Top real estate questions for sellers | Top real estate questions for buyers
If you’re planning on buying or selling a home, it’s wise to ask a lot of questions. Every real estate transaction is unique due to market conditions and location, so even experts have to stay on their toes and pay attention to details.
In this article, we’ll answer some of the most frequently asked questions about real estate. Once you have the information you need, you’ll be able to make smart decisions about the real estate market.
If you still have questions, an experienced real estate agent can help you with your specific situation.
Top real estate questions for home sellers
1. When is the best time to sell my home?
The best time of the year to sell your home is during the spring and summer months.
According to the National Association of Realtors (NAR), transactions during May, June, July, and August make up about 40% of annual home sales. And homes that sell in June and July typically sell for a higher price than homes sold in other months.
Late fall and winter are usually the slowest months for selling a home.
Studies have also shown that listing your home on a Thursday can lead to faster sales, as it gives agents time to schedule showings before the weekend.
And, of course, local market conditions are a big factor in how quickly you sell your home.
In a seller’s market, demand for homes exceeds the number of homes available to sell. These conditions lead to higher home prices and greater leverage for the seller. Buyers may be willing to pay more than the list price, and bidding wars over a home may even break out.
In a seller’s market, homes may sell quickly in the winter months as well.
» LEARN MORE: The Best Time to Sell a House
2. How can I sell my home quickly?
The best way to sell your home quickly is to hire a real estate agent, present the home well, and list it for an appropriate price.
On average, it takes about 60–70 days to sell. Part of this time will be a 30-to-45-day closing period.
But these numbers vary greatly depending on location, market conditions, and the time of year. The buyer’s financing situation can also affect how quickly you close.
Here are some tips on how to sell your home quickly:
- Stage your home. Move some furniture into storage to make the home appear roomier. Remove personal items such as family portraits so potential buyers can imagine themselves in the home.
- Hire a real estate agent. A real estate agent’s experience and local knowledge can influence the speed of a sale. If you’re worried about the cost of an agent, luckily, there are ways to save on commissions, too.
- Price your home appropriately. Price is one of the most important factors for buyers when searching for a home. A real estate agent can help you navigate the market conditions and determine the right price to sell quickly.
- Showcase what makes your home unique. What does your home have that other homes don’t? Built-in bookshelves? A picturesque view? A sunlit family room? Hire a professional photographer to photograph your house. Consider having a 3D tour of your home made.
- Make necessary repairs. Fix any problems that will be red flags for buyers before listing the home. A real estate agent can help you identify major issues and what you might let slide.
Companies that buy homes for cash, such as Opendoor and Zillow Offers, may purchase your home quickly, but you’ll almost certainly have to settle for a much lower price, and even potentially pay a fee for the convenience.
» LEARN MORE: How Can I Sell My House Fast?
3. Why is my home’s market value different from its assessed value?
Market conditions determine your home’s market value, while the appraised or assessed value is calculated by a professional and used for mortgage or tax purposes.
Your home’s value on the market is largely determined by what people are willing to pay for it. This number varies based on the number of homes available and other economic factors.
For example, in the midst of a seller’s market, when demand for homes is high and supply is low, your home’s market value may rise.
Appraisals are used to determine the value of the property for mortgage insurance purposes, based on the condition and location of a property. Licensed appraisers look at the structural integrity of the home, recent renovations, and comparable home sales to determine this value.
And just because a home is priced high due to market conditions, it doesn’t necessarily mean a lender will provide a loan for that amount if the appraised value is much lower.
Tax assessors work for local governments and value real estate for property tax purposes. They usually assess the value of homes not individually, but neighborhood by neighborhood. Homeowners generally don’t want their property to be assessed for too much because it means they’ll pay higher property taxes.
» FIND OUT MORE: The Most Accurate Home Value Websites
4. How does my agent get paid?
The seller pays for the agents’ commission based on the final selling price of the home.
Typically, the selling agent and the buying agent split the commission (usually 6% of the sale price of the home), with half going to each.
The buying agent and the selling agent each split half of their take with their brokerage. Part of everyone’s cut is used to cover the costs of business, like advertising, MLS fees, insurance, and licensing.
