Not ready to buy, but just have lots of questions about buying?  You've come to the right place!  Listed below are the most commonly asked questions Frank receives from buyers, with good general advice.  Everyone's buying goals are different however, so please be sure to call Frank directly at 407-532-0335, so he can give you the best advice for your specific situation.

I)    Questions of the Home Buyer:     Web Page Disclaimer

In the Home Search

Why Work with 1 Agent?      

Advice on Choosing a Mortgage Lender

Contract Negotiation -- Miscellaneous -- Timeframes  

In the Home Search

I have been looking for homes on my own, even visiting properties that are "for sale by owner".  Can I manage the purchase on my own, or am I better off with a Realtor working for me?
There are a couple of reasons I can think of, that may cause you to want to work without the aid of a Realtor.  Perhaps you have had a bad experience with an agent in the past, with a house you bought or sold, or perhaps you think that you would have to pay a commission fee to an agent when you are purchasing.  Just like Doctors, Lawyers and (your) profession, there are the good and the bad!  So please don't judge all Realtors from a bad experience you may have had in the past.  Keep in mind, that SELLERS generally pay the Realtor's commissions, through the listing contract.  They generally pay 6%, which covers BOTH the listing agent and the selling agent.  Working with a Realtor in a home purchase, in my opinion, "is the best free service you could ever receive"!  Sure you can go and visit new home subdivisions by yourself, but you would still be much better served with my Buyer's Plan if you are going this route.  It's also not that hard to look in newspapers by yourself, pick up 'homes magazines' yourself, and look for 'for sale by owners' yourself, but why would you?  Why would anyone . . 

  • Spend 2-3x longer than necessary to find just the right home?
  • Takes hours researching newspapers, homes magazines, internet ads, etc.  
  • Make endless calls to "for sale by owners", "listing agents", to make appointments to look at houses, complying with their schedules?
  • Have to answer the same questions each time about "pre-qualifying" for a loan?
  • Assume the risk of signing the "for sale by owners" purchase contract, prepared by the "for sale by owner" themselves?
  • Sign a purchase contract that doesn't contain the best (protective clauses) in the event things go wrong?
  • Not surround themselves with quality professionals to guide them through the most important transaction that they will probably ever make?

Considering all the benefits you receive from my "Buyer's Plan", it makes NO sense why you would want anything less for you and your family!

The only reason I don't use a Realtor on my purchase is because I found a "for sale by owner" property that I want.  Can an agent help me on this property?
This depends (completely) on the private sellers attitude.  Most agents, including myself, will sell a FSBO property as long as someone, either the seller, or buyer will pay a reasonable fee for services.  The amount usually asked for is 3%, which would represent 1/2 of a full commission.  The agent would have to act as a "transaction broker", and would be doing an equivalent amount of work for the sellers as they would for the buyers.  If you select an agent, and that agent approaches the seller's with this offer, then MOST reasonable sellers will comply, unless they have a truly HOT property in a HOT area, and have a "friend in Real Estate" or some other professional experience.  Even in this event, any contract that is written will likely favor the seller NOT THE BUYER.  You should really think twice before dealing directly with the seller, without the aid of your OWN professional!

Should I buy a resale home or new home?
There are so many things to consider, that it is not a simple answer.  People that buy new homes are generally (picky by nature).  If you were to look at a couple of resale homes that are newer in style and amenities and you 'balk' at them, then a new home built to specifications is likely for you.  On the other hand, if you do not get hung up on the cosmetic aspects of a house such as paint, carpet, cabinetry, etc., you may be more likely to go for a resale house. Resale homes in my opinion, are a much better value when it becomes time to sell.  New homes are becoming quite expensive, even in the more affordable areas of metro-Orlando, as builders are forced to absorb (then pass on to buyers) increased impact fees, the cost of heightened code-requirements and the like.  If you have an agent check the resale values in the nearest neighborhoods to the new home subdivision you may consider, you will likely see a big variance between resale and new home prices.  The buyer who doesn't think they will be in the home more than 3-5 years is almost always better off in a resale home, because when they go to sell it, they will likely make out better.  Likewise, if you build a new home but are transferred to another area or otherwise choose to sell your home (before the builder has completed sales), you will be competing against (2) markets; the new home market and the resale market.  Some buyers want to be in more "classic" neighborhoods such as "Conway", "College Park", "Maitland" or parts of "Winter Park".  Unless you tear down and build it, you will buying a resale in these areas and paying dearly too!  

