Are you deciding to buy a new home? Welcome to the world of homeownership! If this is your first time, it’s an exciting moment in your life. You’re about to make the most significant financial investment of your lifetime. Yet buying a new house is not as straightforward as it seems. There are steps you must take to make your dream home yours. How do you get everything you dreamed of when buying a home? The key is to ask the right questions before signing on the dotted line. It would help if you also considered the ways to protect your property. Home insurance is the number one way to protect you and your family from the unknown.
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In this article
- Working with a Real Estate Agent
- Questions to Ask Your Potential Real Estate Agent
- Questions and Considerations During the Homebuying Process
- Questions When Comparing Similar Homes
- Best Questions to Ask About Home Costs
- Essential Questions to Ask Regarding Major Issues
- Finding the Answers to Home Buying Questions
Working with a Real Estate Agent
If you have just started your home search, you should use a real estate agent to aid in the process. Licensed real estate agents in your state follow specific procedures and laws to sell or buy homes. A real estate agent representing you, the buyer, is called a “buyer’s agent.” And the real estate agent representing the seller is known as a “seller’s agent.” Sometimes, home sellers decide to represent themselves when selling their homes. You could represent yourself if you are a licensed real estate agent or know the home buying process. However, it’s best to use an agent either way due to the legalities of the buying and selling process. Some states may also require a licensed real estate agent to represent you. Finding an agent is pretty straightforward. You can find a real estate agent in many different ways. Family or friend recommendations, social media, or Googling real estate agents in your area are all popular methods.
Questions to Ask Your Potential Real Estate Agent
An excellent real estate agent will set up a meeting in person or over the phone to go over the home buying process with you. They’ll ask you some initial questions about your and your family’s home buying needs. The point is to get a good idea of homes you’d like to see. Ask your potential agent the following questions before signing a contract with them:
Do you have any certifications or training that set you apart from other agents?
For instance, a realtor® will be a member of the National Association of Realtors. They might also be an accredited buyer representative (ABR). ABRs are agents with specific training to represent buyers in a real estate transaction.
How will you help me buy a home in a competitive real estate market?
You want to have an agent who knows the neighborhood inside and out. You also want them to be able to negotiate a fair price when presenting an offer.
What’s your commission fee?
Most real estate transaction commissions are around six percent of the final sale price at closing. The commission is usually split between the seller’s agent and buyer’s agent. It’s imperative to discuss this with your agent so you know what to expect.
Questions and Considerations During the Homebuying Process
When you decide on a realtor, you will sign a contract. The contract will iron out the details of how you are represented. Representation includes services, compensation, and the length of your agreement. Your agent may work solely for you. However, sometimes an agent will represent a seller of one or more of the homes you’re viewing. Though it’s illegal in some states, this is known as a “dual agency agreement.” And it may pose a conflict of interest. It’s best to avoid agents with a conflict of interest like a dual agency. In that case, you can always ask for a referral to work with another qualified agent. Once the details are ironed out, it’s time to start looking at homes. Your agent will print out or email you listings from a multiple listing service (MLS). An MLS is a database of homes in your area.
Before you look at homes, make sure you have a specific list of questions and must-haves ready to go. Here are some typical considerations and questions to ask throughout home buying:
What’s the budget?
If you are knee-deep in the home buying process, you have a budget picked out. If you’ve just begun the process, then it’s time to consider your budget. Many people go by the 28/36 rule. This rule says you shouldn’t spend more than 28 percent of your gross monthly income on home costs. (Gross monthly income is your monthly income before taxes or deductions.) Also, you shouldn’t spend more than 36 percent of gross monthly income on total debts. Total debts include credit cards, auto loans, student loans, and your mortgage payment. Can you afford a $3,000 per month mortgage plus utilities? Or would a $1,000 monthly mortgage plus utilities be more reasonable? You could put the extra money toward the kids’ college fund. Also, think about your down payment and how much you have saved toward it. The general rule of thumb is to save 20 percent for a down payment. But most mortgage lenders allow a smaller down payment these days. Talk to your lender or ask your realtor about your options.
You will also have to consider your budget for home insurance. Many mortgage lenders require you to buy a homeowners insurance policy to qualify. It’s always wise to compare insurers and look up average rates in your new area. Insurify has a super-easy way of comparing home insurance quotes in a few minutes. It’s worth checking out!
What are your must-haves?
Must-haves include everything you want and need in your home. You might also think of these as “deal-breakers.”. You’re making a serious financial commitment—why not get everything you want? A typical must-have for homebuyers is updated appliances. If you are working with a larger budget, you may ask for other must-haves like a below-ground pool or a media room. Remember to work within your budget. Don’t get too far ahead of yourself if your must-haves are not within reach.