Most agents don’t get paid a salary and work on commission; they only get paid when the home sells. This model incentivizes the selling agent to sell the home for the highest price possible, which also benefits you, the seller.
Sellers and agents negotiate the commission up front and write it into a contract at the beginning of the selling process. While the 6% commission is standard, it’s not set in stone.
Some agents negotiate their commission if they can make up the difference in other ways, such as taking advantage of a market with higher home values. Agents may also choose to discount their commission in exchange for dropping some of their usual services, like marketing campaigns.
5. Are real estate commissions negotiable?
Yes! Real estate commissions are negotiable.
Real estate commissions are one of the biggest expenses that many consumers will ever pay. U.S. home sellers pay about $100 billion a year in real estate commissions. So it certainly makes sense to try to save money by negotiating commissions when selling your home.
Real estate agents definitely work hard to earn their money by using their expertise to ensure a smooth selling process. But sellers often have valid reasons for asking an agent to reduce their commission.
Agents may be flexible with their commission if:
- The home you’re selling is in a highly desirable location.
- You’re in a market where the home will likely sell quickly.
- The seller agrees to forgo standard marketing or other services.
It’s important to remember that agents split their commission with their agency and some agencies will have a minimum that the agent cannot go below.
The commission also provides the agent’s incentive to sell your home as fast as possible at the best price. So while you can certainly negotiate for a lower commission, it still needs to be enough to keep the agent motivated and in compliance with their agency’s regulations.
How do you find an agent willing to work for a negotiated commission? Here are a few ideas:
- Have a conversation with a potential agent and discuss how a lower commission might be possible.
- Offer to use the agent for both buying and selling.
- Refer friends and family to the agent to give them more business.
- Sell during an off-peak season when agents have fewer listings.
- Work with a company that will pre-negotiate low commissions on your behalf.
6. How can I save money when selling my home?
Listing your home as for sale by owner (FSBO) is one way to save money when selling your home.
If you’re thinking about going the FSBO route, you’ll have your work cut out for you, but you’ll likely end up saving money in the long run, as you won’t have to worry about listing agent fees. However, you’ll likely need to offer a commission to buyer’s agents so they’ll bring their clients to see your home.
Letting others know your home is on the market is an essential first step. You can do this without an agent using a flat-fee service to list your home on the multiple listing service (MLS) that buying agents use to find homes to show their clients.
Be aware, though, that while you may save money on agent fees by selling your home yourself, the home may sell for less in the long run.
While FSBO can save you the expense of hiring a listing agent, there are plenty of other ways to save money when selling your home:
- Identify cost-effective repairs that you can complete before listing the home, thereby avoiding negotiations and concessions later on.
- Research the terms of your mortgage to make sure you’re not penalized for paying it off early.
- Shop around for the best prices on closing costs, such as the title search.
7. How do I determine the selling price of my home?
The best way to set a selling price for your home is via a Comparative Market Analysis (CMA), which can be performed by a real estate license holder.
A CMA takes these factors into consideration:
- Current, sold, and expired listings in your area
- Number of beds and bathrooms in your home
- Square footage of your home
- Necessary repairs or renovations in your home
Together this information can give you a strong indication of your home’s fair market price. You can also use your home’s tax-assessed value and the estimates of online resources like Zillow to get an idea of a good target list price.
When choosing a price remember that the list price and final sale price often differ. Depending on your home and market conditions, it can be strategically advantageous to price your home lower than market value in order to attract more interest and a higher number of offers.
But lowering your price too aggressively can sometimes be off-putting to buyers concerned the seller might be trying to start a bidding war.
8. How should I prepare my home to sell?
The most important things to do to your home itself are cost-effective repairs and design changes that make your home feel neutral and spacious. These changes can include:
- Painting the interior
- Installing new kitchen hardware
- Power washing the exterior of the home
- Moving infrequently used items to storage to declutter
- Depersonalizing your home by removing family photos
Realtors often hire a professional stager for photographs and open houses once this work is complete.
