Whether you’re a home buyer or seller, it’s important that you start out asking the right questions. If you decide to hire a professional to help represent your interests, use these questions when hiring them. With sufficient year and representation experience, that partner should be able to answer the questions satisfactorily for you.

 

Clearly there are more than seven questions to ask, but it’s a great place for you to start the process. And if you’ve gone through the home buying/selling journey before, then you have a head start.

 

The 7 Questions Buyers Should Ask Before Making a Move

1. What’s should my total budget be?

You have to ask and answer this question, because the entire process rides on the answer. And the answer is…it depends. You’ll need to have a conversation with a reputable lender who can look at your finances, including cash or savings in hand, and credit and provide you an amount you would qualify for.

When purchasing, you should plan for costs beyond loan down payment amount. This would include closing costs (title prep, taxes, any sales commissions, etc) and then moving in expenses (window blinds, property updates/repairs, paint, etc).

Depending on the loan you use and money saved for expenses, moving into a property can quickly eat up your savings if you are just barely getting in. So as soon as you think you’re ready to start the process, stop spending on stupid stuff and start saving it away for moving in to a new place.

 

2. Do the current market conditions make it a good or bad time to buy?

Real estate markets are generally a buyer’s or seller’s market. Rarely is it balanced.

In a seller’s market, expect competition, bidding wars and higher prices. Low inventory is what creates these conditions.

In a buyer’s market, you’re likely to have the chance to ask for concessions (at the seller’s expense) that will benefit you and your budget.

If you want to (or have to) move when everybody else is, then you’ll be competing with everyone in the Spring market (April, May, June). But, if you have the luxury of time on your side, I’d encourage you to look at September to January. Most people don’t want to sell at that time of the year and you’re more likely to find a deal then.

 

3. What’s included in the sale?

Glad you asked. Because if you don’t clarify when you’re writing the contract, then don’t be surprised when something’s not there you thought was. Lock in all the details of what you think will be sold (clothes washer and dryer, that freezer in the basement, the shed in the bac, etc).

Finding out after the sale that something wasn’t part of the contract is not fun. But it can be avoided.

 

4. Are there any issues with the home?

Careful who you ask. There’s opinion and there’s professionals who specialize in answering. If you’re in a tight seller’s market, it may be difficult to get a home inspection contingency to find out if that fuzzy stuff is carpet or mildew. There are ways of getting inspections done when buying without a contingency and we’re happy to walk you through them. 

 

If you are fortunate and able to get an inspection, the job of the inspector is to raise potential red flags – not state emphatically that it is a problem (unless they’re certified in that field). When issues are raised, then you look to get a professional (roofer, structural engineer, electrician, plumber, etc) in to examine the red flag.

 

It takes some heavy lifting to get issues resolved, and when time is short, it’s important to have the right team supporting you to get answers.

 

5. How long are homes I’d want to buy staying on the market?

Once you’ve decided on your budget parameters and area where you want to purchase, your agent should be able to show you a picture of the homes and how long (or short) a time they’re staying on the market. 

 

If a home has been listed for months, it because of 1) price or 2) presentation. Location is important, but the price represents the value for that home. If it isn’t selling, then it’s a flag for potential issues – or may be a fixer upper deal for those who may be seeking a DIY project.

In a seller’s market, be prepared to move on properties as soon as they come on the market. In a buyer’s market, yea, go ahead and think about it for a week or two.

 

6. How do I know what neighborhood I want to buy in/stay away from?

This is a trick question that can get Realtors® in trouble. The answer is that the onus is on buyers to research school districts, neighborhoods, crime rates and such. We can’t be perceived as steering you towards or away from a particular area.

 

Fair Housing is something we have no interest in violating, so if you have any questions about whether you’d want to live in a particular area, go ahead and give it a text drive through to see if it works for your needs.

 

We’ll certainly look at areas you decide you want to live in and provide data that demonstrates the value of an investment you’re considering making.

 

7. What are the ongoing cost of owning a home?

Getting in a home is one thing. Staying in the home is another. And that’s not meant to be a daunting statement. There obviously are expenses associated with owning a home and so long as you know of them, then usually the lack of surprise takes out the fear.

 

Depending on the age of your home generally has an impact of costs involved. If the home was well maintained by the previous owner, then it will make it easier on you and less surprises to deal with.

 

And that’s the key: when a problem arises, deal with it. If there’s a leak in the faucet, wrapping tape around it won’t fix it. You’ll be dealing with rot later – so maintain the little problem before it becomes a nightmare.

 

Typically HVAC systems last 12-15 years. Water heaters 10-12 years. Roofs 20-30 years. There is an associated lifespan for everything in your home. So plan on taking good care of things and you’ll see that lifespan generally last 10-20% longer.