How many homes is 'enough' homes to look at before I choose?
As many as it takes!  Some buyers will only have to look at one home, and some buyers are still looking from their start back in 2003!  "How many" depends upon the kind of market you have.  In a buyer's market (more sellers, less buyers) you will have a nice selection of almost every housing type, in most every neighborhood.  In a seller's market (like we've had since about 1998), there are (more buyers and less sellers), so the selection is usually quite meager.  In this type of market, you either buy what's out there, play the waiting game (get a good agent), or wait until the market turns back around.  For the buyers I've worked with in 1999, most chose a home within the first (2) trips out, looking at about 6-10 homes.

What if I just want an agent to give me a list of homes for sale so I can drive by them.  I don't want to waste my time looking at homes that don't appeal to me!
Many agents will do this for you, but it is NOT the best way to work.  You are wanting to have your cake and eat it to, to work with an agent (hopefully 1), yet work independently as well.  In my opinion, a good discussion up front between you and your agent on all the particulars of the house you want, should keep you entering homes that you like.  If not, then choose another agent.  If you are only in the 'browsing mode', then it's best to simply look on the internet, look in homes magazines, and drive the subdivisions to narrow down where you want to be, and what style of home you want.

 

    In working exclusively with (1) agent  

The agent who is the listing agent on the home I'm selling said they can help me with the home I buying.  Is this a good idea, or should I pick an agent who knows the area I want to be in better?
Although (all agents) work off of the same multiple listing service, and can (all) come up with the same homes that are for sale in an area, you are best served by someone who knows the area you want to be like the back of their hand!  They will have 'inside' information on coming developments, current trends in values, and other in-depth knowledge that (just any agent) will not have.  On the other hand, if the home is relatively easy to locate, and you already know the area and/or subdivision you want to be in, then most any good agent can help you.  Your current agent would have (both sales on the line); the home you are selling (and buying), so there is some serious motivation there to keep your transactions running smoothly!

Should I work exclusively with (1) agent, or just call the individual listing agents and work through them on any offers?
You are generally better off working with (your own) agent, under a "Buyer's Agency" relationship.  If you've been looking at homes by calling the individual listing agents, aren't you getting tired of them wanting to "pre-qualify" you for each and every showing?  Good agents will be doing this, because they only want their homes shown to buyers who are ready, willing (and able) to buy today!  Also, when you work with the listing agent, you are bound by a type of agency relationship called "Transaction Brokerage".  This is a limited form of representation, meaning that the agent is working (for) both parties.  When you work with (your own) agent, they can work for you as a "Buyer's Agent", working for you, to get you the best price and terms possible.  Your own individual agent can also get you pre-qualified or pre-approved for a loan up front, so you can focus on choosing a home, not dealing with 'another' financial inquiry by yet another listing agent!  Your own agent will also be showing you (ALL) of the homes you are interested in, wanting you to pick the one that makes YOU happiest.  The listing agents only have (1) home to sell, and want you to buy that one.

Can I have the listing agent show me the house, then put my offer through my "Buyer's Agent"?
The only reason I can think of that would cause you to do this, would be if your agent was out of town, and a new home came on the market that you 'had to see'!  I ask EVERY buyer if they have recently worked with, or are currently working with an agent.  Sometimes buyers are dissatisfied with their agent for a variety of reasons, and are willing to work with (and write a contract with) another agent.  In general, you should SEE the home with the agent who will WRITE your offer.  If you write an offer with your agent (on a home that the listing agent showed you), then your agent may not get paid!  There is something in our industry called "procuring cause", which means that if one agent shows you a house, or procures you to the house, then that is the agent entitled to compensation.  This however, is not always enforced.  