Every change you make should add more to the value of your home than it costs. Otherwise, it’s not worth your time and effort.
Major repairs and renovations aren’t likely to be worth it, but this isn’t a universal rule. Consulting with a real estate agent can help you determine what makes the most sense for your home.
» READ: The 8 Most Important Repairs to Make Before Selling Your Home
9. How should sellers choose among offers?
It depends on your priorities. Usually, the highest offer is the best one to take. If they’re all very close or equal, here are some factors that could make one more attractive than the rest:
- All-cash offer. In competitive markets, you might receive an all-cash offer. These are more attractive because you don’t have to worry about the buyer securing a loan. Plus, because all-cash offers don’t need a mortgage lender, they can close much faster.
- Fewer contingencies. Buyers can stipulate a number of contingencies that allow them to back out of the sale without losing their earnest money deposit. Common contingencies include inspection contingencies, mortgage contingencies, or contingencies that say the buyer will only go through with the sale if their own home sells. Fewer contingencies mean the sale is more likely to go through to close.
- Higher down payment. This can sometimes indicate a buyer’s strong financial position. It might demonstrate that they’re more serious about the home or more able to afford to deal with issues that might come up during the sales process.
- A letter that connects you to one buyer more than another. Many sellers want their home to go to someone who will love it as much as they have. If the offers are comparable in other respects, connecting personally in some way can be a great way to pick a buyer.
10. Should I buy a new home before selling my old one?
It depends on a number of factors, including whether your area is in a buyer’s or a seller’s market and how much you can afford.
If your area is in a buyer’s market, it might not be advisable to purchase a home before selling yours. It should take you a relatively short amount of time to find and purchase a home. It may take you much longer to sell. You can more comfortably do these simultaneously without worrying that your home will sell before you can purchase a new one.
In a seller’s market, begin searching for a home before you try to sell yours. The homes you’re interested in purchasing are likely to get a number of competitive offers. This means you may end up putting offers in on several homes before yours is accepted.
You’ll likely be able to sell on a faster timeline, meaning it’s less likely you’ll have to fund a down payment without the proceeds from your house or that you’ll have to carry two mortgages.
Neither option is risk-free. Let’s look at the pros and cons:
|✅ Pros||❌ Cons|
|Buying a house before you sell your home||Only having to move once||Risk of having to fund a down payment and carry two mortgages|
|Buying a house before you sell your home||Buying on your schedule gives you time to find a home you really love||Pressure to sell your home at lower than its market value to move faster|
|Waiting to buy a home until you sell yours||No concern about carrying two mortgages||Having to move twice|
|Waiting to buy a home until you sell yours||Comfort of selling on natural timeline means less financial pressure||Living in a rental or with family while you search|
Keeping these pros and cons in mind should help you make the best decision for your situation.
11. What happens after a seller receives offers?
Once you receive your offers, you’ll compare them. If there’s an offer you’re happy with, you can accept it and move forward with the process of the sale!
If a number of offers are equally impressive or there are no satisfactory offers, you can counter or ask for improved offers. This process will go back and forth until you accept an offer.
Unexpected things are bound to crop up in any offer and closing. Your real estate agent and lawyer, if you use one, will be able to help you through those challenges.
12. How do I find a real estate agent near me?
The first step in picking in a real estate agent is deciding what you want in an agent. The most important choice in that process is between using a full-service agent or a discount agent.
- Full-service agents help with every step of the process, including pricing your home. They cost between 2.5–3% of the sale price.
- Discount agents will help you list on sites like Zillow and provide a for sale sign, but they might offer minimal customer service. They’ll work for a lower rate.
Once you decide what you’re looking for in an agent, talk to family and friends about who they’ve worked with and see if they have any recommendations.
You can also look around your neighborhood and get the names of agents from for sale signs.
When you have a few names, contact the agents and set up interviews with them. You may be working with them closely so it’s important that you have a good rapport.
Some useful questions to ask include:
- How did you arrive at the suggested list prices for houses in this neighborhood?
- How would you market this property?
- How many homes have you sold in my area?
- What is your sale-to-list-price ratio?
