Here is a collection of frequently asked questions that I have put together to help you in buying or selling a home. If you have any other questions, not listed here, feel free to call or send an e-mail.
By clicking on any of the questions below, you may view the answer.
FAQ for Home Buyers
There are many questions that home buyers seem to ask quite often. Some questions are before starting the home buying process, during a house hunt, while writing a contract, or after an offer is accepted. Here are the top frequently asked questions from home buyers.
How long does this process take?
While timelines will vary, generally speaking, once you submit an offer on a house, the soonest you can expect to close on it would be roughly 5-6 weeks (unless you’re paying with cash and no contingencies). But before that, depending on the available inventory in the local market, you could spend another additional two weeks, or even two months, looking for a house that fits your criteria. A general rule of thumb, start planning at least six months prior to the date you want to be moved in and settled in a new home.
How many properties does the typical buyer look at?
It varies. A lot of buyers don’t expect to find the right house on their first outing, but that does happen more often than you might think. A lot will also vary depending on your criteria — if you have a wide price range to look in, that could give you a lot of potential houses to look at. If you have very specific criteria, such as a neighborhood or school district you want to live in, then there may be fewer houses available to look at. The great thing about today’s real estate market is that you can rule several houses out online now, rather than having to view all houses in person. You can create an account to set up an saved search with your criteria, and we’ll email you notices when new listings fit your search, or if there’s a price change, status change, or basically any other change made on those listings. This will save you a LOT of time when you begin your search.
Should I hire a buyer’s agent?
Yes. 100%, absolutely, yes. Generally speaking, in our market, the seller pays your agent’s commission, however; all commissions are negotiable. Most sellers today use a seller’s agent to represent them. You should also have an agent in your corner representing your best interests. Especially if you are a first-time home buyer. You want to make sure you use a buyer’s agent to walk you through each step in the process and make sure you understand everything fully.
I’ve heard that even if you make an offer on a house that you can still get out of it later if I change my mind. Is that true?
Yes, and no. Your offer may have several contingencies written into it, like an acceptable inspection and appraisal of the house. You may choose to terminate the contract of any one of those contingencies when there is a valid concern. However, you may risk losing your earnest money if you choose to terminate the contract without a valid reason.
How much should I offer?
That will depend on each individual house. Hiring a professional buyer’s agent will allow you to work with them to see the many homes, but they can also help provide advice when it comes time to make an offer. Your agent knows the local market, knows the local neighborhood values, and can review the recent sales to provide you with a price that they believe to be a fair market value. They will also help guide you through any tricky situations, such as multiple-offer scenarios in a hot market (multiple offers meaning that the sellers are likely to receive multiple offers from several buyers quickly and will have to choose which offer to accept). While the decision is ultimately yours, listen to the advice your agent provides on pricing.
When will I get the keys?
Generally speaking, at the closing table. Other arrangements can be negotiated with the seller if need be, however.
Can I move in prior to the closing?
It’s generally not a good idea. Although you’ll be eager to move in (especially if you got the “clear to close” from your lender several days before the closing), there are just too many things that could happen if you take possession of the house prior to closing. Until both you and the seller sign on the dotted line at the closing, the sale isn’t legal and binding.
What happens at closing?
In a typical closing, you will have a closing officer from the title company present, the seller, the seller’s agent, your buyer’s agent, and perhaps, your loan officer. Each party will have to sign their portion of the many, many documents required by the title company, the mortgage company, and the state of Colorado for the real estate purchase to be legally valid. Trust us, you’ll get some really good practice in on your signature at the closing.
Is the closing date on my contract guaranteed?
Not always. All terms and conditions as written into the contract between you and the seller are all negotiable. However, for any of the terms to be changed, both parties must reach an agreement, and if an agreement can not be reached, the contract may terminate.
How much earnest money should I put down?
Generally speaking, in our market, sellers ask for around 1% of the asking price for an earnest money deposit. However, you’re not limited to the amount they have requested. If your agent advises you there may be multiple offers, sometimes putting down more than what is requested by the seller can make your offer look more appealing than others.
What happens to my earnest money?
The recipient of the earnest money, whether that be a title company or the listing agent’s brokerage (which will be determined by the seller), will deposit the money into an escrow account to be held until the day of closing. At the closing, you will review your settlement statement with your agent and see that the earnest money will already be applied to your balance due at the closing. So for example, if you put down $2,000 in earnest money, and your down payment due for your loan is $40,000, your settlement statement will reflect that you still need to bring $38,000 to the closing, as the $2,000 earnest money has already been applied to that balance.
Will I get my earnest money back if the contract is not accepted?
