Wednesday, June 27, 2007

10 Questions First Time Home Buyers Should Ask

As a potential first time home buyer, your first home purchase can be very confusing. Since a home purchase is usually the single largest purchase an individual or family can make, there are a lot of factors to consider before jumping into the home ownership club.I have put together a list of questions that all first time home buyers should ask themselves before they make the commitment to purchase a home.

1. How much will it cost to work with a real estate agent?
As a buyer, you won't pay anything to have me work for you. In a residential real estate transaction, the seller pays the real estate commission. As an added bonus to working with me, I will give you 20% of the commission we receive from the seller. As a full service residential real estate brokerage, our company provides full MLS access to buyers as well as local real estate agents to help you select, negotiate, and purchase the home of your dreams. You can use your rebate to buy down points on your loan, pay for or lower your closing costs, or buy new furniture.

2. What is the difference between a "Buyer's Agent" and a "Seller's Agent"?
Why should I work with a "Buyer's Agent"?A "Buyer's Agent" is a real estate agent that is hired by the buyer to find the right home for the buyer. The main goal for a "Buyer's Agent" is to find the best home for a buyer, while negotiating the best price. A "Seller's Agent" is a real estate agent hired by the seller to market and sell their home. The main goal of a "Seller's Agent" is to sell the seller's home at the highest price possible. As a buyer, it is in your best interest to work with a "Buyer's Agent" because this will ensure that your agent is working for you and your best interests. Often times, when a "Seller's Agent" is acting on behalf of both the seller and buyer (when a buyer does not have his/her own agent), there is a conflict of interest, since a seller wants the highest possible price for the home, while the buyer wants the most reasonable price for the home.

3. Should I rent or buy?
In general, the rent vs. buy question compares the cost of renting to the after-tax cost of owning a home. Some factors to consider are rent increases and home price appreciation in your area. If you have a nice, cheap, rent-controlled apartment, then it may not make sense to buy. If you are planning to stay in the same place for a longer period of time and the property values in your area are getting higher, it may be a good decision to buy.

4. How much house can I afford?
In general, the amount you can afford to spend on a home is a combination of your cash on hand, your salary, and your outstanding debt. Your mortgage lender can review your financial condition and pre-qualify you for a mortgage amount you can afford. This coupled with the down payment you have available will determine the upper limit of homes you can afford.

5. What will my real estate professional do? Not do?
As your agent I will do the following:
work with you through the entire home buying process, from start to finish
search the entire MLS (Multiple Listing Service)
show you all of the homes you are interested in visiting
recommend houses which meet your criteria
negotiate on your behalf with the seller of the home
prepare the offer for the house
prepare all of the contracts associated with the home purchase
work with the title company, the lender, and the seller (or seller's agent) to arrange all necessary inspections
serve as your "point" person during the closing process
answer any questions you may have about any part of the real estate process
As your agent I will NOT do the following:
provide you with legal advice
provide you with financial advisory advice
pressure you to do anything that you don't feel comfortable doing
It is best to get legal advise from a qualified attorney and financial advise from a CPA or financial advisor.

6. When is the best time to get loan approval?
In order to have the best possible chance when submitting a home offer, I recommend that buyers get pre-approved for their home loan. Pre-approval simply means that the buyer has worked with a lender to determine what the maximum loan amount the buyer could qualify for with that lender, prior to selecting a house. Pre-approved buyers have several advantages, including increased negotiating power, since the seller knows that you can complete the transaction. In fact, some sellers will not even entertain offers unless the buyer is pre-approved.

7. What are the tax implications?
When you buy a home mortgage, interest and property taxes are generally deductible from the income taxes you itemize and pay in April. This means while monthly housing costs may be larger when you own than when you rent, what you save in taxes can make up some or all of the difference. For details, speak with a tax professional.

8. Have I seen everything on the market?
Ensure that you have seen all the properties available on the market by asking your agent. Often times, real estate agents have an incentive to only show clients their own featured listings, not all of the available listings on the MLS (Multiple Listing Service). One way to ensure you are shown every available home is to search for yourself. You can do this using my website, which allows complete access to the MLS for consumers.

9. How will I know I am not overpaying for the property?
One way to ensure that you are paying a fair price for the property is to look at what other houses of similar size and characteristics have sold for in the past few months. As your real estate agent I can provide you with some comparable home sales in the area.

10. When can I move in?
After the home closes escrow, you can move in.

Mike Stankewich, Realtor, Huntington Beach, Orange County, California
ZipRealty, Inc.
Huntington Beach Real Estate