Once you’ve finished this interview process, you should have a good sense of who will be a good match for you.
13. What do I have to disclose to potential buyers?
Laws differ by state so it’s important to consult with your real estate agent or lawyer to make sure you’re in compliance. Comprehensive information can also be found online.
Some common required disclosures include:
- The presence of lead paint
- Pest problems
- Drainage issues
- Homeowners Association information
- Neighborhood nuisances
- Deaths related to the property
You’re usually not required to inspect for new problems. You should only be responsible for disclosing things you already know about. Some states even require that you disclose hauntings. 👻
Each state has a different process for how sellers should disclose information. Most states require disclosures in writing and many have specific forms that need to be filled out.
Working with an experienced real estate agent or attorney can help make sure you do everything the right way.
14. Can I sell my home without an agent?
Yes. You’re not required by law to use an agent or broker to sell your home, and going this route could save you money.
However, the for sale by owner (FSBO) practice has drawbacks, and it isn’t very common. FSBOs made up only 8% of home sales in 2020, according to the National Association of Realtors (NAR).
The major upside is that you avoid paying a listing agent’s commission, though you’ll probably still need to cover the buyer’s agent commission.
Selling without an agent also gives you more control over the sale process and, in some cases, allows for a speedier sale. FSBO could be a good idea if you know the buyer — in other words, you’re conducting a non-arm’s-length transaction — and if you have lots of prior experience with real estate sales.
If you’re an inexperienced seller, however, navigating the complex, high-stakes process of selling a home without an agent can be daunting.
You’re also more likely to underprice your property if you go it alone, which means you could end up leaving far more money on the table than you save in commission fees. The typical FSBO home changed hands for $77,100 less than the average agent-assisted sale in 2020, according to NAR. It’s also harder to market your home without the assistance of a professional agent.
If you decide to dispense with an agent, you have the option of listing your home online. Popular websites that allow you to post FSBO listings include Zillow, Trulia, FSBO.com, HomeFinder, and ForSaleByOwner.com.
Your other tasks when selling FSBO will include figuring out an offering price for your home, negotiating the price with potential buyers, preparing and/or fixing up your home, conducting open houses, and gathering the required legal forms — though it’s highly recommended that you hire an attorney to guide you through the paperwork.
FSBO may have certain advantages, but it isn’t right for most people. The vast majority (93%) of real estate transactions are agent-assisted due to the complexity of the process, the perception that FSBO sellers are taken less seriously, and the rise of low-commission real estate services.
» READ: How to Sell a House Without a Realtor – The Complete Guide
15. Do I have to pay taxes when I sell my home?
If you sell your house for more than you bought it, you may be required to pay taxes on the difference, which is known as a capital gain. However, most homeowners are exempt from paying taxes on their home sale.
According to the IRS, you can exclude up to $250,000 of the capital gain from your taxable income (or $500,000 on a joint return, in most cases) if you meet the ownership and use tests. During the five years before the sale, you need to have owned the home for at least two years and lived in the home for at least two years. You can’t deduct a loss from the sale of the home.
In addition to capital gains taxes you need to consider transfer taxes, which are imposed by the city, county, or state when a property changes ownership. Transfer taxes are widespread but not universal, and they may be referred to by other names, such as deed taxes, stamp taxes, or real estate conveyance taxes.
The transfer tax equals a percentage of the sale price or appraised value of the home, and can range from 0.01% to more than 4%. The seller pays the transfer tax in the vast majority of cases, though this isn’t necessarily required and you may negotiate with the buyer about who pays the tax. Unlike capital gains and property taxes, real estate transfer taxes aren’t tax deductible.
» LEARN: Selling a House Before Two Years? Read This to Avoid Tax Penalties
Top real estate questions for home buyers
1. Can I buy a home without a real estate agent?
Yes! In 2020, the National Association of Realtors (NAR) reported 12% of home buyers opted not to use a real estate agent on their home-buying journey. But as a buyer, you don’t pay realtor fees. The seller pays your agent’s fee out of what they make on the home and often factor the cost into their selling price from the beginning.
