Home Buyer Frequently Asked Questions
The more questions you know to ask about buying a home in Las Vegas, the greater level of confidence you’ll have in making the right decision.
How do I know when I’m ready to buy a home?
Your estate planner, CPA and attorney are great resources to consult about any potential benefits that you may gain from owning a home.
Factors to consider include monthly payment, down payment, savings over renting vs buying, location and lifestyle.
You should also consider the time you plan on staying in your property before either selling or renting it out and purchasing something new.
Depending on whether we’re in a “Buyer’s” or Seller’s” market may also influence your decision to purchase real estate at any given moment.
What’s the difference between a Buyer’s and Seller’s market?
Everyone wants to “buy low and sell high,” but the truth of the matter is there is no way that can happen for everyone, every time.
Seller’s Market = More buyers than sellers (or available properties)
Buyers Market = More sellers (or available properties) than buyers
When there is limited inventory that multiple buyers are competing for, then sellers generally have the advantage of accepting the most favorable offer they receive. An experienced real estate agent representing a buyer knows how to present attractive offers that may be considered by a seller.
On that note, having a solid loan pre-qualification letter or even a full conditional bank approval before shopping for homes is a wise decision, unless you are paying cash and not interested in leveraging your money with a mortgage loan.
Find a real estate agent or loan officer first?
If you need a mortgage, then your real estate agent should require you to have a pre-qualification letter prior to scheduling an appointment to preview properties, especially in a Seller’s market.
The benefit of meeting with a mortgage professional ahead of time is that you can discuss various mortgage programs that may require specific language or property criteria that your agent needs to know about. Knowing what size mortgage you can afford will also help your agent research and recommend the right listings for you to preview.
Waiting around for a loan pre-approval letter shouldn’t prevent you from researching the market though. Our website has several options for previewing properties online, and you can also have your real estate agent email you specific homes that meet your criteria.
Do I need to get pre-approved for a loan first?
Having a pre-approval letter will reduce surprises and increase your negotiating position by getting pre-approved with a lender before selecting a home to purchase. Your real estate professional has access to several lenders offering a variety of loan programs.
Experienced real estate agents (the ones you should be working with) generally require buyers to have that initial pre-qual discussion with a mortgage company before getting serious about driving around to look at properties with the intent on making an offer.
However, you can start the conversation with a real estate agent about communities, properties, the market conditions… and so on prior to having that mortgage pre-qualification letter in hand.
The mortgage company plays a major role throughout the entire process and the responsibility for closing on time theoretically rests with their team of processors and underwriters. If the mortgage company has a strong working relationship with the participating real estate agents, then the transactions tend to go more smoothly.
Many home buyers actually start with a mortgage company that they like and trust first, and then ask them for a referral to a few agents that they work strongly with who would be a good fit.
Should I deal directly with the listing agent?
A “Seller’s” agent represents the seller in the seller’s best interest.
Some buyers feel like they would get a better deal if they work directly with the agent selling the home, but that is generally not the case for the reasons mentioned above.
Since a sales price is negotiated between a buyer and seller, don’t you feel like the seller would have a competitive advantage if they had professional representation in their corner?
Who pays the buyer’s agent’s commission?
Also keep in mind that a property should sell at fair market value, which is backed up by the professional opinion of the agent representing the buyer and validated by an appraisal.
Do I need an agent if I’m buying new construction?
Important – If you preview model homes without your buyer agent, then the new home builder may not pay your agent’s commission. This may put you in a situation where you have to deal directly with the builder’s representing agent alone.
Where does my earnest money go?
Any additional funds are given back to the buyer from the escrow company.
Do I need to sell before I can buy a new home?
If you can qualify for a new home loan with both mortgage liabilities, then the next question you need to answer for yourself is whether or not you can truly afford both payments in the case that property A doesn’t sell for a while.
Some buyers come up with the idea of buying a second home to live in and then letting the current property go into default / foreclosure. This practice is actually considered fraud and could end very badly.
However, it is an honest challenge that many buyers/sellers face, regardless of which type of market they are in.
If it is easy to sell, then finding a property and getting an offer accepted might be difficult.
On the flip side, in a buyer’s market, it might be easy to find a home and hard to sell.
Work with your real estate agent and lender to strategically plan how to make this transition without breaking the law or putting yourself in a stressful situation.
Is it better to buy a short sale or foreclosure?
Cash vs Mortgage play a key role in this scenario as well.
Ask your lender about an FHA 203k Renovation loan, which is a special program that allows a buyer to purchase an uninsurable or simply ugly property with as little as 3.5% down and roll all of the upgrades and rehab costs into a 30 year lower interest rate mortgage.
An “uninsurable” property is one that a typical lender wouldn’t finance. For example, a foreclosure where the previous owners literally took the kitchen sink when they vacated the property. Since cash-buyers are primarily the only people who these types of properties are marketed to, the selling prices tend to be lower due to market demand.
What does a Title Company do?
Speak with your agent or National Title Co. to learn more about these important services:
Title Report – A report showing the condition of title before a sale or loan transaction. After completion of the transaction, a title insurance policy is issued.
Title Policy – Insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrances on the property.
Pay Off Existing Loan(s) – The title company pays off existing loan(s) if instructed.
Taxes and Insurance – The title company prorates the taxes and insurance when instructed by the buyer and the seller.
Signing – Assists the buyer and seller when signing documents.
Recording – The title company records the appropriate documents with the county office, giving public notice.
Disbursement – The title company disburses the documents and money to each party involved
What is Title Insurance?
Title Insurance is a contract of indemnity that guarantees that the title is as reported. If not reported and the owner is damaged, the title policy covers the insured for their loss up to the amount of the policy.
Title insurance assures owners that they are acquiring marketable title. Title insurance is designed to eliminate risk or loss caused by defects in title from the past. Title insurance provides coverage only for title problems that were already in existence at the time the policy was issued.
A preliminary report contains vital information which can affect the close of escrow: Ownership of the subject property; where the current owners hold title; matters of record that specifically affect the subject property or the owners of the property; a legal description of the property and an informational plat map.
Do I need to have a Home Inspection?
The home inspection report should clearly identify any potential significant defects, and give the home buyer a realistic estimate of the costs of repairs so that they can be negotiated in an updated purchase contract.
An inspection should also highlight any areas or features that need to be addressed in the near future which may be reaching the end of their useful life span.
When will I get my keys?
This process can take anywhere from 10 – 72 hours generally. Weekends, end of the month, acts of God and final mortgage funding conditions can stall this process.
Your lender and real estate agent will be all over everyone to make sure this final step is quick and painless.
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