Frequently Asked Buying Questions

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1) How much will this cost me?

As a buyer your realtor commission fee will be paid for by the seller. Aside from this, your charges will include loan fees, providing of course your transaction is predicated upon mortgage financing, escrow fees, title fees, and any other investigative fees such as home inspection, roof inspection, etc… Generally Escrow fees run about $2.00 per thousand on purchase price, plus a base of around $200.00 or so. The fee for title is typically a flat fee, based upon the purchase price.

2) What can I expect the seller to pay for?

Generally speaking, seller will pay the property transfer tax, any outstanding liens or debts owed against the property, and their prorated share of property taxes. However, as is always the case, anything else can be negotiated in, or out! So pay close attention to your contract and be aware of what you’re getting into – when in doubt, ask your realtor.

3) How firm is the price, can I offer lower?

Absolutely, though if you want to get your offer accepted, it helps if your offer price is competitive. usually doesn’t hurt to offer less, unless of course the seller is emotional and your offer is so low that it offends the seller to the point that he or she no longer wishes to work with you. On REO properties for example, a firm understanding of DOM (Days on Market) and list price play a huge factor in seller assessment of lower than list price offers, and what range they would be willing to consider. Ironically, the condition of the property is rarely relevant in these scenarios, so avoid trying to justify your price with repair estimates and comps, this is more helpful and effective for standard sales when the seller doesn’t necessarily have to follow a specific protocol and timeline for offer review and price reductions.

4) When does escrow start?

Escrow starts when the contract says it stars, assuming of course that executed contracts are available at this time. Typically, once a contract has been ratified, the listing agent will forward contracts to escrow so they can open an order, and begin the transaction.

5) What will my loan officer need from you?

Loan officer will need a legible copy of the executed contracts detailing all of the material terms of the transaction. Aside from all your financial info that your loan officer will surely need as well, they will also need a copy of the escrow instructions and the preliminary title report to assess whether any third party liens or debts are owed against the property. They will also want to ensure that their loan is adequately protected by the value of the property, so an appraisal will surely be needed as well.

6) What problems could arise once escrow is opened that I am unaware of?

Maybe nothing, maybe everything. Making sound real estate purchases has everything to do with understanding as much as you can about what it is exactly that you are buying. Is it a house? If so, does it have a septic tank, has it been certified recently, could it need to be replaced? Yes..The better you understand what you’re buying, the more appropriate your offer can be written to protect against unknown variable that can, and occasionally do arise. If your realtor has a good idea of what you want to do with this property, and why you are interested in purchasing it, he should be able to identify which issues will be relevant to you, and which you may not care about as much. To that effect, good communication with your realtor can prevent headache and aggravation later on down the road. As the adage goes “An ounce of prevention is worth a pound of cure.”

7) What happens if I discover a problem with the home during escrow?

Depends on how you feel about this problem. Is it a deal breaker for you? Can the problem be resolved? If so, do we have an idea on what it may cost to cure this problem, and what may be needed in order to do so? As a buyer, you can always request the seller resolve the issue, assuming of course that it’s even possible. If the seller does not agree to fix the problem to buyer’s satisfaction, generally buyer’s have the option to cancel the contract – providing of course that discovery of said issue and corresponding repair request occur within buyer’s allotted timeline for doing so. If not, while the buyer may still elect to not proceed with the transaction, there are no guarantees that his or her good faith deposit will be refunded.

8) What happens if I discover a problem with the home after escrow has closed?

Well, it depends on the problem and what type of disclosures you signed. The seller has a legal obligation to disclose all material facts about the property that he or she is aware of, now proving what the seller knew about, on the other hand, can be a little more tricky. It also depends on what type of investigative work the buyer did. Was a home inspection done? If so, did the home inspector miss the issue? Best advice is to get a home inspection and read it thoroughly. While the inspector may not be qualified to comment on every issue in the home, like the integrity of the roof, for example, he can certainly recommend a licensed roofer perform a roof inspection, and will usually do so if he feels it’s needed. If your report mentions this, get one!

9) What happens if my loan officer is unable to close by our contract close date, can I get an extension?

If the seller agrees to one, yes.

10) Am I allowed to cancel or back out of the deal, if so what happens?