If you want to reduce these fees, though, you can work with a real estate company to find top agents in your area that charge a low commission. Plus, some brokerages offer home buyer rebates or cash back on your purchase.
When might it make sense not to consult a real estate agent? Maybe you’re pretty knowledgeable about your local market or you’re buying a familiar property from someone you know and trust.
Whatever the reason may be, working with a buyer’s agent isn’t a requirement but it is recommended.
Top real estate agents often have in-depth knowledge of local markets and can save you time and money. An agent is typically an experienced negotiator, too, so they’re prepared to help you navigate your transaction with a seller. Agents also have access to the multiple listing service (MLS) database and may know about local “pocket listings,” or homes that are for sale but haven’t hit the market yet.
2. How does a buyer’s agent get paid?
A buyer’s agent commission is included in the sale price of the home you’re purchasing, so they’re paid from the seller’s proceeds when you close on the property.
The average total commission is around 5–6% of the sale price. This percentage is split evenly between the buyer’s agent and the listing agent.
Each agent then splits their commission with their brokers. Typically it’s 50/50 split, meaning your agent goes home with 1.5% of the sale price while their broker gets the same 1.5%.
For example, if a home sells for $275,000, the total commission would be $16,500 (6%), and your agent would receive a quarter of that 6%.
|Home sells for $275k||Percentage commission||Dollar amount|
|Buyer’s agent’s broker cut||1.5%||$4,125|
|Listing agent’s broker cut||1.5%||$4,125|
|Buyer’s agent commission||1.5%||$4,125|
|Listing agent commission||1.5%||$4,125|
» READ: How Much Do Real Estate Agents Make?
» LEARN: Who Pays Realtor Fees?
3. Should I sell my current home before buying a new one?
It depends on your personal preferences and your financial situation. Selling before buying can alleviate some of the stress of buying and selling simultaneously.
If you live in a seller’s market, where the demand for homes is high, selling your home could also be a quick process. In this case, you can likely sell for a great price and possibly work in a rent-back agreement with your buyer, in which you pay them to stay in the home a bit longer after the sale goes through.
If you’re living in a buyer’s market where the demand for homes is low, however, it might be hard to sell quickly. In this case, you might consider opening a home equity line of credit (HELOC) or pursuing a bridge loan. Both of these options can help you put money toward your dream home before it gets taken off the market, even if you haven’t sold your old home yet.
Here are some pros and cons to selling before buying:
|✅ Pros||❌ Cons|
|You don’t have to worry about shouldering two mortgages.||You may have the added expense of paying for temporary housing or a storage facility to store your belongings.|
|You avoid the stress of buying and selling simultaneously.||You’ll probably end up moving twice.|
|You can put the funds from your sale toward the purchase of your new home.|
4. How long will it take to buy a home?
This will vary greatly from sale to sale, but the average time to close on a home purchase loan was 50 days as of May 2021, according to ICE Mortgage Technology.
Leading up to the sales process, of course, you need to spend time looking for a home. The average buyer searched 4.5 months for a home in 2019, including 4.4 home tours, according to Zillow. Your mileage may vary depending on how fast you can find the house you want.
Once you’ve submitted an offer on a house, the seller usually has 72 hours to make a decision. If they accept, a sales contract is executed and your mortgage lender begins processing your loan. (Tack on more time if the seller rejects your offer or submits a counteroffer.)
The loan will then typically move through the following steps:
- Documentation and processing
To speed up the loan process, be responsive to your mortgage lender when they request a document or need additional information, and gather the required paperwork early.
Getting pre-approval (not to be confused with pre-qualification) for your loan first can accelerate the timeline considerably.
Securing homeowner’s insurance early can also speed up the time to closing. Mortgage lenders require that properties be insured before closing, but shopping for and getting that insurance can be time-consuming.
If you have the financial means to buy a house without a mortgage, you can greatly accelerate the process. All-cash transactions allow you to complete a home purchase in as little as two weeks.
5. Should I get pre-approved for a mortgage?
Getting pre-approved for a mortgage is generally a good idea. Pre-approval involves a firm promise on the part of the lender to issue you a mortgage, following an exhaustive investigation into your finances.
