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Frequently asked questions
At Coldwell Banker, we understand that you may have questions about the property-buying process, so we've compiled a list of the questions we hear most often.
Of course, we're always happy to personally answer your questions and offer advice. Please contact us to talk with one of our Realtors.
Click on one of the questions below or scroll down to get started.
Q. How do I start my property search?
Buying a property can be a complex and intimidating process. The first step is to determine what features you need in your new property. Make a list of all the features your property must include to meet your needs, with another list of features you'd like to have, but that aren't critical.
Your Realtor will use your criteria to guide you to the best properties that meet your criteria.
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Q. Why do I need a Realtor?
Just as you wouldn't go to court without a lawyer by your side, it's not a good idea to enter the real estate market without a professional advisor.
As a buyer, when you ask a Realtor to represent you, that Realtor becomes your advocate. Your Realtor will look out for your best interests in all transactions and will treat all information you share with confidentiality. If you rely on the seller's agent to show you a property, you need to be aware that that agent works for the seller, and it's the seller's interests that will take priority.
Your Realtor will have access to all properties listed in the area — not just the Realtor's own listings — and can guide you to all properties that meet your criteria, while advising you about other concerns. For example, your Realtor will help you determine whether a property is priced fairly and will advise you about other factors that might affect your decision, such as location, school district, taxes, and so on.
More importantly, your Realtor will handle all the paperwork for you and will guide you through each step of the buying process. Your Realtor will negotiate for the property you want, write the contracts to safeguard your interests, handle transactions with the title company, and accompany you to the closing table to make sure the deal closes as negotiated.
The State of Texas has many laws regulating every type of real estate transaction, and your Realtor will handle all of these details for you.
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Q. What's the difference between a Realtor and a real estate agent?
The State of Texas sets minimum requirements for real estate agents practicing in the state.
A Realtor is a real estate agent who is also a member in good standing of the National Association of Realtors. This professional organization holds its members to the highest standards of ethics, conduct, and continuing education.
Each member of the Coldwell Banker team is proud to be a credentialed Realtor.
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Q. What if I'm interested in seeing a property listed by a different real estate broker?
Our Realtors can show you any property on the market, no matter what agent or company has the listing.
By working with the same Realtor throughout your process, you get the advantage of a personal relationship with a professional who is totally focused on your needs. You won’t be steered towards properties that are not right for you.
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Q. How much can I afford?
The amount you can afford will depend on your income and expenses, your assets, and your credit rating. One way to estimate how much you can afford is to decide how big a monthly payment you feel comfortable with. The terms and conditions of loans vary, but as a rule of thumb, your total monthly payment, including principal, interest, taxes, and insurance, will be about 1 percent of the property's sales price. So if you can afford $1,000 per month, you'll want to look at properties in the $100,000 price range
To get pre-approved for a loan and determine the loan amount you can be approved for, click here.
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Q. How can I be confident the property I like is right for me?
Many buyers say that they “fell in love” with their new property at first glance, but you will come out ahead if you don't buy impulsively.
- Make sure the property fits your budget. Your Realtor can guide you through the process to get pre-qualified or pre-approved for a loan so you'll know exactly how big a loan you can afford and qualify for. To get pre-approved for a loan and determine the loan amount you can be approved for, click here.
- Ask about the property's utility and maintenance costs.
- Consider whether you can afford any needed renovations and maintenance.
- Consider the taxes and insurance costs for the property.
- While viewing the property, make notes about what you like and don't like. With the seller's permission, take photos to help you remember particular features.
- Take along a friend or family member for a second opinion.
- Consider whether the property’s value will likely appreciate or depreciate over the next 10 years, based on trends in the neighborhood.
- For homes, consider how much time and money it will take to commute to work, schools, church, shopping, and other frequent destinations.
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Q. Who can tell me what my property taxes will be?
Your Realtor can give you a tax report for the property you are considering. Property taxes are reassessed from time to time, so this amount may change. If you would like to confirm what your taxes will be, you can contact the county tax assessor.
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Q. Why is an appraisal necessary?
An appraisal will establish the current market value of the property based on its size, neighborhood, condition, amenities, and the value of comparable properties in the area.
Lenders require an appraisal as a safeguard that the property is worth the funding they will approve. However the appraisal is not an assurance about the condition of the property or a guarantee of its value.
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Q. Can I use the assessed tax value of the property?
Property-tax valuations vary depending on many of factors, and may be higher or lower than the property's actual market value. Lenders require a professional appraisal.
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Q. How is an appraisal obtained?
Before you are approved for financing, you will pay the lender an appraisal fee. Your mortgage officer will arrange for a professional appraisal of the property's value.
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Q. Who can tell me what my insurance rates will be?
Call your insurance agent for an estimate. The agent will collect information on the size, amenities, and description of the property, and will check insurance records to see whether damage has been reported on the property during the past five years.
Claims made by previous owners during the past five years can affect your insurance rates on the property. Your insurance agent can give you more information about whether this will be a concern for your new property.