You may also have a family and want to live in a desirable school district. Be sure to research the community and school district before looking at homes. Let your real estate agent know you’d like to be zoned for the school districts you’re viewing. If you want to know more about school districts, hop on the internet and do a search. There are plenty of neighborhood forums that can direct you. You can also ask your agent about different school districts and zoning restrictions. Your agent will likely know the area well, especially if you move from another state or city.
Questions When Comparing Similar Homes
Your real estate agent will likely show you many comparable homes in the area that suit your needs. It’s often easy to get tricked by the facades of many new homes. Whether new or recently renovated, the homes may be shiny, modern looking, squeaky clean, and staged by interior designers. Looks can often be deceiving to first-time home buyers. Now is the time to ask your agent questions to narrow down your choice of homes. You may also like certain homes that seem to offer everything you had on your list. The problem with many properties is that they have issues that aren’t apparent upon first glance. There are also questions that many homebuyers don’t think to ask at first, and then it’s too late. Thankfully, your agent is there to do the legwork for you. They don’t want a potential sale to fall through if you end up having to back out. That means they will do everything they can to help you. They may be able to get an answer out of the seller’s agent or previous owner. Here are some typical questions to ask your agent:
Is there a homeowners association (HOA)? What are their rules?
Homeowners associations are often involved with housing developments. HOAs often have specific rules along with a fee; this information should be provided to you up front. Ask your realtor for a copy of the rules. They usually involve upkeep or maintenance of your home. For instance, you may have to get special permission to paint your home a different color.
How are the neighbors?
You can ask the seller what the neighbors are like. Are they noisy or quiet? Is the neighborhood pet-friendly? Do the neighbors keep to themselves, or are they more friendly? Knowing your new neighborhood is especially helpful if you are moving from another state and are viewing everything via video call. If you are in a nearby area, it’s a good idea to check out the neighborhood on your own time and even speak with neighbors. You will get a feel of what it will be like to live there.
What is the community like?
Your agent should be able to educate you on community amenities, school ratings, and crime rates in the area. Also, ask traffic. Is it heavy or light during peak hours? You can also use the internet to find out about the town or neighborhood you’re considering. There are rating forums all over the internet.
Why is the seller motivated to sell?
Finding out why the seller is moving will tell you a lot about the final home price. The seller may be downsizing, relocating for a job, or having a significant life event. Your agent will help you find out how motivated the seller is to sell their home. Depending on their reasoning, they may be more or less flexible with the selling price. When it comes to negotiations, you could end up with a deal.
What’s included with the sale of the home?
As a rule, fixtures are typically included with the sale of a home. Cabinets, faucets, and hanging lamps are considered fixtures. It’s always wise to have your agent check with the seller before the negotiation. You may be surprised by what exactly is or isn’t included in the sale of the home. Check your local laws to find out what must be included. You can also ask if the seller will include some must-have items like a stainless-steel fridge. It never hurts to ask!
Best Questions to Ask About Home Costs
Costs of the home will likely sneak up on you, whether you like it or not. To avoid shocking costs that add up in the home buying process, always ask as many questions as possible. You’ll thank yourself in the long run because you may be able to save. Here are some questions to ask when talking about home costs:
How much are closing costs?
Aside from the down payment, closing costs will be another chunk of change to hand over when you close on your home. Closing costs often include loan origination fees and other third-party fees, such as paperwork processing, title research, appraisals, and other administrative tasks. You may pay anywhere between two and five percent of the purchase price of your new home in closing costs. Closing costs vary on location, so be sure to double-check with your agent before signing the deal.
How much are the property taxes?
Annual property tax costs often differ from county to county and state to state. Always find out what you can expect to pay in property taxes each year before looking at homes. Knowing taxes will give you an overview of your budget, as tax costs can often sneak up on people. Ask your real estate agent what you should expect when it comes to property taxes.
Are there any HOA fees?
If the home you’re looking at is part of a homeowners association, you can bet there will be an HOA fee. HOA fees are typically monthly or annual charges and cover maintenance on your home’s exterior of and other community features, such as gardens. These costs should also be worked into your budget when you buy a home. Always ask your agent for details about the community’s HOA rules and fees.
What are the comparable home sale prices in the neighborhood?
An excellent way to find out a home’s fair market value is to compare similar homes in the area you are looking in. Market value can change with home type, square footage, and the block the property is on. You can look at similar home listings in the vicinity. Compare and then negotiate a lower bottom line if the listed price is above its fair market value. Ask your agent for a list of comps to look at, and if there should be a lower offer, ask your agent to negotiate for you.
How much does home insurance cost in the area?
Home insurance prices vary from home to home and neighborhood to neighborhood. It’s always good to get a ballpark on costs before buying. Then, you can compare home insurance quotes for extra savings. Thankfully, you came to the right place. Insurify lets you compare homeowners insurance and find the best companies at the right price. See what rates await you today!