I've heard something about "Transaction Brokerage".  What is this type of agency, and is it better or worse than "Buyer's Agency"?
Which type of agency is better depends on who you talk to!  Transaction brokerage is mandated by our Florida Real Estate Law, when the listing agent fields an offer from a buyer directly, or if one agent from an office sells the listing of an agent in the same office (co-workers). It is defined as a "limited form of representation", and that buyers and sellers are "giving up their right to undivided loyalty" of the agent, because the agent is working with both parties.  Also, the fiduciary duty of confidentiality only applies to the actual negotiation, in that the agent cannot disclose to the buyer that the seller is willing to accept less than the list price, and the agent cannot disclose to the seller that the buyer is willing to pay more than they are offering.  In "Buyer's Agency", the fiduciary duty of "confidentiality" is more sweeping, and means that the Buyer's Agent must hold ALL information about the buyer confidential unless the buyer authorizes certain information to be given to the seller.  Agents can never knowingly keep confidential information that would prove seriously harmful to the other party, such as defects in the house, or assist in helping the seller to lie or otherwise mislead the buyer about the condition of the house.

How do I choose a good agent to work for me exclusively?
There are any number of good ways to find an agent, #1 you can call me!  A lot of people choose an agent based on referral from someone that they know and trust.  This is NOT always the best way to choose an agent!  I believe you should ALWAYS choose someone who has had experience in selling homes in the area where you want to be.  Because many Buyer's Agents do not take listings (or work for sellers), you may have to rely on a referral from someone you know to find this type of agent.  Whereas if you are calling on ads placed by listing agents, you will be mostly talking to those agents.  It's worth your time to interview one of these listing agents on the phone when you call on their ad, because they may be a 'local expert', and just the person you can help you best.  Make sure that they can give you kind of time you need, and try and choose a (personality type) that seems to gel with your own!

 

    In choosing and working with a Mortgage Lender:   

What is important to consider in choosing a mortgage lender?
Start by dealing with a well known, reputable company.  There are (2) basic type of mortgage lenders; 1) Mortgage Bankers, 2) Mortgage Brokers.  The basic difference of the two is that Mortgage Bankers actually hold the loan that they are granting.  Mortgage Brokers "originate" the loan, and basically sell the loan at closing to the company who has (underwritten) the loan, and who holds the paper.  One type is not necessarily better or worse than the other type.  A referral by someone you know and trust to a good lender is a good way to go.  You want to find a mortgage lender who will naturally give you a competitive rate, but be careful in dealing with the lender who "low balls" your interest rate quote!  Some lenders try and get business by low-balling rate quotes, and then bait and switch you to a different, more profitable loan product.  A referral from a good Real Estate agent, or someone who has dealt successfully with a mortgage lender is the best place to start!

Are banks better or worse to use, in obtaining a mortgage loan?
It is my experience (and the experience of most agents I know) that banks ARE NOT the place to originate a mortgage loan.  It is one of the easiest places to start, because you look at their rates whenever you deposit checks into your accounts.  Some buyers will come to me saying they have pre-qualified with their bank, and I will always suggest that they reconsider, and choose a mortgage lender of some kind.  The reasons are many.  First of all, banks always seem to see things in (black or white) when it comes to credit, debt ratios, credit scores, and the many elements that make up an approval on a loan.  Mortgage Brokers (can broker the loan out to a variety of sources), so there is usually much more flexibility on many credit-related issues.  Many banks will also only loan on something called "A-paper", which means they mostly want to do loans to the most credit-worthy buyers, and not put in the extra time it may take to work a "tough credit file".  Another BIG REASON to choose a mortgage lender recommended from a Realtor, is that the lender's relationship with the Realtor is important to their overall success.  In other words, by taking care of each individual buyer (loan applicant) of the Realtor, the lender is assured of future business.  The quality of service in terms of call-backs, efficient loan processing, etc., will be higher with mortgage lenders than banks. 

I've heard about "online lenders", is this a good way to obtain a loan?
At this time, I'd say no.  Online lenders are certainly good for getting rate quotes, which can keep the competition high, and your rate low.  A loan is a complex web of information gathering, ordering of local services such as appraisal, termite inspection, survey, septic tank inspections, etc.  Many of these inspections are ordered by the lender.  When your "online lender" is out of the state you are in, then there is a POTENTIAL LOSS OF TIMELINESS for a variety of reasons.  Delays in efficient loan processing can aggravate everyone in the transaction, and can lead to a sale falling apart.  You are much better served in choosing a local, recommended mortgage banker/broker, who has a business and reputation he or she is building in your area, and you puts personal service above all else!  The only exception I would make, would be if your local lender could get information from you online via a "feedback form to take loan application", or use "email" as a way of communicating more efficiently.  Online loans may be the "wave of the future", but the wave isn't "safe to surf" yet, at least not in my opinion!

