buy.

4. What Can I afford?

Look at homes priced at what you can afford, based on the input from your lender as part of your Pre-Approval Process. Don’t plan on looking at homes priced above what you can afford and try to submit a “lowball” offer to see if it sticks. Making reasonable offers is acceptable. Sometimes make lower offers, depending on current market conditions. More often than not, a seller will reject “lowball” offers, unless there are circumstances about the home that your skilled real estate agent can advise you about. See #10 for more information on making “low-ball” offers.

5. What do I need to plan for to Buy a home? (Down Payment, Closing Costs, Location, Schools, etc)

You must plan before buying a home. Buying a home is a major life event that requires planning. Have you maintained your credit to qualify? Have you saved enough money for a down payment? Sometimes you can obtain additional funds for a down payment from family members who agree to “Gift” the funds to you, in order to close. Sometimes you can borrow the down payment, as long as the lender agrees and that you can qualify for both payments. Have you also planned on “Closing Costs”? These are costs associated with obtaining the loan to purchase the home. Even though the seller also has closing costs, we may be able to negotiate that the seller will pay your costs, as part of the negotiating process. Have you considered the school zoning and its rating? Schools dramatically affect resale value and appreciation opportunities. Have you planned for the actual move and what it entails? These are all examples of what must be part of your home buying plan. “Prior Planning Prevents Poor Performance”. Our Trained Real Estate Professionals can help you plan each step and avoid hiccups or disappointments along the way.

6. What should I know about the local Real Estate market?

When buying a home, a common question you may have, is regarding the neighborhood or area. As a real estate professional, there are rules against steering and providing personal insight into specific areas and neighborhoods, for example. This doesn’t mean that your Realtor cannot provide you with tips and advice when buying a home. Many buyers wonder about the growth of the local economy, crime statistics, taxes, and local amenities. If you have a top Realtor when buying a home, you should be able to receive all of the pertinent information to allow you to make an educated decision on areas and neighborhoods.

Your Realtor can answer questions as to what prices are homes being sold for? How fast are homes selling? What are the average days on the market (DOM)? What’s the current inventory level in this community? What type of market is it (Buyer’s, Seller’s, or Balanced)? Where is the market headed? What benefits/disadvantages does this city or community hold? Are homes in this area appreciating… and at what average rate? What is the Resale Value and School Rating? All these are important questions to know about in the local market where you want to buy a home. This information is vital to making an informed decision. Your skilled real estate agent knows the local market and can advise you about the pros, cons, benefits and drawbacks for each of the communities and their respective school districts.

7. Should I Buy anything else before closing on the home?

You just signed a Purchase Agreement for your new home. You found out your Credit rating is higher than you thought, and just noticed that both IKEA and Ethan Allen have some fabulous home furnishing sales. Great, you thought – let’s go shopping! STOP! Hold up! Any major purchase can halt your loan approval in its tracks. No buying of furniture, cars or the like until AFTER you have closed on your new home purchase.

8. Should I ask for more, when making an offer?

This same advice is provided to home Sellers, and the same advice is for you too, as a homebuyer. When you have to come to a mutual agreement when one party is selling and the other party is buying, it’s going to require some give and take from both parties. It’s not the time to dig in your heels (all the way) on all the items. Harmony can go a long way in getting you the home you’ll love to live in. Don’t risk losing the home you love over little things. Only negotiate the big items that mean the most to you. Seek advice from your skilled agent when making an offer.

9. Should I make a “low-ball” offer?

Know your local market. Low-ball offers could possibly make more sense when you, as the buyer, hold the cards in a Buyer’s Market. However, even in a Buyer’s Market, the seller can balk at a low-ball offer. A Buyer’s Market is when there’s an abundance of homes for sale and sellers are competing to secure the scarcity of buyers buying homes. The reverse holds true in a Seller’s Market. Low-ball offers can keep you from owning the home you truly want by offending the seller. Talk with your Real Estate Professional to make sure it makes sense, before making a low-ball offer.

