Generally, when you purchase a home, it goes something  like this: get pre-approved for a mortgage, find a house, make an offer, seller accepts/declines/counters, order inspections, request repairs, close on the home. Depending on the home, type of mortgage, and any other number of variables, there could be more or less steps, but these are the steps that many home buyers take in their home purchase. That being said, each of these steps have their own checklists to work through, so it’s not necessarily as simple as I have laid it out.

For example, when making an offer and getting it accepted, there could be ten or more counter offers between the initial offer and the final contract. The key here is learning what the underlying goals are for each party so that both sides are happy with the final product. Understanding these steps are what make a Realtor a fantastic resource, especially for first time home buyers.

As lovely as it would be to type in an address and come up with a concrete number to put on paper in buying a house, markets don’t quite work like that. It’s like the old adage, a home is “only worth what someone is willing to pay for it.” There are several variables that can result in different prices for nearly identical homes. Larger yard, closer to schools, a closet in one where there is none in another. These can all affect the price of similar homes, and sometimes the online result you got may not take them into account. 

When you’re looking at how much to sell your home, one invaluable resource you can have your agent show you is called a Comparative Market Analysis. Is this like an appraisal? Absolutely not, but it does help you narrow down your choices by finding out how much similar properties to yours have sold for in a given amount of time. While it is not an appraisal, if your agent is on the ball, they can use similar criteria that appraiser may use in their search, to come up with the home’s value.

Put simply, earnest money is the down payment of the down payment. Clear as mud? Essentially, the two terms have different uses. Where Earnest Money is deposited immediately after your offer is accepted(to show that you’re “earnest” about your purchase) and typically goes towards closing costs, a Down Payment is paid to the mortgage company to create immediate equity in the property, which is used as a buffer in case you can’t pay the mortgage and they have to sell it to recoup the mortgage company’s money.

A couple of considerations: firstly, Earnest Money is kind of an insurance policy to protect the seller. If, for any reason not covered in the contract, the buyer backs out of the deal, the seller keeps the Earnest Money, so the buyer is incentivized to keep up their end of the bargain. Since the down payment goes towards the mortgage, this is not typically required until closing.

This answer is simple! Namely, it depends. One large factor is the type of loan you have. Some loans require up to 25% down, others require none. Some loans have fees built in, some do not. Many times, the cost will be a percentage of the total mortgage. Now, add in fees that are charged by the title company, real estate agent commission, and title insurance, and you’re getting an idea of why the answer was “it depends.”

That question is best answered by another question. Are houses selling fast or slow? Or even, are houses selling for over or under list price? In a nutshell, if the answers to these types of questions are in favor of the seller, it’s a Seller’s Market, and vice-versa.

Sometimes, the answer is neither. If homes are selling close to list price, at a fair amount of time, and there are plenty of both buyer demand and housing supply, this can be considered a neutral market.

First of all, let’s address the elephant in the room. There is no set commission rate for a real estate agent. Read that again. You are just as free to negotiate the commission for your agent as you are to negotiate the price of that house. That being said, oftentimes an agent can be a “you get what you pay for” type of deal. If commissions are frequently seen around 5-6% in your area, are you getting the same degree of service and expertise from the agent you are paying 2-3%? In my experience, not typically. If you have a good agent, have done your due diligence in learning how they can help you, and you can effectively communicate with each other, you are likely to get more value out of the agent that knows what their knowledge and expertise are worth.

Now, the question was “how” not “why”, so let’s circle back. Much of the time, both the buyer and seller agents are paid from the proceeds of the sale(AKA, out of the seller’s side). In this case you might see “agent splits” of 50/50, 60/40, etc. You may even see a split of 0, and in that case, the buyer will be responsible for paying their own agent as agreed in whatever representation agreement they have. All that being said, an agent should never use a commission split as a factor in showing you a home. As their client, their job is to do what is best for YOU, no matter what or how they get paid. Period.

Don’t let the tomatoes fly, but not necessarily. Your goals will be the determining factor in what offer you decide to accept. Do you have a flexible timeline, or is time of the essence? If you’re in a hurry, then you may want to consider things like a faster closing date, or cash purchase vs. mortgage. Do you have a certain amount you need to pay off your home? Just some things to think about when you’re getting those offers in.

It is usually a good idea to have a loan preapproval before putting an offer in on a house. There are several reasons for this. First of all, a home price may not mean much to your budget, but the mortgage payment probably will. It wouldn’t be a great start if you found the home of your dreams, got an accepted offer, paid for inspections, and then found out that your mortgage payment is twice as much as you can afford. In this manner, pre-approvals can help you stay focused on finding the house that works for both your dreams and your wallet.

Pre-approvals can also be a good negotiation tactic, and some sellers require them to be turned in along with any offer. This shows sellers that you are both serious and prepared to follow through with any agreed purchase price. Of course, even after a pre-approval, the final loan will need to be approved with the specific home and price information, but it is still a good idea.

Excellent question! In Tennessee, you are not required to hire a Realtor in a real estate transaction. In our area, commissions(which are in no way set at a fixed price) range between 5-6%, so what exactly do you get, and how much can you save by using one? Obviously, the purchase process itself can be a complex labyrinth to navigate when you take into account the negotiation process, required disclosures, inspections, repairs, and any number of other hiccups that may arise. These are the very basic services that your agent should provide. What truly makes them experts, however, is their level of market knowledge, familiarity with the community, negotiation skills and marketing savvy. Anyone can go down a list and check off items you may need to close on a house, but it takes an expert to take the goals that you communicate to them and find the right house, at the right price, at the right time. 

Once again, the universal answer: it depends. If you are in a position where you can buy a new home without first selling your old one, then congratulations, you are in a great position, in terms of flexibility. If, however, your new purchase is dependent on the sales proceeds of your old home, then you may need to find a seller who is flexible with the close date.

Worst case scenario, could you pay two mortgages each month? In a slow market, you might have to wait up to six months to sell a home, so do you have money set aside, just in case? If the answer is no, then you may want to wait for the right deal that can accommodate this need.

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