If you’re like most buyers, purchasing a new home is one of the biggest and most expensive investments you will probably make in your lifetime. Whether you are a first time home buyer or a have done this before, this can be a very exciting time…but also a very stressful time! The most important thing we can do for you is to make sure you understand the buying process completely so you are well informed and prepared for the decisions you will need to make along the way. Below you will find a couple of the most common questions we get from our buyers. Keep in mind, this is just the beginning! Once you decide to let us help you find your dream home, we will be going through everything in a lot more detail and will make sure we answer every single one of your questions so finding your dream home isn’t stressful, just exciting!!!
Does it cost anything to have buyer representation?
In the Twin Cities metro (and largely across the country) the buyers’ agent is paid by the sellers’ agent thru a commission split, so it is ‘free’ in some sense. Don’t forget that when you are the seller, you are paying the listing agent enough to split with an unknown buyers’ agent.
How do you interview agents?
As an industry insider, here is what I have said to my young adult children. The single most important question to ask a real estate agent is how many transactions they do. Since you are paying them for what they know, someone who only does 10 or 15 deals a year doesn’t have a market perspective that is useful. To be at Re/Max Results agents are expected to do 25-30 deals a year minimum. Many of the top ones, myself included, do 50+ transactions per year. The next question to ask is how many buyer transactions did you do last year. Unfortunately, many top agents stop working with buyers because it is a more labor intensive process and so they farm that part of their business out to sub agents that they split commissions with. In that case, you come back to the original question for the agent who is being referred to. How many buyer deals did you do last year. The question that is often pointed out in real estate for dummies types of books is this: what area do your specialize in? For buyers that is totally wrong headed. You want someone who has the broadest range of knowledge so they can make suggestions, cross compare pricing, etc It actually isn’t a terribly useful question for sellers either, but that’s a different discussion!
How much cash do you need and when?
At a minimum you need 3.5% of the sale price of the house for a downpayment. One percent of that amount is given at the time the offer is made. The rest is brought on the day of closing. A few days after your offer is received, you will need about $500 for an inspection. A few more days later you will need $1000-2000 for an insurance policy. Everything else can be financed. After closing you need to spend money to take care of your house. Wise people set up a fund so that they have money for maintenance and improvements.
How long does it take?
It depends on these things – time of year, type of market, your decision making style, whether you have similar tastes to your partner, whether you have champagne tastes and a beer budget, and last whether you have an odd request. In general, in the spring of the year, a first time buyer will have chosen a house in 2-6 weeks and will have possession of it in another 4-6 weeks.
How do I know how much to offer when I find a home I want to buy?
A big part of our job is to supply you with the information you need to make this decision. We will provide you with comparables, market history and trends for this particular neighborhood, as well as other factors that will help you make an informed decision.
Will the seller pay my closing costs?
This is negotiable. It has become more common in this market for the seller to agree to pay a buyers closing fees (which cost an average of 3% of the sales price), but it all depends on the terms of your offer and how motivated the seller is.