Home Seller FAQ - LUXE Real Estate Team - Pemberton Holmes - Victoria

In the event that you have questions about purchasing a home I have compiled a list of the most commonly asked questions from home-buyers.   This Home Buyer’s FAQ is constantly being added to so if you don’t see your particular question listed and need some immediate answers, please don’t hesitate to contact me

How Do I Know if I'm Ready to Buy a Home?
You can find out by asking yourself some questions:

  • Do I have a steady source of income? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
  • Do I have a good record of paying my bills?
  • Do I have money saved for a down payment?
  • Do I have few outstanding debts, like car payments?
  • Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer “yes” to these questions, you are probably ready to buy your own home.

How Does Purchasing a Home Compare with Renting?
The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing. Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.
How Does the Lender Decide the Amount that Can Afford?
The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.
What Questions Should I Ask When Looking at Homes?
Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced? What things require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet)? Also ask about the house and neighbourhood, focusing on quality of life.  Be sure the seller’s or listing agent’s answers are clear and complete. Ask questions until you understand all of the information they’ve given. Making a list of questions ahead of time will help you organize your thoughts and arrange all of the information you receive.
How Many Homes Should I Consider Before Choosing One?
There isn’t a set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see 15 houses before choosing one. Just be sure to communicate often with your real estate agent about everything you’re looking for. It will help avoid wasting your time.
What Should I Look for When Walking Through a Home?
In addition to comparing the home to your minimum requirement and wish lists, you may want to consider the following:

  • Is there enough room for both the present and the future?
  • Are there enough bedrooms and bathrooms?
  • Is the home structurally sound?
  • Do the mechanical systems and appliances work?
  • Is the yard big enough?
  • Do you like the floor plan?
  • Will your furniture fit in the space? Is there enough storage space?
  • Imagine the home in good weather and bad – will you be happy with it year round?

Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.

How Do I Determine the Initial Offer?
Listen to your realtor’s advice, but follow your own instincts on deciding a fair price. Calculating your offer should involve several factors: what homes sell for in the area, the home’s condition, how long it’s been on the market, financing terms, and the seller’s situation. By the time you’re ready to make an offer, you should have a good idea of what the home is worth and what you can afford.  And, be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.
How Do I Make an Offer?
Your Realtor will assist you in making an offer, which will include the following information on contract:

  • Names of all parties
  • Address and Legal Description
  • Amount of earnest (deposit) money
  • Price you are offering
  • Proposed move-in date
  • Proposed closing date
  • Length of time the offer is valid
  • Included and Excluded Items
  • Subjects and Terms of the contract (offer)

Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just making an offer.  Be prepared in the case of a counter-offer.

What is Earnest Money? How Much Should I Set Aside?
Earnest (deposit) money is money put down to demonstrate your seriousness about buying a home.  If you’re wondering how much you should set aside, it must be substantial enough to demonstrate good faith and is usually between 1-5% of the purchase price (though the amount can vary with conditions). If your offer is accepted, the earnest money becomes part of your down payment or closing costs.  Depending on the terms regarding the deposit, if the offer is rejected your money is returned to you, but if you back out of a contract you may forfeit the entire amount.
What Does a Home Inspector Do in Regards to the Purchase of a Home?
An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs that are needed. The Inspector does not evaluate whether or not you’re getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced. It’s a good idea to have an inspection before you sign a written offer since, once the deal is closed, you’ve bought the house “as is.” Or, you may want to include an inspection clause in the offer when negotiating for a home. An inspection clause gives you an “out” on buying the house if serious problems are found or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix the problem(s) before you purchase the house.
Do I Need to Be There for the Inspection?
It’s not required, but it’s a good idea. Following the inspection, the home inspector will be able to answer questions about the report and any problem areas. This is also an opportunity to hear an objective opinion on the home you’d like to purchase and it is a good time to ask general, maintenance questions.