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Q. Once I make an offer on a property, am I required to buy it?
An offer does not necessarily obligate you to buy the property, but you should only offer on properties you sincerely want. If you are worried about financing, results of property inspections, or other factors, your Realtor can write contingencies into the contract to protect your interests.
When you make an offer on a property, you will be asked for a deposit, or earnest money, which is transferred to the title company upon execution of your offer. This earnest money is paid to ensure the seller that your offer is serious.
Your Realtor can rescind your offer if you change your mind before the seller answers your offer and delivers a signed contract.
A contract is considered executed after the signed contract is delivered to both the buyer and seller, or their agents, and the earnest money is escrowed. Any party that backs out is in breach of contract, but there are exceptions.
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Q. If I change my mind, can I get my earnest money back?
Ask your Realtor to specify an option period in your contract. This option gives you the right to back out of the sale, for any reason, within a specified period of time – usually 14 days. You will write the seller a minimal check ($100 or so) to reserve this option. If you back out within the option period, the seller will keep the option money, but the earnest money will be returned to you, the buyer.
If you close the sale, the earnest money will be applied to your closing costs. If the deal falls through, the earnest money will be returned to you or delivered to the seller, depending upon the terms of your contract.
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Q. How can I protect myself in case my financing falls through?
Your Realtor will explain your options, and can build contingencies into the contract to protect your interests. A well-written contract can ensure that your commitment is dependent on financing, a favorable inspection report, sale of your current property, or other factors you may face.
If you walk away from the sale because of these contingencies, the earnest money will be returned to you, and the seller will keep the option money.
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Q. If a seller receives more than one offer, can he use that to try to negotiate a higher price?
Yes. The seller's agent can inform the buyers' agents of the competing offers to see if either buyer is willing to offer more money.
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Q. What is a residential service contract?
A residential service contract is an insurance policy that covers certain repairs to the home for one year after the sale. The exact repairs covered depend upon the contract you purchase. Your Realtor can direct you to residential service contracts offered in your area. The repairs are reimbursed by the insurance company, not the seller.
A residential service contract generally costs $350 or more, and many buyers ask their sellers to reimburse them for this cost. You may ask the seller to furnish a residential service contract during the contract negotiations, but the seller is not required to do so.
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Q. What items do I pay for, and what do the sellers pay for?
The costs paid by the buyer and seller will vary depending upon the terms of the contract. At closing, the seller's costs will typically be about 8 percent of the sales price, including the brokerage fee, title, insurance, attorneys fees, escrow fee, tax certificate, and recording fee.
The buyer's fees at closing typically include:
- Lender fees, including loan origination fees, appraisal fees, credit report fees.
- A deposit equal to 14 months of taxes and insurance on the property, depending on your preferences and lender requirements.
- Title company fees.
Mortgage payments are often due on the first day of each month. If you close on another day, you can expect to pay pro-rated interest on the loan for the number of days remaining in the month. Your lender will provide you with a good-faith estimate explaining the fees you'll be responsible for.
Sometimes buyers ask sellers to help with closing costs. You and your Realtor can decide whether to ask for partial closing costs based on the condition of the property, the selling price, and other terms of the sale.
There are several additional fees you may need to pay during the buying process. Here are some typical costs:
- Earnest money is a down payment generally equal to 1 percent of the property’s sale price. This money is credited to you at closing.
- An option fee is a small sum, usually $100, paid to the seller to reserve a post-contract evaluation period. This money is credited to you at closing.
During the option period, you (the buyer) can back out of the sale for any reason, forfeit the option money to the seller, and get a refund of the earnest money.
- Inspection fees are paid directly to the licensed inspectors you contract to evaluate the property for defects. In addition to a general building inspection, you'll typically need individual inspections for various systems such as heating and air conditioning, plumbing, and water well and septic system, if applicable.
- Survey fees to obtain an up-to-date survey of the property.
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Q. Am I required to have the property inspected before buying it?
No, you're not required to have inspections, but they are typically well worth the money. Inspections can uncover hidden problems such as leaky roofs, unstable foundations, and termite infestation.
By learning of these problems up front, you can clearly understand the fair market value of the property and the cost of any needed repairs. Most importantly, you safeguard your interests and can avoid unpleasant surprises after you've bought the property.
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Q. What types of inspections should I get?
The types of inspections you need will depend on the property and its amenities. For any house or commercial property, your most important investment is a general property inspection, which will examine the structure from the foundation to the roof, as well as the visible plumbing, electrical wiring, drainage, and fixtures. The cost typically ranges from $200 to $300, depending on the size of the property.
If your general inspector isn't licensed for termites, you'll want a separate termite inspection. You'll also want a separate HVAC inspection, which covers the heating, ventilation, and air conditioning. You might opt for a plumbing inspection if you or your general inspector suspects problems not visible during the general inspection. If the property has a pool, sauna, or hot tub, you'll want a pool inspection. For rural properties and those without public sewer and water, you'll want a water well and septic inspection.
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