BUYHOMESINCHARLESTON ARTICLES FOR BUYERS
ARTICLES OF INTEREST FOR BUYERS
SHOULD I BUY NEW OR EXISTING? - BUYER SERVICES AN AGENT CAN PROVIDE - INSPECTIONS AND REPAIRS - LEGAL JARGON - SHOPPING FOR A MORTGAGE
SHOULD I BUY NEW, OR EXISTING?
One of the big decisions that a buyer must make, is whether to buy a new home, or an existing one. While new homes tend to have higher prices than comparable existing ones, there are other factors to consider:
TIMING - new tract homes can take 4-6 months to build (up to 12 months for custom-built). If you need a home sooner than this, you may look at inventory homes (or "specs") that new home builders may have available or in advanced construction, or existing homes.
PRICING - while new homes are generally more expensive, when a market is over-supplied, new home builders tend to
offer larger incentives for buyers than those an existing home owner may be able to give. Incentives may include closing costs, allowances to pick extra options.
PERSONALIZATION - If you choose to build a new home, you will have the ability to choose colors, styles, floorplans, options and add-ons that can make your home very personalized to your tastes and preferences. Existing homes come with somoeone else's paint colors and options.
LOT SIZE - Most new home communities have smaller lot sizes than older, more established communities. The rising price of land has forced developers to reduce lot sizes.
TREES & LANDSCAPING - many new community builders prefer to start from a clean slate, cut down all existing tree cover (because it is cheaper to put in the infrastructure and build the homes) and start from scratch. This makes the community look a bit barren and lack mature tree cover. Existing, older communities normally feature more mature trees and landscaping that may appeal to you.
MAINTENANCE & OPERATING COSTS - newer homes tend to be more energy efficient, since they are built with higher efficiency building materials, stricter building codes and more efficient appliances. This will reduce your ongoing utility costs every month. Newer homes also require less maintenance than older ones, although the cost to maintain a home first increases with age, then
declines. So you may spend less to maintain a 1960's home than one built in the 1980's.
SERVICES A BUYER'S AGENT CAN PROVIDE
Not every valuable service must cost an arm and a leg. The old saying "the best things in life are free" can be applied to home buyers who hire a REALTOR® to represent them, which is possible in South Carolina. In a traditional home sale, it is the Seller who pays the
commission, which is then divided among the various sales professionals involved in the transaction.
As a buyer, you don't have to pay a commission to receive advice from an experienced real estate professional. You can get many valuable, free services from your REALTOR®, including:
* Loan pre-qualification that saves you time;
* Guidance in obtaining the best mortgage terms;
* Assistance in determining your needs and buying criteria for a home;
* Identification of suitable homes for you and your family;
* Experienced advice during contract negotiations;
* Implementation of an efficient contract-to-closing program to make sure the contract is completed successfully; and
* Representation of your buyer's interests during the transaction.
One common misconception is that new home builders or sellers of existing homes will give buyers a "better deal" if there is no buyer's agent involved. In most cases this is not the case. In existing homes, the commission has already been negotiated between the seller and the listing agent, and it is not going to change depending on whether the buyer comes represented by an agent or not. In new home construction, the commission has been built into the "transaction costs" by a department in head office which generally is not the sales department, so the "deals" are independent of the commission payable.
Many new home builders PREFER that a buyer comes represented by an agent, because this reduces their potential liability if problems arise in the future. Buyer's agents can usually get a "better than average" deal for their clients, since they are better aware of prevailing market conditions.
Whether you are a first-time or an experienced home buyer, you can benefit from the expert market advice and the thorough transaction knowledge that your REALTOR® can provide. After all, it is our business to sell homes, and we do it every day!
BUYER'S DUE DILIGENCE - INSPECTIONS AND REPAIRS
After the contract is signed and delivered to both parts ("ratified"), the buyers will have some time to do their "due diligence" before the closing. Most request a home inspection to be done to make sure the home does not have any major problems.
A home inspector will spend anywhere from one to four hours going over your home with a fine tooth comb, noting any defects and items that need attention or repair. The buyer's REALTOR® will normally produce a "Repair Addendum" with all the buyers' requests for repairs.
When the Seller receives the "Repair Addendum" from the Buyer, here's what they normally do:
* Sit down with their REALTOR® and determine the validity of the buyers' requests;
* Estimate how much these repairs would cost to do;
* Assess the risks of just saying "NO" to buyers who are making demands considered to be unreasonable (most contracts are signed "subject to inspections" so if the parties don't arrive to an agreement for repairs that is satisfactory, the buyers can walk away from the contract and get their earnest money back)
Keep in mind that, unless the Seller is offering the home "as-is", buyers would normally expect a home that is free of leaks, free of termites, mold/fungi infestation and with no damage (structurally sound), and safe (i.e. electrical system). Everything else which may go beyond "normal" seller obligations, including cosmetic and minor deferred maintenance items, is negotiable between the parts. This means that there will be a second "round" of negotiations when it comes to repairs.
Sellers have the option to either do the repairs, or offer to pay compensation to the buyers INSTEAD OF doing some, or all of the repairs; however, the buyers may or may not agree with your proposal.
Once both parties reach a satisfactory agreement regarding the repairs to be done by you prior to closing, hire licensed and reputable professionals who will guarantee their work, and give copies of their reports and invoices to the buyers at closing. Arrange for repairs to be done as far ahead of time as you can, to avoid last minute complications which may jeopardize the transaction.
When you buy a home, the closing attorney (SC is an attorney state for real estate) will make you sign stacks of papers, affidavits and documents filled with legal jargon.
Most of these documents relate to establishing your identity (for legal and tax purposes), transferring the deed, and formalizing any loans and mortgages.
Depending on personality, some buyers are anxious to get out of there and get their keys (so they sign all the paperwork as fast as they can without even reading it) while others are extremely cautious and read every sentence before signing (and find it very frustrating to have to read these documents at the closing table, while causing everyone else to sigh in resignation!)
It is important to be aware of and understand all the paperwork you sign.
Although "closing packages" from lenders normally arrive at the attorney's office at the last minute, most of the documents you'll be signing are standardized - you can request copies in advance from the lender and the attorney so you can read them at leisure, in order to feel comfortable signing at the closing table.
Before you start shopping for a home, it is essential to get pre-approved by a lender. This does not mean that you cannot keep "shopping around" for the best loan while you look at homes. Once you have a signed (or "ratified") contract, you will need to choose a lender, submit a formal application and many times pay a fee (usually the cost of the appraisal) to the lender.
So, how do you choose the right lender?
It is important to choose a reputable lender, but also one that has the right loan program to fit your particular situation. It is important to carefully compare rates, origination and processing fees, terms, conditions and restrictions before making a final decision.
Some lenders are very conservative and are only competitive with loans for customers with above-average credit scores and low loan-to-value (LTV) ratios (low risk loans). Others are more flexible and will consider applicants who have less-than-perfect credit history (higher risk loans). Some have a central underwriting location and may need extra time to process your application, others do their underwriting locally.
Mortgage brokers generally have access to many lenders and may have products that banks cannot offer, but their fees may be slightly higher.
The ordinary consumer interacts with only a few mortgage lenders over a lifetime, but REALTORS deal with mortgage lenders every day. Ask your REALTOR to recommend some mortgage lenders, and to help you decide which offering best suits your individual needs.