Once I've made my loan application, can I switch lenders if I'm not satisfied with the lender I've selected?
Yes you can, but it may cost you more money and jeopardize your loan from closing on or before the closing date.  Any deviation from the loan approval date on your contract, must be agreed upon by both buyer and seller, in writing, in the form of an extension to the timeframe of loan approval.  Most contracts use the word "diligence" when describing how the buyer should work in obtaining their loan.  If a buyer, at some point late in the loan process, decides to switch lenders, for whatever the reason, they could be seen as not working "diligently" to obtain a loan, with the goal of closing on time.  Also, if you change lenders (or loan products) you may incur extra expense on a new appraisal, and most certainly a new credit report.  If however, you got with a lender who is very poor in loan processing ability and/or service to you, then most everyone in the transaction will likely be glad you are changing lenders, but as your goal, keep your original closing date in mind.

I've noticed that there are very low mortgage rates advertised in the local newspaper, but my lender's rate is higher.  Why is this?
It is my opinion, that many low rates you see advertised in newspapers are "teaser rates" like the teaser pricing you see done in newspaper automobile advertising, designed to make the phone ring at that lender's office.  I'm told by a couple of lenders I know and trust, that these "teaser rates" are only good for certain types of loans, for certain down payment amounts, and for buyers with very high credit scores.  In other words, you may not prove eligible for the loan rate they are advertising.  You can use these lenders rates to keep (the lender you choose) competitive, but instead focus on a reputable lender in a reputable company, offering a high level of service as well as a competitive rate.

Should I 'lock' my interest rate, or 'float' the rate until closing?
Get a feel from your lender on where interest rates are heading, then take into account the length of time from your loan application until closing.  When you hear news of "The Fed" raising interest rates in the future, you should likely LOCK your rate, because it will most certainly be higher in 30 days.  Lately, the news is that rates will edge up slightly, usually by 1/4 increments, which shows up as higher mortgage rates, credit card rates and eventually yields on individual investments.  In the current market climate, I would personally lock a rate.

Are lenders required to give me a "good faith estimate" of the money I will need (total) to buy the house I've chosen?
YES!  The Federal Truth In Lending Act, makes a lender give you a "good faith estimate of expenses" at your loan application, and a full disclosure at closing, of the yields on the loan they are making and other financial information that pertains to the loan.  Also, a good Realtor will ensure that you have this "good faith estimate" and they may even prepare one of their own for you.

 

    Contract Negotiation/Miscellaneous/Timeframe:   

I've heard that it is best to offer a lot less than the seller's asking price.  Is this true?
NO IT ISN'T, BECAUSE IF YOU ARE OFFERING FAR LESS THAN MARKET VALUE, YOU MAY NOT GET AS GOOD A DEAL AS IF YOU WERE TO OFFER A REALISTIC MARKET PRICE!  It is VERY important to know the market value of the home you want to buy.  You can do this by having your Realtor prepare a CMA (Comparable Market Analysis) for you, in advance of your offer.  The CMA is a list of homes that are roughly comparable to the home you want to buy, that have sold within the last few weeks to several months.  The CMA is usually prepared by a licensed Realtor, and can be used to help justify your offer.  Many (computerized) CMA's will have photos of houses, and detail a variety of pricing information as well as features and amenities of the comparable sales.  I consider a CMA to be a 'snapshot' of what an appraisal will look like.  You are protected from over-paying for a home, because most lenders will not make loans on homes that are worth less than you are paying.  You should base your offer on the CMA, the condition of the home you are wanting to buy, and advice from your "Buyer's Agent", hopefully a GOOD agent!

How much money should I expect to put up for a good faith (escrow) deposit once I negotiate a contract on my home purchase?
Escrow deposits can be only a couple hundred dollars, or as much as several thousand dollars.  "How much" depends generally on the price range you are operating in.  For homes priced at about the 100,000 level, a deposit of $1,000.00 proves acceptable much of the time.  Most sellers (with advice of good listing agents) will ask for as much deposit money as they can get.  I consider the deposit to be "walk away money", meaning the buyer may be allowed to walk way from the purchase as long as they allow the seller to have the money.  The more money there is on the line, the less likely a buyer will walk away!  The deposit is designed to show good faith of the buyer to fulfill their part of the contract, and close on the sale.  The buyer is entitled to receive the deposit back in the event buyer's loan is denied, or in the event of seller default on any of the seller's terms and conditions in the contract.  Escrow deposits are to sit in a special escrow account (that can bear interest with interest kept by account holder), with funds held in abeyance until the day of closing.  The money is applied toward your total cash requirement.  A seller may be entitled to your escrow deposit if you default.  Speak to your individual Realtor to find out how and when a seller or buyer can default in the transaction, and the process you go through to determine you would get the escrow money in this event.

