Frequently asked questions of buyers
How long does the buying process take?
While timelines will vary, generally speaking, once you submit an offer on a house, the soonest you can expect to close on it would be roughly 5-6 weeks (unless you’re paying with cash and no contingencies). But before that, depending on the available inventory in the local market, you could spend another additional two weeks, or even two months, looking for a house that fits your criteria. A general rule of thumb, start planning at least six months prior to the date you want to be moved in and settled in a new home.
How many properties does the typical buyer look at?
It varies. A lot of buyers don’t expect to find the right house on their first outing, but that does happen more often than you might think. A lot will also vary depending on your criteria — if you have a wide price range to look in, that could give you a lot of potential houses to look at. If you have very specific criteria, such as a neighborhood or school district you want to live in, then there may be fewer houses available to look at. The great thing about today’s real estate market is that you can rule several houses out online now, rather than having to view all houses in person. You can create an account to set up an saved search with your criteria, and we’ll email you notices when new listings fit your search, or if there’s a price change, status change, or basically any other change made on those listings. This will save you a LOT of time when you begin your search.
Should I hire a buyer’s agent?
Yes. 100%, absolutely, yes. Generally speaking, in our market, the seller pays your agent’s commission, however; all commissions are negotiable. Most sellers today use a seller’s agent to represent them. You should also have an agent in your corner representing your best interests. Especially if you are a first-time home buyer. You want to make sure you use a buyer’s agent to walk you through each step in the process and make sure you understand everything fully.
I’ve heard that even if you make an offer on a house that you can still get out of it later if I change my mind. Is that true?
Yes, and no. Your offer may have several contingencies written into it, like an acceptable inspection and appraisal of the house. You may choose to terminate the contract of any one of those contingencies when there is a valid concern. However, you may risk losing your earnest money if you choose to terminate the contract without a valid reason.
How much should I offer?
That will depend on each individual house. Hiring a professional buyer’s agent will allow you to work with them to see the many homes, but they can also help provide advice when it comes time to make an offer. Your agent knows the local market, knows the local neighborhood values, and can review the recent sales to provide you with a price that they believe to be a fair market value. They will also help guide you through any tricky situations, such as multiple-offer scenarios in a hot market (multiple offers meaning that the sellers are likely to receive multiple offers from several buyers quickly and will have to choose which offer to accept). While the decision is ultimately yours, listen to the advice your agent provides on pricing.
When will I get the keys?
Generally speaking, at the closing table. Other arrangements can be negotiated with the seller if need be, however.
Can I move in prior to the closing?
It’s generally not a good idea. Although you’ll be eager to move in (especially if you got the "clear to close" from your lender several days before the closing), there are just too many things that could happen if you take possession of the house prior to closing. Until both you and the seller sign on the dotted line at the closing, the sale isn’t legal and binding.
What happens at the closing?
In a typical closing, you will have a closing officer from the title company present, the seller, the seller’s agent, your buyer’s agent, and perhaps, your loan officer. Each party will have to sign their portion of the many, many documents required by the title company, the mortgage company, and the state of Colorado for the real estate purchase to be legally valid. Trust us, you’ll get some really good practice in on your signature at the closing.
Is the closing date on my contract guaranteed?
Not always. All terms and conditions as written into the contract between you and the seller are all negotiable. However, for any of the terms to be changed, both parties must reach an agreement, and if an agreement can not be reached, the contract may terminate.
How much earnest money should I put down?
Generally speaking, in our market, sellers ask for around 1% of the asking price for an earnest money deposit. However, you’re not limited to the amount they have requested. If your agent advises you there may be multiple offers, sometimes putting down more than what is requested by the seller can make your offer look more appealing than others.
What happens to my earnest money?
The recipient of the earnest money, whether that be a title company or the listing agent’s brokerage (which will be determined by the seller), will deposit the money into an escrow account to be held until the day of closing. At the closing, you will review your settlement statement with your agent and see that the earnest money will already be applied to your balance due at the closing. So for example, if you put down $2,000 in earnest money, and your down payment due for your loan is $40,000, your settlement statement will reflect that you still need to bring $38,000 to the closing, as the $2,000 earnest money has already been applied to that balance.
Will I get my earnest money back if the contract is not accepted?
Yes. The earnest money recipient is only allowed to deposit the earnest money on an accepted, valid contract.
What is the process to get my earnest money back if the contract is accepted and the home inspection finds an issue?
When drafting the offer with your agent, you will specify dates and deadlines for the inspection. One contingency written into the contract is that you will only purchase the house given that there is an acceptable inspection of the house. When you find that there is an issue with the inspection, you can go one of two ways. First, you can terminate the contract due to unacceptable inspection issues, and your earnest money will be returned. Second, you can attempt to proceed with the contract, and your agent will draft an inspection objection. The inspection objection asks the sellers to fix the items unacceptable to you, or can also ask for a credit or allowance for the cost of fixing the items, and you can do the repairs yourself. The sellers can choose to accept, counter, or reject your inspection objection. If a resolution is not reached by the specified inspection resolution deadline as specified in the contract, then the contract is terminated, and your earnest money will be returned.
Is there anything I should not do during the house hunting process?
Yes. There are, in fact, several things you should not do. Read about them here.
What is the likelihood of a multiple offer situation?
This can depend on several factors. Is there a lot of available inventory in your price range? Is the price range you’re looking at close to that area’s median price range? Are there more buyers than sellers? Think of it like a simple supply and demand concept — when there aren’t enough houses available for sale, and the demand for that price range is high, it’s more likely that you’ll see a multiple offer scenario. Talk with your agent about tactics and strategies for combatting a multiple offer scenario, and what to expect if you run into this.
What monies will I need to come in with?
There are several costs you will need to cover prior to the closing. The first being the earnest money. Most sellers will ask for 1% of the asking price to be submitted in earnest money. Next will come the inspection costs. Inspections will vary depending on the overall square footage of the house, but a starting price could be in the $300 range for an entry-level house. Also keep in mind this is just for a general inspection. If the general inspector finds concerns with a specific part of the house, like the roof, or the electrical systems, you may want to also hire a more specialized contractor to review those individual items, as well. Next then, you have the appraisal. Again, the cost of the appraisal will vary depending on the square footage of the house. The appraisal will be ordered by the loan officer, and again, start around the $300 price range for an entry-level house. Lastly, it’s also a good idea to have extra money set aside for moving costs, and any repairs you may need immediately after closing.
How long does the home inspection take?
At minimum, usually two hours, but can take several more hours, depending on the square footage of the house. You may also choose to have the inspector perform a radon test, which requires the testing equipment to be set up in the house for at least 72 hours.
Do I really need a home inspector?
Yes. Absolutely, 100%, yes. Even if you’re purchasing a newly constructed home. Buying a house is such a huge financial investment, you want to have an inspector make sure there aren’t any serious or health and safety issues with the house. Think about it — would you buy a car without test driving it first to make sure it runs?
Do I need an attorney?
In the state of Colorado, licensed real estate agents may draft all contracts and forms on behalf of their clients. While an attorney is not required, it’s up to you whether or not you wish to have an attorney also review the contract. If you do choose to hire an attorney, make sure to hire one that specializes in real estate.