Buyer FAQs

Frequently Asked Questions

  • How long does the buying process take?

    • This article has some good information about this

  • Will I get my earnest money back if the contract is not accepted?

    • Yes.  Earnest money is held in escrow by the title company (usually) and is returned to the buyer pursuant to the terms of the contract.  The buyer may lose the earnest money if he or she decides after the option period and successfully securing financing that they no longer want the house.  This entails both parties signing a Release of Earnest Money (TAR- 1940).

  • What is the process to get my earnest money back if the contract is accepted and the home inspection finds an issue?

    • The termination of a contract because of a problem discovered in the home inspection is covered under paragraph 23, Termination Option.  In this paragraph the amount of money paid to have an option period as well as the length of the option period are spelled out.  The length of the option period should be sufficient to conduct all needed inspections and receive and digest any reports.  If the buyer decides to terminate the contract during the option period, the agent will submit a Notice of Buyer’s Termination of Contract (TAR-1902) selecting box 1 and also the Release of Earnest Money form (TAR-1940).

  • Should I lock in my interest rate or should I float?

    • Real estate agents are not mortgage brokers nor financial advisers and they do not play them on TV.  It is best to talk directly to your lender and/or financial adviser about this.  Having said that, this is basically a decision based on the current trends in the cost of money.  If rates are going to go up during the time your loan is being processed, it might be a good idea to lock them in.  There is a fee associated with this though.  If rates are trending down, you may want to let yours float.

  • When will I get the keys?

    • Taking possession of the house (getting the keys) is covered under paragraph 10 of the One to Four Residential Family Contract (Resale) (TAR-1601).  Normally the possession is transferred at closing and after funding.  Sometimes there are circumstances in which either the buyer or the seller needs to move into the house early, or stay in the house longer, respectively.  In this case the box is check that possession takes place according to the terms of a lease back agreement (For the seller it’s the Seller’s Temporary Residential Lease TAR-1910.  For the buyer it’s the Buyer’s Temporary Residential Lease TAR-1911)

  • What happens at the closing?

    • This article is a good overview of what happens at the table

  • Is the closing date on my contract guaranteed?

    • The date of closing is established in paragraph 9 of the One to Four Residential Family Contract (Resale) TAR-1601.  Note that is states “on or before” a specific date.  As part of the executed contract this date is “guaranteed”.  There are, however, myriad reasons why this date might change.  If a situation arises that the date of closing needs to be pushed back, then a contract amendment must be signed by both parties agreeing to the change.  Note that the new closing date is also “on or before”.

  • What monies will I need to come in with?

    • The Closing Disclosure (as supplied either by the lender or the title company and formerly called the HUD-1) details all the buyer’s costs and will have a bottom line that the buyer needs to bring to the closing table.  The buyer, by the new TILA-RESPA law, must receive this closing disclosure no less than 72 hours prior to closing.  These must be certified funds; either certified bank check or wired funds.  Most title companies will accept a personal check for smaller amounts (usually up to $1500).  Don’t bring cash!  Do bring your driver’s license!

  • How long does the home inspection take?

    • Home inspections typically take between 2 and 4 hours, depending on the size and complexity of the property.  A 1200 sq ft tract home may take 2 hours to inspect.  A 7000 sq ft country estate on 3 acres with swimming pool, 2 out buildings, septic system, well and swimming pool will take longer.  There are many types of inspections that may be required (usually by the lender): the home itself, sprinkler system, wood destroying insects (WDI), septic system, pool.  The initial home inspection may necessitate subsequent inspecting by specialists such as structural engineer, roofer, A/C company, etc.

  • Do I really need a home inspector?

    • The buyer may not be required to get a home inspection (in the case of paying cash for the property), but it is always a very good idea to get a home inspection.  The buyer should want to go into the purchase knowing as much about the property as he or she can.  An inspection is the best way to do this.

  • Can you recommend an attorney, home inspector or a lender?

    • Real estate agents can, and often do give recommendations of this type.  Many will have a list of vendors that they give to their clients with multiple potential candidates for each service.  They do this to protect themselves from angry buyers who are unhappy with the services of the recommendation.  Most real estate agents make great efforts to find the best vendor because it reflects on them; but it can always happen that someone makes a mistake, or there’s a personally conflict.

  • How much should I offer?

    • This question is best answered by your real estate agent who understands the current market and the area.  This article has some interesting points.

  • How many homes does the average buyer look at?

    • The average seems to be 10-15 homes.  Some have fallen in love with the first home they saw.  Others have looked at upwards of 40.  Today, 92% of buyers begin their search online.  This is a great way to narrow down your selection pool.  Buyers should sit down and determine what things are important.  Obviously, price is the first consideration, but other things such as commute time, schools, proximity of amenities all factor in.  Armed with this list and the internet, the buyer can further distill the search pool.  With the help of your real estate agent, you can review the criteria and the agent can use local MLS search tools to provide the buyer with a reasonable number of homes to look at.

  • How often do you find the perfect property on the first day (80-10-10 rule)?

    • The 80-10-10 rule states that you should make a list of the things you NEED, and a list of the things you WANT.  When you are looking for the “perfect” home the home should fulfill 80% of the things you need, 10% of the things you want and 10% of the things you don’t prefer but can live with.  Finding a house the first day almost never happens, but the 80-10-10 rule is a good way to evaluate homes.

  • Is there anything I should NOT do during the house hunting process? (From nar.com)

    • DON’T Go Looking for a New House with your real estate agent unless you are shopping with a pre-approval letter in your hands.

    • DON’T Go Home Shopping Without A Real Estate Agent. A real estate agent working as your buyer's agent is a FREE SERVICE to you.

    • DON’T Use the Real Estate Agent Selling The House You Are Interested In. Some professionals consider this a conflict of interest.

    • DON’T Apply for ANY NEW CREDIT of any kind. This can negatively affect your credit scores and hurt your debt to income ratios.

    • DON’T Pay Off Any Collections. Talk with a mortgage professional first. Your FHA mortgage may not require you to pay off all collections. Paying some collections off can hurt your credit score more than leaving the collection in place.

    • DON’T Close Credit Card Accounts. Old credit card accounts with zero balances can be your best friend if you need to raise your credit scores. Talk with a mortgage professional before doing this.

    • DON’T Write a Sales Contract with A Short Closing Date. This only benefits the real estate agent and not you.

    • DON’T Listen to Everything You Hear. There are too many 'experts' trying to give you advice, question all the answers. If it is too good to be true, it usually is when it comes to mortgages.

    • DON’T Change Jobs. If this becomes an issue discuss the situation with a mortgage professional.

    • DON’T Make Any Large Deposits. All unusual large deposits will need to be explained to an underwriter. If you don't do it right the underwriter may not count that large deposit to be used at closing.

  • What is the likelihood of a multiple offer situation?

    • While rare, multiple offers do occur and most often in a seller’s market when there are few homes in inventory and many buyers.  Your real estate agent knows how to handle these situations.