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Are interest rates
negotiable?
ANSWER: Some lenders
are willing to negotiate on both the loan rate and the
number of points but this isn't typical among
established lenders who set their rates like large
corporations set the prices on their goods.
Nevertheless, it pays to shop around for loan rates and
know the market before you go in to talk to a lender.
You should always look at the combination of interest
rate and points and get the best deal possible.
The interest rate is much more open to negotiation on
purchases that involve seller financing. These usually
are based on market rates but some flexibility exists
when negotiating such a deal. When shopping for rates,
look for published rates in local newspapers or check
the growing number of Internet sites that publish such
information.
Are low-ball offers advisable?
ANSWER: A low-ball
offer is a term used to describe an offer on a house
that is substantially less than the asking price. While
any offer can be presented, a low-ball offer can sour a
prospective sale and discourage the seller from
negotiating at all. Unless the house is very overpriced,
the offer will probably be rejected. You should always
do your homework about comparable prices in the
neighborhood before making an y offer. It also pays to
know something about the seller's motivation. A lower
price with a speedy escrow, for example, may motivate a
seller who must move, has another house under contract
or must sell quickly for other reasons.
Can you buy homes below market?
ANSWER: While a typical
buyer may look at five to 10 homes before making an
offer, an investor who makes bargain buys usually goes
through many more. Most experts agree it takes a lot of
determination to find a real "bargain." There are a
number of ways to buy a bargain property:
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Buy a fixer-upper in a
transitional neighborhood, improve it and keep it or
resell at a higher price.
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Buy a foreclosure
property (after doing your research carefully).
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Buy a house due to be
torn down and move it to a new lot.
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Buy a partial interest
in a piece of real estate, such as part of a
tenants-in-common partnership.
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Buy a leftover house in
a new-home development.
Can you negotiate the
price on new homes?
ANSWER: It can be
difficult to negotiate the sales price with a developer
because they may claim their prices are based on fixed
construction costs. But it doesn't hurt to try. Experts
say builders more likely to be flexible on price at the
very beginning and the very end of a development
project. Early on, most developers want to move people
in quickly so the project picks up momentum. Later,
developers may be more inclined to accept lower offers
when only a few units remain. If negotiating the price
doesn't work, buyers commonly negotiate for better
amenities (upgrade carpet, light fixtures, etc.) or lot
location. Experts say a developer will rarely pass up a
deal over a couple hundred dollars' worth of carpeting,
for example
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Do I need an attorney when I buy a house?
ANSWER: In some states,
you do need an attorney to complete a real estate
transaction, but in others you do not. Most home buyers
are capable of handling routine real estate purchase
contracts as long as they make certain they read the
fine print and understand all the terms of the contract.
In particular, you should be clear on the terms of any
contingency clauses that will allow them to back out of
the contract. If you have any questions at all, it may
be advisable to consult an attorney to avoid future
legal hassles. In looking for an attorney, ask friends
for recommendations or ask your real estate agent to
recommend several. Call to inquire about fees and to
check on their experience. In general, more experienced
attorneys will cost more, but real estate fees as a rule
are small relative to the cost of the property you are
buying.
How is the price set?
ANSWER: It's very
important to price your home according to current market
conditions. Because the real estate market is
continually changing, and market fluctuations have an
effect on property values, it's imperative to select
your list price based on the most recent comparable
sales in your neighborhood. A so-called comparative
market analysis provides the background data upon which
to base your list-price decision. When you prepare to
sell and are interviewing agents, study each agent's
comparable sales report (the data should be no more than
three months old). If all agents agree on a price range
for your home, go with the consensus. Watch out for an
agent whose opinion of value is considerably higher than
the others
How much does my real estate agent need to know?
ANSWER: Real estate
agents would say that the more you tell them, the better
they can negotiate on your behalf. However, the degree
of trust you have with an agent may depend upon their
legal obligation. Agents working for buyers have three
possible choices: They can represent the buyer
exclusively, called single agency, or represent the
seller exclusively, called sub-agency, or represent both
the buyer and seller in a dual-agency situation. Some
states require agents to disclose all possible agency
relationships before they enter into a residential real
estate transaction. Here is a summary of the three basic
types:
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In a traditional
relationship, real estate agents and brokers have a
fiduciary relationship to the seller. Be aware that
the seller pays the commission of both brokers, not
just the one who lists and shows the property, but
also to the sub-broker, who brings the ready,
willing and able buyer to the table.
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Dual agency exists if
two agents working for the same broker represent the
buyer and seller in a transaction. A potential
conflict of interest is created if the listing agent
has advance knowledge of another buyer's offer.
Therefore, the law states that a dual agent shall
not disclose to the buyer that the seller will
accept less than the list price, or disclose to the
seller that the buyer will pay more than the offer
price, without express written permission.
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A buyer also can hire
his or her own agent who will represent the buyer's
interests exclusively. A buyer's agent usually must
be paid out of the buyer's own pocket but the buyer
can trust them with financial information, knowing
it will not be transmitted to the other broker and
ultimately to the seller
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Is there a secret to good negotiating?
ANSWER: There are
several cardinal rules to negotiating effectively. One
is do your homework, and learn as much about the seller
or the buyer as you can. Another is to play your cards
close to your vest and not reveal too much information
to the other party or their agent. Don't let yourself
get rushed into any decision, no matter how tempting it
may be. Finally, if you have doubts about your
negotiating skill, hire someone to help.