Can I negotiate (ask for) new carpeting, paint, or other cosmetic improvements be done to the house prior to my closing on it?
ABSOLUTELY YES!  But you should know the market value of the home you want to buy, considering the condition it is in.  It may already be priced in consideration of the fact that it needs cosmetic improvements.  I will always have a seller obtain a quote on carpet, paint, etc., with installation from a reputable company, and use this information in a negotiation.  You should first start with a good CMA (comparable market analysis) on the home you want to buy, note the range of sales prices on comparable homes to the one you want to buy, and make your offer based on the condition of the home.  You can usually read comments noted in the listings, which homes were "fixer-uppers", and which homes were in "move-in condition".  You will see uppers-uppers usually selling for less, but be sure to gauge just (how much less).

I've heard that home inspections are important.  How do I select a home inspector, and how much should it cost?
Like choosing a Realtor or mortgage lender, the selection of a home inspector is very important.  Home inspections have the purpose of finding out defects/deficiencies in the house you are buying.  The seller contractually agrees to make repairs up to the repair limit of the contract, and will work from the list your inspector provides.  The home inspector you select should be: 1) state certified, 2) Have references available upon request, 3) Tell you how long their typical inspections take, 4) Give you a written report listing the scope of their report and any liabilities they may have if defects are found after the closing.  If one inspector says that their inspection takes an hour, and another one says it will take 2-3, you can bet the second inspector will be more thorough and "nit picky".  As part of my service to my Buyers, I provide (3) inspection companies for my buyers to consider.  You should be, however, responsible for your selection.  There are MANY times when inspectors fail to find defects in a home, and most have disclaimers that hold them "harmless" in this event.  In my experience I have found that inspectors are broken down into two major groups: 1) inspectors that will only note the major repairs/defects a home has as pertains to the contract, and 2) inspectors that will "nit pick" a house from top to bottom, listing each and every defect, discrepancy no matter how trivial.  The latter type of inspector can be known as a "contract killer" because their reports sometimes can overstate the facts, and scare a buyer from going through with the purchase.  What type of inspector you choose is completely up to YOU!  Ask your Realtor for a name or two, ask someone you know who may have had an inspector in the past, and open up the phone book to!

What are sellers responsible for fixing from a home inspection, and how much money are they obligated to spend?  What if they don't comply?
There is a (repair clause) in the two types of contracts that Realtors in this marketplace work with.  The clause basically states that sellers will list any defects in the (mechanical) systems of the house that they know about to you on a separate disclosure form, and that they will maintain the property in good condition until the closing date.  The phrase "sellers warranty" is used to describe the fact that the seller, to the best of their knowledge, warrants that mechanical features of the home are in good, working condition.  A home inspectors goal is to find ANY (mechanical) items that are not in good working condition.  When they do, they furnish a list for you in their report.  They may comment on a variety of cosmetic issues the home has, however contracts generally do not cover cosmetic deficiencies.  At that point you review the repairs needed, and when applicable in your contact, decide if you want to go through with the purchase, and if so, which repairs you want performed prior to closing.  I'd say that 95% of buyers want the sellers to do ALL of the repairs noted.  In the contract, the seller generally agrees to pay (up to a certain amount of money) toward "warranted items", that is, the mechanical defects found on your report.  The wording in your contract may also state that the seller use "appropriately licensed repair people" to make repairs, meaning that they can't choose the cheap way out on a repair that you must live with!  If the sellers fail to comply, to the letter of the contract, on each VALID repair request, then you have a variety of options.  You may be able to: 1) void the contract, receiving your deposit back, 2) sue the seller for "failing to perform" under the contract, 3) accept the seller's response and close anyway.  Whatever you do, do it under the advice of your Realtor, or attorney as applicable.