Pre-approval thus shows sellers that you are a serious, qualified buyer and gives them confidence you won’t run into problems getting financing during the home purchase process. This can give you an edge in a competitive housing market.
Many home buyers confuse pre-approval with pre-qualification. Pre-qualification is simply a lender’s recommendation of the types of loans you might qualify for, based on self-reported financial information.
Pre-approval is taken much more seriously by sellers, because a qualified lending professional verifies all of your information. To determine how much you’re pre-approved for, the lender will consider your credit score, credit history, debt-to-income ratio, employment history, and assets and liabilities.
On your end, you’ll fill out an application and provide the required documentation. This will generally include proof of income, proof of employment, a detailed list of your debts, and recent bank statements.
Pre-approval can take seven to ten days, or longer if your initial application isn’t complete. By contrast, pre-qualification can be completed in as little as an hour.
6. What will my down payment be?
Your down payment — the money you pay upfront to your mortgage lender — gets calculated as a percentage of the total value of the home you’re purchasing.
With most lenders, you’ll need a down payment of at least 3% of the home’s value. But your minimum down payment will vary based on numerous factors, such as your income, credit score, and the loan type.
Making a traditional down payment of 20% can be ideal, as it exempts you from paying private mortgage insurance (PMI) and may decrease the interest rate of your loan, but it’s not often required.
Additionally, there are programs available to some first-time homebuyers, veterans, and rural residents looking for mortgage loan options with low down-payment requirements.
» READ: 20 Ways to Save Money When Buying a Home
7. What happens after I put in an offer on a home?
After you put in an offer on a home, the seller will evaluate the offer and will either accept it, reject it, or make a counteroffer. Sellers generally have 72 hours to make a decision, though the default period varies by state. The buyer’s agreement that your agent submits on your behalf may also include an adjusted deadline.
If your offer is accepted, great! You now move on to the next steps of the home purchase. The exact process varies for each buyer but usually includes the following elements:
- Sign the purchase agreement: This is a legally binding document signed by you and the seller. The offer is now considered “under contract.”
- Pay the earnest money: You typically have 1–3 days to deposit the earnest money (also known as “good faith money”) into an escrow account.
- Submit the mortgage lender documents: You submit your request for a loan plus all the required documentation (this step will go much faster if you obtained pre-approval).
- Set up a home inspection: You typically have up to 14 days to conduct the inspection after the offer is accepted, but most inspections take place within 7–10 days.
- Conduct title review and clearance: A title company or attorney reviews the title to make sure the owner has unencumbered ownership of the property. If everything checks out, the title is cleared.
- Receive loan approval: The lender signs off on all the documents and gives a final approval and “clear to close.”
- Close on the home: On a specific date, you meet the closing agent — usually a title officer, escrow company officer, or attorney — and sign the closing documents. The sale transaction is now officially complete.
If the seller isn’t satisfied with your offer and/or it’s a seller’s market, they may submit a counteroffer with a change in price or terms. Changes could focus on:
- Closing date or occupancy date
- Home purchase contract contingencies, which allow the buyer to cancel the contract before or after certain events such as inspection, appraisal, and loan approval
After receiving the counteroffer, you have 72 hours (or whatever amount of time is noted in the counteroffer) to accept or re-counter.
If your offer was rejected, you can make another offer on the advice of your agent. Your agent may know why the offer was rejected and assess your chances with a second offer. Or you can just move on.
» LEARN: 20 Things to Negotiate When Buying a Home
8. What is earnest money?
Also known as “good faith money,” earnest money is a deposit made by the buyer after an offer is accepted to demonstrate that they’re serious about purchasing the home. The earnest money amount is typically around 1–3% of the total purchase price, depending on the market.
While the sale of the home is pending, the earnest money is placed in an escrow account managed by a neutral third party. This deposit ensures that the home is taken off the market while negotiations ensue or an inspection is conducted.
🤔 What is escrow?
Escrow is a financial arrangement that places assets or funds into the hands of a neutral third party on behalf of two groups or individuals until the completion of a transaction.
