Buying A House FAQ

What is the average difference between what a seller is asking for a home and the final sale price?

As you might imagine, the difference between asking and the final sales price can vary greatly. Especially in the higher priced homes. Generally speaking, homes on the market for $50,000 or less have a margin of approximately 2%-5%. Foreclosures can range from 10% to as much as 30%. Short sale ranges depend upon the loan balance owed and recent sales in the neighborhood. Homes above the $50,000 range from 0-10%. You make an offer and see what the seller does.

If a seller damages my home when they are moving out and refuses to pay for the repairs what are my options?

Three words…Smalls Claims Court. It only costs about $60 to file. Just $30 will get the person served the papers forcing them to show up in court. Normally the person with the most organized information wins. Take pictures and make note of conversations. Record dates and times. You’ll win!

We’re getting ready to sell the house we raised 4 children in. As they were growing up, we needed more room and put 2 bedrooms and a bath in the basement. Our city inspector just came out for the inspection and said the bathroom is not vented properly. The estimate to take care of the repairs is over $3,000. Do we have to take care of the repairs?

This is a common problem for almost all bathrooms in the lower level of a home. I think it’s a conspiracy by the city inspectors, plumbers, and building inspectors. It never fails to amaze me that you and thousands of other families are told this after successfully raising your family without problems with a “dangerous plumbing situation in hand” in the basement. Luckily, I have an answer to your problem. When you put your home on the market, have your agent put a sign in the lower level bathroom that it’s not vented properly according to city code. State that you have used this bathroom for many years without a problem. If they wish you will remove the toilet and cap off the pipe. You will not pay for it to be vented. The toilet may be reinstalled after closing.

What if a seller’s disclosure says as is? What does that mean to me?

Buying as is usually means that the seller is letting you know in advance that they don’t plan on doing any work to the property. If a municipal, gas, septic, or termite inspection is required, then you’ll be obligated to have them performed and do any repairs necessary. Be careful…Make sure your contract stipulates that you can have any or all inspections you wish (especially a whole house inspection) and that the contract is contingent upon you being satisfied with the as is condition. Negotiate the contract with any repairs necessary in mind.

Can I access the multiple listing service (MLS) by myself or do I need a REALTOR®?

The MLS system is owned and operated by the local association of REALTORS®. It’s one of the great benefits of belonging to the association. Access is by membership only and it’s expensive. The database provides information on all properties currently listed by members, recently sold properties, expired properties (properties listed for sale that did not sell during the listing period), properties currently under contract, and tax records on all properties in the city and county. The information is invaluable in determining the value of a property. The internet does have some information, but not all.

What are the final figures? When do you get them?

The final figures are the charges associated with a real estate transaction. They should be close to what was quoted to you on your good faith estimate. They are normally drawn up within 48 hours of the closing date. Take time and go over them with your REALTOR® prior to or at the closing table. Any questions, ask!

My husband and I are looking into purchasing a home. We are not using a REALTOR®. Should we? If we don’t, what should we do as far as a contract? How about using a lawyer?

Congratulations on deciding to buy a home. It’s one of the best investments you’ll ever make and usually the largest you’ll ever make in your life. I always recommend using a REALTOR®. If you purchase from a private seller, negotiate a reduced commission and have a REALTOR® put the package together for you so that you are informed about all the particulars of buying a home which are many. You can pick up a blank Real Estate contract from a book in the library or any business form store. If you choose to do it without a REALTOR® make sure you hire an attorney to look it over. And do not use the seller’s attorney. Hire your own.

My husband and I want to purchase a home. We’ve been married for two years and have been able to meet our bills, but his credit is still poor due to some bills left from his previous marriage. All of our credit cards are in my name due to the same problem. How long do we have to be penalized for his past problems?

There are a number of ways to deal with this problem. A lender is going to look at your most recent 12-18 month credit history. For older problems involving credit such as charge off, judgment, and collection accounts, they want to see them either paid off or in a repayment plan that shows at least 6 months worth of payments that have been made on the debt. If they were joint accounts and the divorce decree says they are the responsibility of his ex-wife, a copy of the divorce decree will suffice. Another idea if all of these fail is to have him sign a waiver of marital rights, then buy the property based on your good credit and salary. Bottom line, when there’s a will, there’s a way. Have your REALTOR® start contacting lenders for you today.

I’m thinking of buying a home from a friend. Would it be better to use a real estate agent or a lawyer to put the deal together?