Can the seller make repairs to their property themselves, or must they hire appropriately licensed repair companies?
This depends mostly on you, and what your agent will allow.  I protect my buyers vehemently by giving them more control over the repair process.  Because the sellers are making the repairs for someone else, namely YOU, then YOU should have control over the quality of the repair to be performed.  This is exactly why many contracts state that "appropriately licensed companies" will be utilized in making ALL repairs.  This give you someone to fall back on, should their be a problem with the repair in an unacceptable amount of time.  However, if a repair is minor by nature, and something you (or I) could do by going down to a home improvement store, buying a basic part, and fixing easily, then you may want to allow a seller to do that.  But in the case of the following "skill" repairs, you should insist that repairs be done by acceptable professionals: 1) Air Conditioning & Heating, 2) Roofing issues, 3) Electrical issues (except for very simple ones), 4) Plumbing issues (except for very simple ones), 5) All major structural issues.  

What if I have a serious problem in the home after I close, and I suspect that the seller (concealed a defect)?  What is my recourse?
Home inspections are designed to try and find ALL defects a home has, but are generally NOT GUARANTEED to find ALL!  The key is to "prove that the seller knew" that the defect existed, and this can be hard to do!  It depends totally on what kind of defect you found.  In this event, you should speak with your Realtor first, allowing him or her to contact (the listing agent and seller) to lodge the complaint.  Sometimes this will work out in a quick and amicable settlement of the issue.  Other times you might have to consult an attorney, preferably one who specializes in Real Estate.  An attorney can discuss with you ALL of your options.

What is the scope of the termite inspection, and when does it occur?
Termite inspections are only warranted for a period of (30) days!  This is quite unsettling, because it speaks to the extreme problem we have with these pesky insects here in Florida!  The inspection can be ordered at any time within the 30-day period prior to closing.  It is a GOOD IDEA to get it done as soon as possible, as termites and the damage they cause, must be eradicated prior to you receiving your full loan approval!  Pay particular attention to the part of the seller's disclosure as it relates to termites (both past and present), and if the house is under a termite bond, which can make the termite inspection easier for everyone involved!  In addition to checking for the insects, termite inspections also check for any "wood destroying fungi", or (wood decay) to any part of the house, whether caused by roofing leaks, plumbing leaks, or perhaps poor hardboard siding on the exterior of the house.  Sometimes wood siding can absorb moisture, buckle and rot in places.  This would also need to be repaired prior to a loan being closed on.

The house I am buying has a "termite bond" in place.  How do "bonds" work, and is there anything I need to check on?
It is ALWAYS GOOD to have some type of termite bond in place!  There are two types of homes in Florida: 1) homes that have had termites, 2) homes that will eventually have termites.  Until the FDA approves proper chemicals that can last as long as the (toxic chemicals of the past), then we will have a continual battle on our hands here!  Start by getting a copy of EVERYTHING the seller has as it relates to the treatment of the home, drawings/diagrams, chemicals used, and the actual bond certificate listing benefits and limitations of the bond.  Most importantly, check to see if you are getting a REPAIR BOND or TREATMENT ONLY BOND.  Repair bonds may have (exceptions), that is, areas where termites were previously found, may not be covered for future damage claims.  Most companies that I've experienced (in this marketplace) do NOT want to make repairs!  They almost always stipulate that LIVE TERMITES MUST BE FOUND in order for you to receive a repair.  If live termites are not found, they will most always call it (old damage) and not want to make a repair if one is needed.  They will also simply pound their hands, screwdriver, etc. against the site of the suspected damage (exit holes in drywall, etc.), and if it SOUND SOLID may not want to make a repair.  You have the option of opening up a hole in the drywall to explore if there is any stud damage near the "exit holes", and if there is damage the company will most always fix it.  If there isn't damage, the company will probably NOT pay to patch the wall back up for you, so keep this in mind.  

Does the lender's appraisal have to come in at the sales price?
Generally yes.  Lenders always take into consideration the fact that a buyer may eventually default on their loan.  If this happens and they (get the house back), they will have to sell it for fair market value, and cut their losses.  How much of a loss depends on what you paid for the home when you bought it.  Lenders will generally want the appraisal to come in at (or above) sales price to prevent a future problem for them in the event you default on the loan.

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