If the terms of a contract aren’t met by one party or the other, the third party controlling the escrow account will act according to the terms of the contract to determine what is done with the funds.
If the buyer backs out of the purchase for a reason stipulated in the escrow agreement, the earnest money is refunded to the buyer. If the buyer backs out of the purchase for any reason not outlined in the contract, they forfeit the earnest money deposit.
» READ: What is Earnest Money?
9. Should I have the home I’m buying inspected?
Yes, this is a good idea. Home inspections aren’t required by law, but they allow you to learn about any defects or potential hazards in the home before you close on the purchase.
Home inspections can be used as a contingency in the real estate contract, giving you the chance to back out of the purchase if the inspection uncovers a major problem.
As the buyer, you’ll be expected to pay for the inspection, because it’s your responsibility to make sure the house you’re buying is in satisfactory condition. Home inspections cost an average of $338, but the price can range from $250–400 or more, depending on the size of the house.
Inspections take around two to three hours to complete. During this time, the inspector will evaluate the the house, including:
- Electrical function
- Exterior condition
- HVAC function
- Interior condition
- Plumbing function
- Roof condition
After the seller accepts your offer, you normally have up to 14 days to conduct the inspection, but most inspections take place within seven to ten days.
Some lenders, such as the Federal Housing Administration (FHA), strongly encourage mortgage borrowers to get an inspection, though they don’t require it.
» READ: Who Pays for a Home Inspection?
10. What are closing costs when buying a home?
Closing costs on a home sale are fees and other expenses paid by the buyer and the seller when closing on a home. For buyers, these usually add about 3–5% on top of the purchase price. (Sellers also have to pay closing costs, the largest of which is the real estate commission, typically around 6%.)
The nationwide average closing costs for a home purchase in 2020 were $6,087 including taxes, and $3,470 excluding taxes, according to ClosingCorp, a provider of residential real estate closing data. Closing costs vary widely depending on the state, the lender, and other factors.
Average closing costs (including taxes) in 2020 ranged from $1,571 in Missouri to $29,329 in the District of Columbia.
Closing costs can include:
- Appraisal fee
- Loan application fee
- Lender’s title insurance
- Mortgage transfer taxes
- Origination fee
- Points on the mortgage
You can curb closing costs in several ways. Ask multiple lenders to provide a Loan Estimate form, a three-page document outlining the estimated costs associated with the mortgage loan you’re applying for. This allows you to comparison shop and choose a lender offering the best terms.
Every Loan Estimate form includes a section titled “Services You Can Shop For,” which lists the costs you can negotiate or shop for. These usually include the settling/closing agent, the home inspection, and title services. You can save on title services, the largest individual cost, by going online and comparing the charges offered by various title search companies.
In addition to closing costs, buyers also have to put down cash for the down payment if they secured a mortgage.
» READ: How Much Are Closing Costs? (What Buyers & Sellers Typically Pay)
11. What is a buyer’s market?
In a buyer’s market, the supply of homes exceeds the number of people interested in purchasing them. The market may respond to reduced demand with lower prices, so it’s usually a great time to buy.
If you’re shopping in a buyer’s market, you’re less likely to compete with other buyers for your dream home.
Sellers might see fewer offers on their home when demand is low, which gives buyers the advantage at the negotiating table. Sellers can also be more amenable to negotiating if their home has been on the market for a while. You can offer less than the asking price, ask the seller to make repairs, or ask them to pay some of your closing costs to speed up the process.
As the buyer, you have the leverage because sellers sometimes can’t be sure they’ll receive an offer better than yours in the near future.
An experienced real estate agent will know what kind of market you’re buying in, and be able to help you negotiate your purchasing contract when the time comes.
» READ: 20 Things to Negotiate When Buying a Home
Buying or selling a home is undeniably a huge endeavor and no simple task if you’re buying or selling for the first time. That’s why it counts to get answers to these important real estate questions.
Now that you’ve explored some of the major elements of home buying and selling, you can feel confident you’re equipped with the knowledge and tools you need to navigate your next steps.
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