10. Should I risk the home I love, over a little bit of money?

Expect negotiations in a home sale. Most buyers have a specific amount they are able to pay as a down payment on a home, the variable is the mortgage amount. Do you really want to get down to argue over $1000 or so, knowing that for every $1K on a Mortgage is only $6.39 per month (based on a 6.6% 30-year Mortgage)? Take a step back and re-evaluate what the home has to offer. Can you find a similar home for a $1000 less? Or would it be better to pay $6.39 more per month, to get the home of your dreams? Set aside emotions and look at the true picture. Listen to the Realtor you hired to advise you. They should have valuable insight to guide you.

11. What is Earnest Money?

Earnest Money is a deposit offered by the Buyer to show “Good Faith” in the offer you are making. The primary purpose of this deposit is to show the seller that you are serious about purchasing their home. The amount deposited is subtracted from the final figure that a Buyer pays at closing. Brokerage Firms are required to set up an Escrow Account; a separate, non-interest-bearing account to hold Earnest Money Deposits.There shall be no commingling of funds, and that the Broker holding earnest money shall not release the funds unless the sale is closed, or a Mutual Release is properly executed by both the buyers and sellers. The amount of earnest money is negotiable. The buyer states how much earnest money he is willing to deposit. If accepted by the seller, then the earnest money will be deposited into the Escrow Account, which is periodically audited by the Real Estate Commission.
Since the seller does not have access to the earnest money, one might want to offer a higher earnest money deposit amount on a lower offer, to entice the seller into accepting their offer over others who are willing to deposit less.

12. What is Title Insurance?

In the Purchase Agreement, the Seller agrees to furnish Buyer a standard ALTA (American Land Title Association) form Owner’s Title Insurance policy at Seller’s expense, issued by a company qualified to insure titles in Alabama, in the amount of the purchase price, insuring Buyer against loss on account of any defect or encumbrance in the title, otherwise, the Earnest Money shall be refunded.

Every buyer needs to be insured against Title Defects, Liens, Judgements, etc when buying a home. The Closing Attorney should clear up these types of liens, when closing the transaction. However, buyers should insist on seeing the pre-liminary Title Insurance Policy or Binder to review “Exceptions” to the Title Insurance. Exceptions may include Easements, Covenants, Homeowners Association By-laws, Surveys, etc. Buyers need to know what these are, if they are “exceptions” that the buyer is assuming when Title to the property is being transferred. Buyers also need to see what is being required by the Title Company to transfer title, including pay-off of mortgages, liens and judgements to make sure they were cleared or paid at closing.

13. Should I get a Home Inspection? Should I hire a Home Inspector?

The answer is absolutely, without a doubt, no questions asked – YES! No home is perfect. Every home has issues. Generally speaking, no home meets current Building Codes, as Codes are updated and changed all the time. Many homes may have Deferred Maintenance, or Cosmetic changes. Don’t fret over the little things. Be more concerned about any major needed repairs and how they can be resolved. Expect that the Seller will usually not issue you a credit for “all” of the repairs the Inspector notes on his or her report. Keep in mind that when hiring a Home Inspector that you are hiring someone to tear your home apart, which could tarnish or destroy your dream. While they are supposed to be hired to identify repairs needed, many Inspectors express their feelings and recommendations beyond the scope of the job they were hired to do. Keep in mind that Home Inspectors are not experts on all aspects of the components of a home. If in doubt on an issue, get a 2nd opinion from a Licensed Professional involving Electrical, Plumbing, HVAC, Foundation, Roofing, etc. There will always be a number of issues, and sitting down to tally up all the estimated costs with an expectation that the seller will either issue you a credit for “all” the needed repairs is not realistic. However, asking a seller to make “necessary” repairs, or issue a credit, contribution, or allowance is fair.

14. Do I need a Termite Bond or Wood Infestation Report?

Yes, to both! Termite Bonds are usually provided and paid for, by the seller. Normally, sellers agree to transfer their existing Termite Bond. A Termite Bond will either “re-treat” the home, if termites appear, or “Repair” the damage caused by the termites and then re-treat. Therefore, make sure of what type of bond you will be provided. Our recommendation is to make sure the bond is a “Repair & Replacement” type of bond… not just a Treatment Bond. Be specific in the offer you make to provide for a “Repair & Replacement” Bond.

A Wood Infestation Report shows current or past infestation, and identifies other Wood Infestations of beetles, insects, wood decay, fungus etc. The Wood Infestation Report is usually paid for by the Buyer.