 

Other costs include property taxes, homeowners insurance, utilities, desired improvements, etc.

 

Bonus Question 1. What financing options do I have?

The better your lender understands your situation, the better a loan product they can set you up with.

 

The typical options are Conventional, FHA and VA.

 

How much money you put down depends on that program. But understand that your downpayment and loan type are elements that will go towards your offer when buying a home. There is strategy involved in getting it right so that your offer gets accepted. 

 

Last thing I’ll say here on the financing item: pay more attention initially to the cost of your purchase and what it takes to get in your home at the price you settle on. Currently interest rates are “high” somewhere in the 6-7% range. But know that if you can afford it at the current rate, refinancing when rates improve is always an option. The overused but true quip is: marry the house but date the rate.

 

Bonus Question 2. Are there any zoning laws or restrictions?

See questions 6. It may take some work along with your agent to get to the bottom of this, but ultimately it’s on you to do the due diligence and determine if the property is suitable for your needs. If you’re looking to make updates (add a pool, finish the basement, build an accessory dwelling unit (ADU), it will be on you to check applicable HOA & local zoning laws.

 

Thinking about AirBnB for your home? I’d check the HOA/Condo docs and then local ordinances. But you don’t want to buy a property specifically for investment if there’s some unanswered question of whether or not you’re permitted to.

 

Bonus Question 3. What contingencies should I include in my offer?

The contingencies you offer or don’t will be a function of the market and who controls it. In a seller’s market, you’ll need to be prepared to compete against others who are comfortable waiving contingencies AND providing first born naming rights.

 

In a buyer’s market, I say load ‘em up. 

 

In a balanced market, again, the competition will dictate the extent of what your winning offer will include.

 

The basic contingencies are:

• home inspection (allows you to negotiate or back out the contract if major issues arise)
• Financing (protects you if your loan falls through due to job issues or inability to get approved)
• Appraisal (if the home is valued less than the sales price, you may be able to renegotiate the price)
• Home sale (if you have a home to sell before buying, this covers you)

 

The 7 Questions Sellers Should Ask Before Making a Move

 

1. What’s my home’s current market value?

Repeat after me: your Zestimate does not automatically equal your market value. If you can be open to this possibility, then there’s hope.

The optimal way to determine what your home is worth, and thus likely to fetch on the open market is to have your real estate partner create a Comparative Market Analysis (CMA).

 

Done correctly, a CMA is the equivalent to an appraisal that outlines the value of your home for the lender.

 

With an understanding of the market value, clarity on market conditions and a ton of marketing and work to get your home in front of qualified buyers, it is possible to exceed the value outlined in the CMA when competition engages.

 

If you price your home too high when listing it for sale, the market will let you know with little to no offers, few showings and tepid feedback.

Price your home too low and you may miss out on potential gains.

 

A good agent will understand how to guide you on pricing and provide you with feedback and recommendations in the event of a market turn.

 

2. How much will I net from the sale?

The calculations that go to the bottom line include the following: 

• Mortgage balance payoff
• Potential repair costs or concessions
• Broker fees
• Transfer taxes and closing costs

 

Your agent should be able to provide scenarios based on various sales prices less the cost of selling to provide you a net number you can expect to see from a final sale of your home.

 

3. When is the best time to sell?

The Spring market is always the best time to sell. The next best time is when you have to. And oftentimes a job change, life event or need rarely gives you the benefit of choosing your timing. 

 

The second best time may vary on your geographic location and any industries that have an impact on employment. We generally see the Spring market fade into the slower summer season (July, August) before rebounding in mid September to early November.

 

So when you’re faced with selling in an off-season, it’s important to remember that correctly pricing and strong market cannot be under-emphasized.

 

4. What improvements should I make before selling?

The answer depends on the pricepoint you’re selling at. Higher priced homes need to reflect high value. You’ll need to ensure that the curb appeal is actually appealing. The house must wow potential buyers.

 

For mid to lower pricepoints, the home still needs to reflect the value, but generally the cost involved to get the home ready isn’t as great as higher priced properties.

 

If the property hasn’t been maintained, you’ll have to start with getting it up to par before considering improvements. Wood rot around windows, fascia trim, weeds growing up on the side of the house – those things have to be addressed otherwise you’re going to be courted by investors looking for a deal.

 

So some of the low-cost improvements include:

• Fresh neutral paint
• Updated door levers (not knobs) and matching hinges
• Updated light fixtures
• Deep cleaning and decluttering
• Landscaping

 

These key improvements don’t necessarily cost a ton, but they have a high impact.

 

I tell my clients all the time. If I pay you $1 and you give me back $3 to $5, I’ll do that all day. The point is, if you can get a 2 to 10X+return on the money you put in for improvements, why would you not?