It’s almost always better to use a REALTOR® to put a real estate transaction together, especially if it’s a piece of residential property. A lawyer is great at looking over a contract to make sure all the i’s are dotted and T’s are crossed and who’s liable for what if the transaction gets bogged down or doesn’t come to fruition. A REALTOR®, on the other hand, not only has access to the appropriate contracts and addendums needed, but is well versed in the various responsibilities of the parties involved in the transaction. That experience is helpful when it comes to monitoring the details of a transaction necessary to get it to closing; details that, for the most part, a lawyer is no more familiar with than the average consumer. Eight out of ten for-sale-by-owner properties find a buyer. Eighty percent of those ultimately do not get to the closing table, primarily because no one knew what to do when the normal problems that occur in every real estate transaction popped up. Many of these contracts were looked over by an attorney. Pick your poison, an attorney or REALTOR®. By the way…Buying a home from a friend is one of the easiest ways to destroy a friendship, often due to unknown problems related to the condition of the home. Make sure your agreement includes a clause that allows you to have the home inspected by a home inspector, so that any problems can be addressed between yourself and your friend.

I have just finished college, I have successfully been hired in my field, and I’m interested in buying a home. My problem is that I have never owned a credit card, so I don’t think I have any established credit. I’ve been told by many people that this will be held against me. Any truth to these rumors? If so, what do I do and when would I be eligible for a home loan?

Not having a credit card at this point in your life is not necessary for purchasing a home. When a lender checks your credit report and recognizes this set of circumstances, they will look at your secondary tier of credit: rent, utilities, etc. As long as you can show you’ve paid your bills on a regular basis, you will be fine. If you never paid the rent, utilities, car payment, student loans, or a credit card debt, then you will need to establish some form of credit, make at least 6 payments to the debt on time, and you will be eligible for a home loan.

How does my VA entitlement work? I was in the service in the 70′s and have never used it. Is it still good? If I die, can my wife use it? Can I buy a home for nothing?

Your VA entitlement is good for life, but is non-transferable and your buying power is limited to $180,000. There is no down payment and no limit on where you can use it to buy a piece of property. A VA loan allows the seller to pay almost all of your closing cost and prepaid items. You can basically buy a $100,000 home for as little as $1,000 out-of-pocket money. Regardless, use a REALTOR® who is familiar with VA contracts.

I would like to take advantage of the first time home buyers program, but I inherited a house from my parents. Does this exclude me from these programs?

In this case, the big issue is whether or not you live in the home you inherited. If the answer to that is yes, you do live in the home you inherited, you are not considered a first time buyer. If the answer is no and you can verify that, you are one.

When is the best time to close on a home?

The best time to close on a home is any day, but not within the last four days of the month. At least 75% of all real estate transactions close during those four days, leading to delays, a lot of frenzied activity, and last minute problems. The rest of the month, you’ll be the only people in the building.

I don’t have a lot of savings, but I do have a large income. What type of loan should I pursue?

The most inexpensive way to purchase a home is through owner financing or the FHA loan. With an owner, you can create any type of financing you wish. With FHA loans, there are no salary limits and the total cost of cash necessary is less than 6.5% of the sale price. There are sale price limits to these programs. Check with a REALTOR® to find out what they are in the area you wish to buy.

I’m interested in a home that is involved with a corporate relocation company. When I decided to write a contract, I was presented with an inch thick packet of forms. The relocation company said these had to be included with our contract. Is this normal? I thought I should have a lawyer look at them, so I decided not to put in an offer. What’s up with this?

Buying a home through a corporate relocation company can be financially rewarding, but mechanically frustrating: Financially rewarding due to the fact that the emotions of the owner aren’t involved in the sale. It’s a strictly bottom line figure. The person handling the sale for the relocation company has a range of pricing, within which they can accept any offer. If the offer is below that range, it goes before a committee. Any losses are absorbed by the company that hired the relocation company-i.e.; their pockets are deeper than the seller’s. Mechanically frustrating is the issue that caused you to walk away. The vast array of forms you needed to sign range from termite inspections, building inspections, municipal inspections, seller’s disclosure, disclaimers about the fact that the relocation company doesn’t own the house, therefore, doesn’t know much about the house, acknowledgment of sister companies they worked with, etc. None of the forms are anything to worry about. It’s all about what the lawyers think the relocation company needs to indemnify them. You may use their inspectors or hire your own. You may use their lenders or hire your own. You get the picture… Another frustrating issue is the fact that they only negotiate these contracts during certain business hours.

Do taxes vary from county to county?

Taxes do vary from county to county, but the significant variable is whether you live in the highly populated metro areas or in rural areas. Rural areas almost inversely have substantially lower taxes, but they also provide fewer services. Metro areas have higher taxes. It used to be that parts of the metro areas had considerable variance in their taxes, but today they are much closer to each other (they may vary $5 to $10 per month).