Yes. The earnest money recipient is only allowed to deposit the earnest money on an accepted, valid contract.
What is the process to get my earnest money back if the contract is accepted and the home inspection finds an issue?
When drafting the offer with your agent, you will specify dates and deadlines for the inspection. One contingency written into the contract is that you will only purchase the house given that there is an acceptable inspection of the house. When you find that there is an issue with the inspection, you can go one of two ways. First, you can terminate the contract due to unacceptable inspection issues, and your earnest money will be returned. Second, you can attempt to proceed with the contract, and your agent will draft an inspection objection. The inspection objection asks the sellers to fix the items unacceptable to you, or can also ask for a credit or allowance for the cost of fixing the items, and you can do the repairs yourself. The sellers can choose to accept, counter, or reject your inspection objection. If a resolution is not reached by the specified inspection resolution deadline as specified in the contract, then the contract is terminated, and your earnest money will be returned.
Is there anything I should not do during the house hunting process?
Yes. There are, in fact, several things you should not do. Read about them here.
What is the likelihood of a multiple offer situation?
This can depend on several factors. Is there a lot of available inventory in your price range? Is the price range you’re looking at close to that area’s median price range? Are there more buyers than sellers? Think of it like a simple supply and demand concept — when there aren’t enough houses available for sale, and the demand for that price range is high, it’s more likely that you’ll see a multiple offer scenario. Talk with your agent about tactics and strategies for combatting a multiple offer scenario, and what to expect if you run into this.
What monies will I need to come in with?
There are several costs you will need to cover prior to the closing. The first being the earnest money. Most sellers will ask for 1% of the asking price to be submitted in earnest money. Next will come the inspection costs. Inspections will vary depending on the overall square footage of the house, but a starting price could be in the $300 range for an entry-level house. Also keep in mind this is just for a general inspection. If the general inspector finds concerns with a specific part of the house, like the roof, or the electrical systems, you may want to also hire a more specialized contractor to review those individual items, as well. Next then, you have the appraisal. Again, the cost of the appraisal will vary depending on the square footage of the house. The appraisal will be ordered by the loan officer, and again, start around the $300 price range for an entry-level house. Lastly, it’s also a good idea to have extra money set aside for moving costs, and any repairs you may need immediately after closing.
How long does the home inspection take?
At minimum, usually two hours, but can take several more hours, depending on the square footage of the house. You may also choose to have the inspector perform a radon test, which requires the testing equipment to be set up in the house for at least 72 hours.
Do I really need a home inspector?
Yes. Absolutely, 100%, yes. Even if you’re purchasing a newly constructed home. Buying a house is such a huge financial investment, you want to have an inspector make sure there aren’t any serious or health and safety issues with the house. Think about it — would you buy a car without test driving it first to make sure it runs?
Do I need an attorney?
In the state of Colorado, licensed real estate agents may draft all contracts and forms on behalf of their clients. While an attorney is not required, it’s up to you whether or not you wish to have an attorney also review the contract. If you do choose to hire an attorney, make sure to hire one that specializes in real estate.
FAQ for Home Sellers
The top frequently asked questions from home sellers begin to accumulate before even starting the home selling process. If you’re going to be selling your home, it’s suggested you are prepared and have a strong understanding of the process. Many times the best way to understand the process and be well-prepared is by asking questions.
Should I hire a real estate agent?
Yes. Absolutely, 100%, yes. This may be even more true of a statement for sellers than buyers. Today’s marketplace for real estate is online. 9 out of every 10 buyers start their home search online. And the best way to get your house online is to hire a professional real estate agent. They will have access to the local Multiple Listing Service (MLS), which syndicates your house everywhere online. Just posting your house for sale on Craigslist isn’t enough these days. Getting the maximum online exposure for your house will give you the best chance of bringing in an acceptable offer. Not to mention all of the other services that your agent will help coordinate for you, like setting and scheduling showings (so you don’t have to publish your personal phone number online), and negotiating the contract and terms.
What are the steps involved in selling your house?
The home selling process actually starts some time before your house hits the market. You’ll want to first de-clutter your house, perhaps include a bit of staging, and basically just try to view your home through the buyer’s eyes. You’ll also want to make any crucial repairs to the home; things like structural or safety issues will be sure to come up in the buyer’s inspection, so it’s better to just fix those items now rather than later. Then, once you’re ready to put your house on the market, your agent will prepare a myriad of marketing materials for your home. Then comes the tough part — showings. Your agent will notify you when prospective buyers want to look at your house. You’ll then have to plan to be away from the house so that the buyers (along with their agent) will look at the house. This can be a frustrating part of selling, as sometimes others’ schedules don’t coincide with yours, and you’ll have to weigh the choice of re-arranging your schedule, or declining a potential buyer access to the home. Once you have a buyer wanting to submit an offer on your house, you’ll choose to either accept, counter, or reject the offer. After reaching an agreed contract, you’ll proceed into the contingency phase of the contract. The buyer may indicate in their offer to include an inspection and/or appraisal of the home; and if outcomes of those contingencies are not satisfactory to the buyer, you may re-negotiate or terminate the contract. Assuming all goes well, the buyer may have a few other contingencies, such as obtaining a suitable loan, homeowner’s insurance, and more, and then you will proceed to closing.