 

5. Should I stage my home?

This is a glass half full / half empty argument for some. Some will swear by it that their way is the best.

 

Some will use “free” staging to get a listing. Hopefully you don’t go for the shiny object when making a listing decision.

The argument is that staged homes may sell faster and for more money.

 

But oftentimes decluttering a home and using selective furnishings can negate the need for costly staging.

 

Some argue that an empty home allows for buyers to envision their own belongings in place.

 

I’ll typically work with sellers to find a balanced approach that results in the quickest and best presentation of their home for the buying audience.

 

6. How long will it take to sell?

A seller’s market will typically see a home gobbled up by a buyer, with multiple offers, in 0-14 days.

 

A buyer’s market might take 30+ days.

 

Price it right in either market and you’ll be sold and on to your next destination before you know it.

 

Keep in mind that once you go under contract, the work in many ways has only begun. There’s still a 30-45 day timeframe where all of the title, lending and inspecting work is being done to make sure the home closes.

 

The point is, when you interview for a listing agent, ask them to show you what the market is doing and how long you should expect to be up for sale. Your expectations need to be managed when listing your home. Things don’t automagically happen by chance.

 

Your agent will need to be on top of every aspect of the transaction because bad things do happen in the course of a sale, and you’ll want to have someone who knows how to handle issues before they become problems.

 

7. What are my options if my home doesn’t sell quickly?

In order for your home to sell “quickly” the price, market, value, your expectations and your agent’s plan have to be in alignment.

 

But there are times when a market may be mid-shift when your home finally goes on the market. There are tell-tale signs that the price doesn’t reflect the value of what buyers are looking for. The longer a property sits on the market, the less attractive it becomes. Be quick to examine the price and make changes if needed. 

 

Also, you should have your agent explain their marketing plan and efforts to get the home in front of qualified buyers.

 

If you are in a time crunch, you should consider whether you can afford to rent the home out and re-list when the market improves.

 

One of the options I’ve handled for my clients is to rent the property out as a furnished home. There is a lack of decent options available to families moving into your area who would love to not have to deal with their old furniture and enjoy the ease of moving right in to your home.

 

Bonus Question 1. What are the tax implications of selling?

I’m not a Certified Public Accountant (CPA) so I can’t answer that for your situation. Consult the proper professional for your needs.

 

I can say based on the law was passed under President George W Bush there are benefits to both single and married couples who sell a home they’ve lived in for two of the past five years. The key benefit is that capital gains of $250k for single and $500k for married couples are not taxed on primary residences.

 

The important thing to remember is that if you live in it for two years and then rent it out for another two years, you’ll still be within the timeframe for selling without capital gains (up to the appropriate amounts). So be careful about renting for three years (in addition to the two you’ve lived there) because if you are not sold and closed by the end of the five year period, you’re going to pay a hefty amount to Uncle Sam.

 

Again, get the proper tax counsel. This is intended to be general information that should cause you to seek professional opinion for you.

 

Bonus Question 2. What contingencies should I expect from buyers?

If the market is in your favor, it’s possible you get no contingencies. If the market is shifting towards buyers, and you’re interested in selling (rather than sitting on the market), you should consider the best terms from the offers you receive and counter or accept as appropriate.

 

Your agent’s job is to walk you through and provide counsel on how to manage offers.

 

If you do get an offer with contingencies, they’ll probably include one or more of the following: 

• Inspection contingency (Buyer can negotiate repairs or walk away)
• Appraisal contingency (The home must appraise for the purchase price or the buyer may renegotiate the sales price – or walk)
• Financing contingency (a sale is subject to the buyer securing a loan)
• Home sale contingency (~40% of buyers have a home to sell before they can buy. This would provide for them to sell/close on their current home before closing on yours)

 

Bonus Question 3. Where will I move next, and what’s my plan?

That’s a great question that I hope you’ve discussed with your agent before you decide to list your home. It will be important to develop a plan before listing so that when you go under contract you’re not creating delays by an inability to move out.

 

Oftentimes I’m able to help my sellers find a great agent in the areas they’re moving to – someone that has a similar work ethic and experience as I do.

 

Also, a good agent in a good market may be able to negotiate you additional time to stay in your home at low or no cost while you work out the timing of your next move. 

 

Whether buying or selling a home, it is important to ask questions and get them answered to your satisfaction. My mantra is that the better educated you are about the entire process, the better a client you will be. I love educating my clients about the entire process. Doing so saves surprises, helps them understand what’s next, allows their expectations to be managed, and so much more.

 

How can I and my team be of assistance to you? If you would like to have a conversation about questions you have, please reach out to me today.