15. What is Hazardous Drywall?

This tainted wallboard (Sheetrock) often gives off a foul odor, corrodes copper, electrical wiring and other metal surfaces and may cause serious health problems with prolonged exposure. We recommend that the buyer requests the Home Inspector to inspect for this drywall problem, or hire an inspector specifically trained in discovering defective drywall, especially if property was either built or renovated since 2001.

16. Why is a Lead Based Paint Disclosure required?

If a residential dwelling built prior to 1978 is located on the property, Federal law requires that certain disclosures be made by the Seller to the Buyer and that the Purchase Agreement be made subject to a lead-based paint testing contingency. Every purchaser of any interest in residential property on which a residential dwelling was built prior to 1978 is notified that such property may present exposure to lead from lead-based paint that may place young children at risk of developing lead poisoning. Lead poisoning in young children may produce permanent neurological damage, including learning disabilities, reduced intelligence quotient, behavioral problems, and impaired memory. Lead poisoning also poses a particular risk to pregnant women. The seller of any interest in residential property is required to provide the buyer with any information on lead-based paint hazards from risk assessments or inspections in the seller’s possession, and notify the buyer of any known lead-based paint hazards.

17. Should I have the Sewer Line or Septic Tank Inspected?

In an older home, you might want to consider hiring a Home Inspector, who can also run a camera down the Sewer line. Many older homes may have old clay or tile sewer lines that are cracked or broken from tree roots or other movement. Sometimes a plumber may have to be called to inspect and make recommendations. Even old galvanized pipes and PVC lines may have problems. Some Home Warranty Companies offer protection for sewer lines, roofing etc, beyond the normal plumbing, electrical, HVAC and Appliance protection.

As for Septic Tanks, most should be cleaned out and inspected every 3 to 5 years, based on size of families, usage, etc. If the sellers have consistently been cleaning the tank by a professional Septic Tank Sewage Disposal Company, then ask them to provide copies of invoices and Inspection Results. However, if the tank has not been pumped out, and inspected in the last 5 years, then you should have it done. You don’t want your dream home tarnished with sewage, septic tank or field line issues. It is a nasty problem you want to avoid.

18. What is a Home Warranty? Should I get one?

A Home Warranty covers most working components of home for one year from purchase: to repair or replace Appliances, repair Electrical Issues, repair or replace Plumbing Fixtures & Issues, repair or replace HVAC, Lighting, Hot Water Heater, etc. Some warranty companies can also add Roofing and Sewer Line coverage. We recommend to all buyers that they ask the sellers to pay for and provide a Home Warranty chosen by the buyer or buyer’s agent. After the 1st year of coverage, most Home Warranty companies will offer annual extensions for a reasonable premium. If you are purchasing an older home where the HVAC may be near the end of its life, we recommend to renew the coverage annually.

19. Are Sellers present at showings?

Usually not. However, even though we prefer sellers not to be present when you preview their home, if they insist on being present, then it’s a great time to see your Realtor in action digging for clues that can possibly get you a reduced price. If Sellers are present, then keep quiet about your likes and dislikes while viewing the home. You would not want the seller to know how excited you are about their home before an offer is made. Let your trained Realtor negotiate the best price and terms, without giving the seller an indication of how much you might be willing to pay.

20. Should I write a letter to the Seller when making an offer?

Many sellers have a soft heart. If you find a home that is just perfect for you and your family, let the seller know! Many sellers have raised their family in the home you want to buy and would love the thought of another family continuing a family tradition. If you’re single, let them know why the home is just right for you. Perhaps, you’re furthering your career, planning a marriage, or planning to build a family and raising children. Add heartful comments and photos. It can make a huge difference. Sellers love to turn over their home to someone who will love it as much as they have. Your offer may be accepted over other offers presented, if you write a warm, heart-felt letter.

21. Will a well-maintained home demand a better offer?

Do you love that home that you just looked at and want to buy? It was obvious how well cared for the home was, as everything was orderly, neat and clean; just the home for you! Obviously, a well-maintained home was cared for and well taken care of by the seller, over the years. There should be less to worry about knowing that issues were taken care of by the seller. The term here, is “Pride of Ownership”. This will not be the home you’ll likely get much of a discount. These types of homes draw prospective Buyers like bees to honey. Prepare your offer to be attractive, because there is probably another Buyer standing in the wing, ready to make an offer for this pristine, prize home.