Should I include an inspection contingency in my
offer?
ANSWER: An "inspection
contingency" protects you as a buyer in a purchase offer
by allowing you to cancel closing on the deal if an
inspector finds problems with the property.
As soon as the seller accepts a written offer, the
document becomes a legally binding contract. The
purchase contract can be written to include a
contingency for any repairs found to be needed or
related items the seller must take care of before
closing. If these are not dealt with, and you have such
a clause in your contract, you can delay or possibly
cancel the closing. If it's not stated in the contract,
you could face losing your deposit. There also may be
costly legal implications stemming from backing out of a
contract. You usually will have the right to choose the
inspector (and be responsible for paying for the
inspections). In addition to an overall inspection for
structural soundness, you can request a satisfactory
pest control inspection report, roof inspection report
or contingency for no potential environmental hazards
such as asbestos or radon gas. Contingency clauses
should satisfy the concerns of both the buyer and
seller. Buyers also can protect themselves by inserting
additional necessary contingencies. Indicate which items
like curtains and appliances are to remain with the
house. Then stipulate you have the right to personally
inspect the home 24 hours before closing to make sure
all is in order.
What are some tips on negotiation?
ANSWER:
The more you know about a seller's motivation, the
stronger a negotiating position you are in. For example,
seller who must move quickly due to a job transfer may
be amenable to a lower price with a speedy escrow. Other
so-called "motivated sellers" include people going
through a divorce or who have already purchased another
home. Remember, that the listing price is what the
seller would like to receive but is not necessarily what
they will settle for. Before making an offer, check the
recent sales prices of comparable homes in the
neighborhood to see how the seller's asking price stacks
up. Some experts discourage making deliberate low-ball
offers. While such an offer can be presented, it can
also sour the sale and discourage the seller from
negotiating at all.
What contingencies should be put in an offer?
ANSWER: Most offers
include two standard contingencies: a financing
contingency, which makes the sale dependent on the
buyers' ability to obtain a loan commitment from a
lender, and an inspection contingency, which allows
buyers to have professionals inspect the property to
their satisfaction. A buyer could forfeit his or her
deposit under certain circumstances, such as backing out
of the deal for a reason not stipulated in the contract.
The purchase contract must include the sellers
responsibilities, such things as passing clear title,
maintaining the property in its present condition until
closing and making any agreed-upon repairs to the
property.
What do you think of get-rich-quick real estate
schemes?
ANSWER: Most real
estate experts say there is no such thing as getting
rich quick in real estate. But there's no end to
get-rich-quick programs presented to the public as
alternative methods of buying real estate. Some are
reputable while others depend on your financial
circumstances to work. A handful are simply scams. Many
get-rich-on-real-estate programs offer advice on how to
buy government foreclosure properties and participate in
other government programs. Most of this information can
be obtained by calling the government offices involved
directly.
Anyone interested in real estate investments would be
wise to explore a variety of sources. Most investors
view real estate as a long-term investment. Deals that
sound too good to be true often are.
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What is the best time to buy?
ANSWER: Because many
buyers prefer to move in the spring or summer, the
market starts to heat up as early as February. Families
with children are eager to buy so they can move during
summer vacation, before the new school year begins. The
market slows down in late summer before picking up again
briefly in the fall. November and December have
traditionally been slow months, although some astute
buyers look for bargains during this period.
What is the difference between list price, sales
price and appraised value?
ANSWER: The list price
is a seller's advertised price, a figure that usually is
only a rough estimate of what the seller wants to get.
Sellers can price high, low or close to what they hope
to get. To judge whether the list price is a fair one,
be sure to consult comparable sales prices in the area.
The sales price is the amount of money you as a buyer
would pay for a property.
The appraisal value is a certified appraiser's estimate
of the worth of a property, and is based on comparable
sales, the condition of the property and numerous other
factors.
What is the first step to buying a home?
ANSWER: Finding out
what you can afford is one of the fist steps, which can
be done by pre-qualifying for a home loan. This step
will help you narrow your search for both a neighborhood
and particular houses. A pre-qualification is a simple
calculation that considers several factors, but
primarily your income. There are no guarantees with a
prequalificaiton, but it will be expected of you when
you make an offer on a home.
What repairs should the seller make?
ANSWER: If you want to
get top dollar for your property, you probably need to
make all minor repairs and selected major repairs before
going on the market. Nearly all purchase contracts
include an inspection clause, a buyer contingency that
allows a buyer to back out if numerous defects are found
or negotiate their repair. The trick is not to overspend
on pre-sale repairs, especially if there are few houses
on the market but many buyers willing to buy at almost
any price. On the other hand, making such repairs may be
the only way to sell your house in a down market.
Who gets the furnishings when a home is sold?
ANSWER: It depends.
Fixtures, any kind of personal property that is
permanently attached to a house (such as drapery rods,
built-in bookcases, tacked-down carpeting or a furnace)
automatically stay with the house unless specified
otherwise in the sales contract. But anything that is
not nailed down is negotiable. This most often involves
appliances that are not built in (washer, dryer,
refrigerator, for example), although some sellers will
be interested in negotiating for other items, such as a
piano
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