What are the costs associated with selling my house?
There are a variety of costs to expect when selling your house. Firstly, if you hire a real estate agent for the transaction, you can expect to pay a commission fee. Commissions will vary, but are usually a minimal percentage of the purchase price. You can also expect to pay certain costs at the closing. Things like filing fees, recording fees, the title company’s fees, any overdue utility or HOA payments, will all be due upon closing. You can talk to you agent, preparing a Sellers Net Proceeds Worksheet, to estimate fees you will have to pay, and how much you will take home from the sale.
Is there a best time to sell?
The real estate market does have a seasonal factor to it — usually seeing higher number of sales during the summer months than the winter months. However, there is also a bit of a niche market for buyers during the slower winter months. Typically, buyers looking to purchase in the slower months tend to be more serious buyers, which could also be to your advantage. One caveat if you plan to sell your house in the winter months — be sure to take some great exterior photos of your house during the summer months, when the foliage is lush and green. Those photos can help greatly market your house over ones with snow and/or dead foliage in them.
How should I determine my house's asking price?
This is a job best left for the pro’s. Your agent can pull records of recently sold properties similar to yours and prepare a Comparable Market Analysis (CMA), which outlines what other similar houses like yours have recently sold for (and also those that did not sell) so that you can agree upon a thoroughly researched asking price.
Why does Zillow think my house is worth so much more?
Oh, Zillow. That fickle friend of ours. Zillow’s “Zestimate” (and any other website’s home worth estimations, for that fact) is just what it says it is — an estimate. Zillow’s algorithms, while very clever, are limited in the factors they can consider when pricing a home. Zillow does not have full access to all records, like a real estate agent would. In fact, Zillow has even reported that their Zestimate can be off as much as 20% in roughly 85% of the homes listed on Zillow nationally.
What are the dangers of overpricing my house?
A lot of different things could happen when you overprice your house. We’ve outlined them in a separate article for you, here.
What factors will influence the asking price of my house?
The most basic features of your house will have the most impact on pricing. Things like, the square footage, number of bedrooms, bathrooms, garage spaces, and any additional room spaces, will be the biggest factors. There are some smaller details that will help amp up the price of your house, such as new paint and carpet/flooring. Other more expensive upgrades, such as room remodels or additions, may not get you the most bang for your buck. A great website to use as a reference, if you’re thinking of upgrading a few items, is the Cost Vs. Value site. This site tracks the popularity, and ROI of common home upgrade projects, so you can find projects that will add value to your house.
Should I make repairs?
On certain items, yes. Items that compromise the structural or safety of the house should be attempted to be repaired prior to selling. It’s likely that a buyer’s inspection would reveal such items anyways, which could greatly change the terms of the contract. But don’t feel like you have to fix EVERY flaw with the house. Buyers have a certain level of understanding that the house will likely gain a little wear and tear over the years.
Do I have to disclose known defects?
Yes. If you’ve had a basement flood, or a leaky roof, you should fill out a Seller’s Property Disclosure and disclose these facts up front. Again, it’s likely that a buyer will find out any major faults of the house during an inspection anyway, but in the state of Colorado, sellers must disclose known defects. Additionally, if your agent knows about these defects, he or she is required by law to disclose such facts to buyers, additionally. Save everyone the trouble and just disclose known facts up front.
Do I have to sell to the highest offer?
No. You are allowed to choose any offer that is submitted for consideration. Sometimes, choosing a lower-priced offer could even be in your best interest if there are fewer contingencies included in that offer.
How quickly will my house sell?
Soon, hopefully, if you price it right. Pricing it right is the first step to getting your house sold quicker, but there are other factors to consider. Most real estate markets track an average days on market (DOM) — which is a stat that is compiled from all houses in a region (sometimes even in a particular price range), averaged out amongst the number of days it takes for each house to sell. In desirable markets, the DOM tends to be less. In less desirable or uncommon markets, it tends to be higher. Be sure to have an expectation of what the local market’s average DOM is likely to be when you prep your house to sell.