Frequently Asked Questions
Real Estate FAQ
New to real estate? Looking to learn more? We’ve gathered together some common questions we get.
Buying a Home
What should I consider when looking at a house?
Do I buy a move-in ready home or fixer-upper?
Both a move-in ready and a fixer-upper have advantages and disadvantages. A fixer-upper will cost much less, but will need time, resources, skills and the desire to put work into the property to make it worth the lower price. It’s important to consider realistically each of these factors before deciding. Perhaps you love to work with your hands, but have a job with long hours – will you really have the time needed to do many large home improvement projects? On the other hand, if you’re itching to start tearing down walls and refinishing floors, a fixer-upper might be exactly what you’re looking for. We have a great article on our blog that can help you choose which is right for you.
How do I know if it’s worth the price?
How much of a down payment do I need?
Of course, the larger the down payment, the less your loan amount will be, but don’t be scared away from home buying if you can’t make the off-cited 20% down payment. The national average is 11% down, but if you’re a first time buyer, you may qualify for loans with down payments as low as 3.5%. If you’re wondering what you should put down, or what you can afford to pay for a house in general, it’s a good idea to start your home buying process by getting pre-approved by a lender. If you think a lower down payment may be right for you, this article examines various low down payment mortgage options.
How do I find out tax information about a house?
How do I get the best loan?
There are multiple loan programs available, and depending on your situation some will be better than others for you. An ARM, or adjustable-rate mortgage, will start with an initial low fixed interest rate that will then adjust to changing interest rates. A fixed rate mortgage will have payments that remain the same throughout the loan period. Choosing between loan programs will require looking at your current finances and estimating future income to evaluate which will be best for you.
What are home inspections?
What goes on during closing and what are the costs?
Closing is the final step of purchasing a home, and the part of the process where the title is officially transferred from seller to buyer. As a buyer, you will present proof of your homeowners insurance policy. The seller will provide proof of any inspections. The closing agent will list what is owed by each party and all the documentation will be signed.
There are many fees associated with buying a home, as there are many pieces and people who work to complete the process. The fees also vary between states and cities. Closing fees include appraisal fee, inspection fee, loan origination fee, taxes, credit report, document preparation fee, title fee, attorney and escrow fees and insurance costs. This is not a full list, however, as each sale will have a unique set of circumstances. In general, it is best to prepare for closing costs of about 2-5% of the home price.
Selling a Home
What is my home worth?
What improvements should I make before selling?
Little improvements are important as well, as they help show your home in its best light to buyers and are generally low cost. Give your house a thorough cleaning (windows, vents, tiles and floors), fresh coats of paint, repair the small things like leaky faucets, declutter and remove any tattered furniture, add air fresheners and remove items that might represent views potential buyers might not hold. Remember that selling requires home staging. You want your potential buyers to be able to easily see themselves living in your property.
What is home staging?
When is the best time to put my house on the market?
Do I need a realtor?
How do I know if a buyer’s qualified?
Do I need a lawyer?
How will selling my house affect my tax return?
Investing in Real Estate
What do I want to look for in an investment property?
Which is going to be more beneficial for me? Multi-unit v. single family?
Unless you own a multitude of single-family homes, your income will automatically be higher for multi-unit homes, as you will have multiple rent payments for the property. Even if one unit is to become vacant, you’ll continue to have a steady flow of income from the occupied unit/s to continue to cover any costs associated with maintaining the investment property. However, multi-family homes can be significantly less affordable to finance than single-family homes. This is dependent on the size of the property, of course. An investment property with 4 units or less will qualify for the same financing options as a single-unit home, versus a property with 5+ units, which requires a commercial real estate loan. With that being said, it is easier to grow your investment portfolio with strictly single-family units, as they are typically the more affordable option. Some things to take into consideration are: the amount of rental income anticipated each month, what you can afford in terms of a down payment and if you are looking to buy and hold the property or if you are looking to sell the property sooner than later.
What is ARV?
ARV stands for After Repair Value and it is used to calculate the future value of a distressed property after a rehab. It’s important to evaluate a property’s ARV before making a purchase, as it will determine whether an investment is worthwhile. To determine an ARV you should take the cost of the property and the cost of repairs and estimate its likely selling value. An ARV should be at least 10% higher than the combined cost of the property and repairs. Take a look at our blog post, How to Estimate the Real Cost of a Property Rehab, to help determine whether to follow through on an investment opportunity.
What are the potential tax benefits?
What is an exit strategy?