22. What does the term “Times Are of the Essence” in the Real Estate Purchase Agreement mean?

Your Realtor should be well aware of contractual deadlines to make sure you’re aware of them. Or if you’re using an Attorney, they’ll advise you the same. Contractual deadlines are legal time periods in which you need to provide a condition, as per the terms in the Purchase Agreement, or contract. If you miss the deadlines and conditions you can jeopardize the home sale along with your Escrow Deposit (Earnest Money). Make sure you follow them and that the Realtor you hire advises accordingly. This is not an attempt to provide legal advice as only an Attorney can provide such advice. You and your Realtor should stay ahead of conditions and deadlines.

23. Are Messy homes and Hoarder Homes a better buy?

Learn the Art of Visualization! See beyond the clutter and purple painted walls to buy a home, that the other Buyers can’t envision. Walls can be painted. You need to have vision. It’s all about seeing beyond the ghastly painted walls and clutter to be able to put it all into a visual form, that you can perceive and one that you can love. Nothing but a bit of paint, cleaning and cosmetic work can’t do to fix, which is easy on the pocketbook. Some of the best buys are those that look awful, distasteful and cluttered. Home-Flippers love to make offers on homes like these, that have a lot of upside potential, with a little paint, cosmetic updates, and elbow grease.

24. Should I let a Seller stay beyond the closing date?

It is extremely risky to allow the Seller to stay beyond the agreed-upon Closing date. It doesn’t have to be risky and it may not be the norm, but do you really want to take the risk of the Seller causing delays or problems to the home you just bought? Make it simple and require that they’re prepared to move by day of closing.

25. Is buying a home priced at fair market value a good thing?

Real Estate is considered a great investment! Building equity in a home becomes one of the biggest assets of most families. Real Estate Appreciation is real! Building Equity and adding Appreciation builds wealth. You don’t always have to purchase a home 10% below market value for it to be a good thing. Remember the age-old advice: Location-Location-Location! It doesn’t have to be the “Best” location in a community, but find the one you love in a good re-sellable location, with good schools, and you have a winning combination! Present your best offer after careful review with your Realtor based upon recent, comparable homes sales. If the Seller has hired a good Realtor, their home should be priced right and will likely draw many eligible prospective Buyers.

26. IS Cash King?

You may hate to hear that “Cash is King” when you’re financing your home purchase. However, most cash buyers make lower offers. The best way to deal with them is to present your best offer as touched on in previous recommendations. Let the Seller know how you feel about their home (write that heartfelt letter), make sure you have a strong Pre-Approval Letter, make sure all your “t’s” are crossed and “i’s” are dotted, your conditions noted in contract are favorable in the Seller’s eye’s (Closing Dates, terms etc) and you might have a good chance against the Cash King, particularly if they present a “low ball offer, because they think Cash is King. If your agent is highly trained, they should be highly skilled at negotiating in your behalf.

27. Is a local skilled Realtor worth their weight in gold?

Buying a home is one of life’s most important events. Don’t trust it to just anyone. Do your homework. Choose your Realtor wisely. Are they skilled and trained? Are they knowledgeable? Are they “Service Motivated” … more interested in helping you, representing you and your family’s interests, and willing to sacrifice their time and talent in your behalf? Do they counsel with you, consult with you, listen to you, and try to protect you? Are they sincerely interested in finding the home of your dreams, weeding through the haystack of homes looking for that diamond, and verifies information, records, taxes, the home’s history, etc? Or are they a Realtor who relies on hope and keeping their fingers crossed?! Most Realtors swim in a “Sea of Mediocrity” … but not ours.

Therefore, before you start that home search looking for homes for sale in Alabama, Florida or nationwide, you’ll want to study these FAQs and facts, and make sure you’re on board with them.

Understand these home buying facts and frequently asked questions, and you are well on your way to buying a home you’ll love. Best of luck in your home search.

If you found these FAQs helpful, please don’t keep it all to yourself, but share with others who could benefit in the home buying process. And thank you, if you decide to share!