Below are some of the most frequently asked questions from buyers just like you. If you don't see a question you need the answer to, leave it in a comment below! I'll be sure to add it to the list.
1. Do I have to pay for my agent's commission?
Technically, yes, but with the way things work, 95% of the time, no! The Buyer's Agency Agreement states that it's the buyer's responsibility to pay the representing firm once the transaction has closed. However, the seller typically pays for agents' commissions as an incentive to get their home sold. If the seller is offering less than what our firm charges, or if the buyer is interested in a home that's listed as For Sale By Owner, it's my responsibility to communicate that to the buyer PRIOR to any showings of the property and, if the client is still interested, to negotiate a commission that matches what our firm charges. If that's not possible and the buyer wants to purchase the home, they will then have to make the decision to proceed knowing they will also need to make up or fully provide the agreed-upon commission amount.
While this does happen, in my experience, it's very uncommon. Most homes are listed within the Multiple Listing Service, and those properties are required to offer a commission for the buyer's agent in order to participate. It may not be the same amount as what the buying agent's firm charges, but that information will be disclosed up front and handled appropriately, with the buyer making the ultimate decision on whether or not to proceed.
2. Where do you find homes for me?
My primary resource is our local Multiple Listing Service (MLS). This is an aggregate of all the firms in the area sharing their listings so buyers' agents can find them and hopefully, sell them! It's unusual for a local firm not to participate in our MLS. I can also directly contact agents if I'm having trouble finding a specific property for a client, and I search on FSBO.com, Craigslist, and the like for any listing that isn't on MLS.
3. How much do I need to pay for the Due Diligence fee?
It depends. There are several factors that go into determining the amount: the popularity of the property, the asking price, and the rest of the offer terms. If the property is popular, I will recommend the buyer offer a higher fee in order to capture the seller's attention. If the asking price of the home is between $250,000 and $400,000 (our market's most in-demand price range), then I'll also recommend a higher due diligence fee. And finally, if we need to use the due diligence fee as a sort of compensation to balance out another offer term, such as more days to close than the norm, then I'll recommend a higher fee be offered. Because the buyer is almost guaranteed to lose the due diligence fee if they back out of the contract, I never recommend the fee amount be as high as or more than the Earnest Money Deposit.
4. Do I have to have a survey?
No, you don't HAVE to, but not getting one is a huge mistake! If you're purchasing a single-family residence and there hasn't been a survey recently done on the property, then it's in your best interest to have a survey completed. The average buyer is going to have title insurance protecting the title (deed) to the property. If there's a discrepancy with the land, such as an encroachment from a neighbor's home, a portion of your home is on the neighbor's land, or the old land boundaries have shifted, then your title insurance will not cover the cost to fix the issue if the information could have been discovered via survey prior to closing on the home. NOTE: All of the above scenarios are incredibly common! Please just plan to have a survey done and save yourself from any future headaches.
5. Why do I have to sign an Exclusive Buyer's Agency Agreement in order to work with a real estate agent?
There are several reasons. First, it's the law. North Carolina has decided that if an agent is working with a buyer and that buyer is ready to place an offer on a home, then there needs to be parameters in place to guide the way they work together.
Next, we put these agreements in place to protect the buyers. It's important for each buyer to know what the firm and the agent is obligated to do for them and on their behalf, as well as how their information will be protected throughout the process.
Finally, these agreements also protect the firm and the agent. It means that a buyer is committed to working exclusively with that agent and won't take up time without there really being an opportunity for compensation. Agents are compensated only when a client closes on a property, so when we commit to someone who isn't committed to us, it's not to anyone's benefit.
6. Do I have to have a/an ____________ inspection? (Septic, well, pest, water quality, home, HVAC, etc.)
Unless the lender requires it, you don't HAVE to have any inspections. However, It is a VERY bad idea to proceed with purchasing a home when you know nothing about the important and expensive systems within the home. It's not worth saving a few hundred dollars now if you have to spend thousands to fix a problem that would have been easily uncovered by an inspection during the Due Diligence Period.
7. Is radon really a problem in this area?
Yes! Here's the EPA's information about it, but in short? Have a test done.
8. How much home can I afford?
This information will be provided by a lender once a pre-qualification process has been completed. This process typically includes at least a soft credit check (not shown on your record) and a look at your income and assets. It's so important to have this consultation with a lender prior to viewing properties. We won't really know what you're qualified for, and it's no fun to fall in love with a home, only to find out you can't afford it. 99% of all sellers in our market also won't accept an offer with a pre-qualification letter from a lending institution, which conveys to them your viability as a potential buyer.
9. How much will my closing costs be?
It's very difficult to know exactly what your closing costs will be prior to closing. We typically don't have the exact numbers until two or three days before closing, and that's if the lender, the attorney, and myself as your agent have all been working diligently (we have been!). Sometimes there are hiccups that cause that information to be delayed until the day of closing, and that is typically due to the lender and the underwriting process.
The good news is that the lender will provide a worksheet that shows estimated costs, and the final numbers have to be within a certain percentage range of the provided estimate. So when you receive that worksheet, you'll be able to have some peace of mind!
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