Depends on what terms were negotiated with the accepted offer. If your offer allows for a contingency period, and you find something defective during this time-frame, buyer is entitled to a full refund of EMD if he backs out. If you want to cancel for a reason other than a material discovery with the property, OR you want to cancel after your contingency period expires, your may not get your deposit back – refer to the liquidated damages clause in your contract.

11) Is the seller allowed to cancel or back out of the deal?

No, seller is never allowed to cancel. Although, as mentioned previously, everything is negotiable. If offer allows for a seller contingency, for example the purchase of a replacement home, then seller does have a right to exercise this option. If contract does not provide for a seller contingency and seller wishes to terminate anyway, buyer can sue seller for specific performance and “force” the sale through court action.

12) What happens if repairs are needed in order for lender to fund the deal, who makes the repairs, who pays for the repairs?

Legally buyer should not be initiating any repairs on a property that he or she does not yet own. If repairs are needed, the quality and quantity of said repairs are to be discussed with agent, who can then relay to seller. If seller allows repairs, they can be made. Caution, seller ALLOWING repairs is not the same as seller agreeing to PAY for them….please be sure this is crystal clear when discussing the nature and extent of any proposed work to be done.

13) What happens if the appraisal comes in below our contract price, will the seller reduce price?

POSSIBLY. If seller does not agree to reduce the price, AND contract is contingent upon an appraisal, buyer can cancel. If not, buyer may choose to make up the difference in price, providing of course that your lender allows this.

14) What happens if the appraisal comes in higher than our contract price, can the seller ask for more $?

NO

15) What happens if the property is damaged or vandalized during the escrow process?

This is a seller responsibility and seller is obligated to deliver the property to the buyer in the SAME condition as it was when buyer made their original offer. If seller cannot do this, buyer may cancel.

16) What if title indicates that back taxes or liens are owed against the property, who’s responsibility is it to pay for this?

Generally, this is always a seller responsibility, unless the contract stipulates otherwise.

17) How can I find out if my property has any weird or strange tax assessments, or “mello roos” that can affect my expected monthly payment?

Ask your realtor to check title for mello roos or special assessments.

18) Is Mello Roos tax forever? If not, when does it go away?

No, it is not forever, though generally, it’s for a pretty long time – usually between 20-30 years from the start date – irrespective of how many times title may have transferred in the interim.

19) If the property I want to buy has a septic system, is that bad? Should I get this checked out, if so – how and who should pay for this and how much does it normally cost?

Septic is not bad at all, and if properly maintained, is usually cheaper than sewer. A septic certification to verify functionality typically runs about $400-500

20) If the property I am interested in purchasing was built prior to 1978, should I be concerned about lead based paint? What about asbestos?

Not likely, though it is possible. Furthermore, if lead does exist, it will likely be relegated to the earliest coats of paint only, and will not be hazardous unless you expose this paint, and then ingest it…so don’t do that:)

21) Is my realtor allowed to represent the seller also?

Yes, but if you didn’t know about this until after the contract was signed, your realtor did something wrong. It’s legal with advanced permission from both parties only.

22) I just found out that my realtor sold the house I am buying to the seller who is selling it me!…Is that legal?

Yes

23) Should I get a home warranty? If so, how much does this cost, and who should pay for that?

Yes, home warranty is always a good idea. Try to get the seller to pay, if not – then pay for one yourself, it’s worth it.

24) When can I get the keys to my house?

Once escrow receives confirmation of recording.

25) I sold my house, and am waiting for escrow to close before I can move into my new place…Can I move a few things in before it closes?

No

26) The seller lied to me, what can I do about it?

Depends on the lie, and how exactly the lie harmed you. If the seller willfully lied about a material issue in the home, recommend consulting an attorney.

27) My realtor lied to me, what can I do about it?

Depends on the lie, and how exactly the lie harmed you. Lying is never acceptable, and is a violation of realtor ethics and professional code of conduct, though unless the lie physically or financially caused you harm, it might not be worth pursuing. If harm was caused, contact the BRE immediately, as well as your agent’s broker.

28) What happens to my deposit if I back out or my lender is unable to complete the loan as promised?

Depends on what buyer contingencies are still in effect at the time of the backkout – if none, you may lose your deposit.

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