Residential Q&A

Getting pre-approved for a mortgage is the first step of the home buying process. Getting a pre-approval letter from a lender gets the ball rolling in the right direction.

Here’s why:

First, you need to know how much you can borrow. Knowing how much home you can afford narrows down home searching to suitable properties, thus no time is wasted considering homes not within your budget. (Pre-approvals also help prevent disappointment caused by falling in love unaffordable homes.)

Second, the loan estimate from your Lender shows how much money is required for the down payment and closing costs. You may need more time to save up money, liquidate other assets or seek mortgage gift funds from family. In any case, you will have a clear picture of what is financially required.

Finally, being pre-approved for a mortgage demonstrates that you are a serious buyer to both your real estate agent and the person selling their home. Most real estate agents require clients to obtain a pre-approval before showing homes – this is especially true at the higher end of the real estate market; sellers of luxury homes will only allow pre-screened (and verified) buyers to view their homes. This is meant to keep out “Looky Lous” and protect the seller’s privacy.

If you need a Lender recommendation, we’re happy to provide several great options for you.

In sellers’ markets, increasing demand for homes drives up prices. Here are some of the drivers of demand:

1. Economic factors – the local labor market heats up, bringing an inflow of new residents and pushing up home prices before more inventory can be built.
2. Interest rates trending downward – improves home affordability, creating more buyer interest, particularly for first time home buyers who can afford bigger homes as the cost of money goes lower.
3. A short-term spike in interest rates – may compel “on the fence” buyers to make a purchase if they believe the upward trend will continue. Buyers want to make a move before their purchasing power (the amount they can borrow) gets eroded.
4. Low inventory – fewer homes on the market because of a lack of new construction. Prices for existing homes may go up because there are fewer units available.

A buyer’s market is characterized by declining home prices and reduced demand. Several factors affect long-term and short-term buyer demand, like: Economic disruption – a big employer shuts down operations, laying off their workforce.

1. Interest rates trending higher – the amount of money people can borrow to buy a home is reduced because the cost of money is higher, thus reducing the total number of potential buyers in the market. Home prices drop to meet the level of demand and buyers find better deals.
2. Short-term drop-in interest rates – can give borrowers a temporary edge with more purchasing power before home prices can react to the recent interest rate changes.
3. High inventory – a new subdivision can create downward pressure on prices of older homes nearby, particularly if they lack highly desirable features (modern appliances, etc.)
4. Natural disasters – a recent earthquake or flooding can tank property values in the neighborhood where those disruptions occurred.
5. Low inventory – fewer homes on the market because of a lack of new construction. Prices for existing homes may go up because there are fewer units available.

Your home’s assessed value and market value are each determined by different factors. Buyers and sellers affect the market value of a home, while professional appraisers calculate the assessed value. In a seller’s market, your home’s market value may be higher than its assessed value. That’s because buyers are willing to pay more than the home is technically worth because of low inventory. In a buyer’s market, you’ll be facing a lot of competition from other sellers, so buyers may put in an offer lower than the home’s assessed value.

Home shoppers pay little or no fees to an agent to buy a home.

Here’s why:

For most home sales, there are two real estate agents involved in the deal: one that represents the seller and another who represents the buyer.

Listing brokers represent sellers and charge a fee to represent them and market the property. Marketing may include advertising expenses such as photography, printed and digital marketing ads, and even television and internet ads. The property will also be placed in the local multiple listing service (MLS), where other agents in the area (and nationally) will be able to search and find the home for sale.

Agents who represent buyers (a.k.a. buyer’s agent) are compensated by the listing broker for bringing home buyers to the table. When the home is sold, the listing broker splits the listing fee with the buyer’s agent. Thus, buyers don’t pay their agents. That means if you’re looking for a home, you can have one of our agents work with you throughout the entire process without having to pay them a dime.

When preparing to sell your home, the first thing to do is make it presentable. This means giving the entire house a thorough cleaning and making small repairs. Mop the floors, scrub the bathrooms, and get rid of all the grime in the kitchen. Little things like patching holes in the wall, changing burned-out lightbulbs, and repairing broken appliances can make your place stand out in a crowded market. Don’t forget about paint — returning the walls to a neutral color can help your house sell quicker. White, creams, and grays can make rooms seem bigger and help potential buyers see themselves living there. If you’re not moving out before listing your home, you’ll also need to depersonalize and declutter. Put away your family photos, knick-knacks, and other personal items. You may need to rent a storage unit if you don’t have a place to put them all.

Yes, but you may lose earnest money (basically, a security deposit given to the seller upon signing a contract). You can also face legal consequences if you back out of the agreement for a reason not outlined in the purchase agreement. This document outlines important details, such as repairs the seller is responsible for and contingencies of the real estate deal. However, there are certain scenarios where breaking a purchase agreement is understandable. If you lose your job, can’t sell your current home, or can’t get approved for a mortgage, it’s best to wait until you reach financial stability before buying. Other issues with the home, such as a failed home inspection, unrepaired problems, or difficulty with transferring the title, are also acceptable reasons to back out of an agreement.