Essential Questions to Ask Regarding Major Issues
As first-time home buyers, you want to make sure there are no significant issues with your potential new home. Some states require a home inspection when buying a home. It’s always wise to get an inspection done either way. The inspection will find common issues like radon, asbestos, and lead paint. Even the seller may not have a clue about these issues. Your real estate agent should be able to provide contact information for inspectors. You can also do a web search of your own.
There are also significant issues that your inspector may not touch on. So it’s always good to know what you’re walking into up front. Here are some questions you can ask about any significant issues in a home:
Did the previous owners make any additions or major renovations?
Sometimes, property records and listings don’t identify additions or renovations. A home may advertise as a five-bedroom when one of the rooms is a non-conforming addition. And it may not be up-to-date on building codes. You can also request the original manufacturer warranties for appliances, water heaters, HVAC, and other related systems. This way, you’ll have a better idea of its condition. As a bonus, you could potentially negotiate to lower the final sale price.
What is the age of the roof?
Roofing repairs or replacement can be costly. A home’s roof may be at the end of its lifespan and require you to replace it shortly after moving in. Your lender will likely require any existing damage to be repaired or replaced with a new roof before they approve your loan. Find out the roof’s age if it’s not already included in the listing so you can avoid these costs.
What are the major repairs or problems with the home (if any)?
It’s a requirement for sellers to disclose any known defects in a home, but sometimes not everything gets revealed. Not knowing about all the issues will cost you later. A home inspection by a professional home inspector upon a signed purchase agreement could save time and money. The inspector will report and outline the home’s condition, and this report will help you negotiate concessions. Concessions are repairs or credits that the seller pays before the closing date of your new home. Sometimes, a home has too many issues. You may include a home inspection contingency that outlines this. If this is the case, you can back out of the deal and get your earnest deposit back.
How long has the house been listed on the market?
This question goes with finding out the motivation of the seller. The longer the listing, the lower the seller will likely drop the final asking price. If you ask how long the house has been listed, you can use it as a negotiation tactic, especially if it has been on the market for a long time.
Are there any health or safety hazards to be aware of?
Safety or health hazards should be noted during the home inspection. But it’s always safe to ask about hazards before you submit an offer. Your agent may find out whether there’s mold, termites, or lead paint beforehand. You want this done so you don’t have to go through the pains of finding out after the purchase offer. Treatment may be required and can be written into your contingency plan. You will then save more money in the long run.
Can I see a history of past insurance claims?
Your agent can get a copy of a comprehensive loss underwriting exchange (CLUE) report from the seller. The report will tell you if there have been any home insurance claims in the past seven years. With the report, you’ll have insight into any damages on the home not mentioned by the owners. Weather events, vandalism, or any other covered perils will be on the report.
Is the home in a flood zone?
There’s always a chance a property may be on a floodplain. The high risk of flooding will require additional flood insurance. The Federal Emergency Management Agency (FEMA) provides a flood map service. The service will tell you if a property is in a high-risk flood zone.
Is the home prone to natural disasters?
You may be buying a home in a common area for natural disasters. If your area is prone to natural disasters, you may need a supplemental home insurance package. Always purchase enough home insurance to cover the cost of rebuilding or repairing your home. You wouldn’t want to be left paying added fees if you can prevent them in the first place. Remember, the higher the volume of claims, the higher the rates. So, if you can find a home in a low-risk area, you’ll be getting extra savings on home insurance.
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Frequently Asked Questions- What to Ask Before Buying a Home
What credit score do I need to buy a home?
Mortgage lenders have a base requirement on credit scores for approval or denial of a home loan. A credit score of 700 or higher is considered excellent, which helps you get a lower interest rate. Any score below 660 runs you the risk of being denied. It all depends on the lender and their qualifications. It never hurts to ask different lenders what their requirements are before submitting a loan application.
What is a home warranty?
A home warranty is a contract for discounted repair or replacement on a home if something goes wrong. Ask your agent who should be paying for a home warranty. In some places, a seller may pay for specific coverage. Ask your realtor for more information and whether you need a home warranty.
What is mortgage insurance?
Mortgage insurance protects the lender in cases where you might default on a loan. Most people getting an FHA or USDA mortgage will need to pay for mortgage insurance. Depending on the type of mortgage you qualify for, mortgage insurance may be necessary.
Can I buy a new home if I get a new job?
If you already got preapproved for a home loan, you have nothing to worry about. As long as your job is in the same field or your pay doesn't change, you will still qualify. However, there may be complications if you are relocating for a new job or change jobs before preapproval. Ask the lender for more information.
Finding the Answers to Home Buying Questions
The home buying process can be complicated. There are many questions you should ask your real estate agent, your mortgage lender, and the seller. What doesn’t have to be so complicated is finding the best homeowners insurance.
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