FAQ

Buying a home will likely be one of the largest financial transactions you will ever make. At times it may seem overwhelming and confusing. The knowledgeable and professional Realtors at One Ocean Drive Realty are here to help make the process less stressful and more enjoyable.

One Ocean Drive has a number of resources to help you through this process. 


Buyer's FAQ

 

What if I need to sell my home before I buy a new one?

It is important to put yourself in the best negotiating position before you find the new home you want, One Ocean Drive Realty will help you put your current home on the market. Once you write an offer on a new home, your offer will become "contingent" on the sale of your home. In this situation, the buyer may or may not have the same negotiating power as one whose home has sold (or at least has an accepted offer).

Once I have found a home, how will my offer be presented to the seller?

Your One Ocean Drive agent will call the agent who is listing the home you desire. They will coordinate an appointment and make an offer to the seller. Your agent will act as a negotiator on your behalf.

Will it cost me money to make an offer?

When you write an offer on the home you've chosen, you will be expected to include an earnest money deposit, typically a total of 10% of the purchase price. This deposit is a sign of your good faith that you are seriously interested in purchasing the home.

Where does my earnest money go?

The earnest money is deposited into a trust account of the real estate company or the closing agent. The deposit will then become a credit to the buyer, and is applied toward the purchase price.

Can I lose my earnest money?

Real estate contracts are complicated legal transactions. Rarely does the buyer lose the earnest money. Most often, the transaction falls apart and the deposit will be returned to the buyer. However, if the buyer willfully decides that they no longer want to purchase the home without any legal reason for retracting the offer, they may lose the earnest money deposit. 

What other fees are involved in the purchase of a home?

There are other fees, including: appraisal, credit report, inspection, recording fees and taxes which will be debited at closing.

What happens if I offer less than the asking price?

If you offer less than the asking price, the seller has three options; they can reject your offer, counter your offer or accept it at the lower price. In the case of negotiation, your agent will represent you in all negotiating efforts.


The Buying Process

 

Step 1: Check Your Credit Report & Score

Before obtaining a mortgage or any kind of loan, you should always check your credit. According to the law, you're allowed to receive one free copy of your credit report per year. You can do this by visiting Annualcreditreport.com. Scores range from approximately 300 to 850; generally, the higher your score, the better loan you'll qualify for. Don't forget to check your report for errors. If there are any, dispute them. It may help your credit score.

Step 2: Figure out How Much You Can Afford

You can calculate how much you can afford by starting online. There are several online mortgage calculators that will help you calculate an affordable monthly mortgage payment. Don't forget to factor in money you'll need for a down payment, closing costs, fees (such as fees for an attorney, appraisal, inspection, etc.) and the costs of remodeling or furniture. Remember that you don't always have to put down 20 percent as your parents once did. There are loans available with little to no down payment. An experienced home loan expert can help you understand all your loan options, closing costs and other fees.

Step 3: Find the Right Lender

To find the right mortgage lender it's best to shop around. Get recommendations from your friends and family and check with the Better Business Bureau. Talk to at least three or four mortgage lenders. Ask lots of questions and make sure they have answers that satisfy you. Make sure to find someone that you are comfortable with and who makes you feel at ease.

Once you have the right mortgage lender, make sure you at least get a pre-approval. Pre-qualifications are only a guess based on what you tell the lender and are no guarantee, whereas a pre-approval will give you a better idea of how big a loan you qualify for. The lender will actually pull your credit and get more information about you. However, you could even take it one step further by getting an actual approval before you start home shopping. That way, when you're ready to make an offer, it will make the sale go much quicker. Besides, your offer will look more appealing than other buyers since your financing is guaranteed.

Step 4: Work with Your Agent and Look For the Right Home

Make a list of the things you'll need to have in the house. Ask yourself how many bedrooms and bathrooms you'll need and get an idea of how much space you desire. How big do you want the kitchen to be? Do you need lots of closets and cabinet space? Do you need a big yard for your kids and/or pets to play in? Once you've made a list of your must-have's, don't forget to think about the kind of neighborhood you want, types of schools in the area, the length of your commute to and from work, and the convenience of local shopping. Take into account your safety concerns as well as how good the rate of home appreciation is in the area.

Step 5: Make an Offer

Now that you've found the home you want, you have to make an offer. Most sellers price their homes a bit high, expecting that there will be some haggling involved. A decent place to start is about five percent below the asking price. You can also get a list from your real estate agent to find out how much comparable homes have sold for. Once you've made your offer, don't think it's final. The seller may make a counter-offer to which you can also counter-offer, but you don't want to go back and forth too much. Somewhere, you have to meet in the middle. Once you've agreed on a price, you'll make an earnest money deposit, which is money that goes in escrow to give the seller a sign of good faith.

Step 6: Get the right Mortgage for Your Situation

There are many different types of mortgage programs out there, but as a first-time home buyer, you should be aware of the three basics: adjustable rate, fixed rate and interest-only. Adjustable rate mortgages (ARMs) are short-term mortgages that offer an interest rate that is fixed for a short period of time, usually between one to seven years. After that, the interest rate can adjust every year up or down, depending on the market. These are good for people who don't plan on living in their home very long and/or are looking for a lower interest rate and payment.

Fixed-rate mortgages are more traditional and offer a fixed interest rate (and thus a fixed monthly payment) for a longer period of time, usually 15 or 30 years, though they're available in 20 or 25 year terms. These are good for people who like a predictable payment and plan on living in their home for a long time.

Both fixed and adjustable rate mortgages can have an interest-only payment. What this means is that for a certain amount of time during the loan term, you're allowed to pay only enough to cover the interest portion of your payment. You can still pay principal when you wish, but don't have to if your budget is tight. There is a myth that with interest-only mortgages, you don't build equity. This is not necessarily true, since you can build equity through home appreciation. The benefit to interest-only mortgages is that you increase your cash flow by not paying principal.

Step 7: Close on Your New Home

Make sure you get a home inspection before you close. It will be well-worth the money spent since it ensures the property's structural soundness and good condition. Setting the closing date that is convenient to both parties may be tricky, but can certainly be done. Remember that you may have to wait until your rental agreement runs out and the seller may have to wait until they close on their new house. Be sure you talk to your mortgage banker to understand all the costs that will be involved with the closing so there are no surprises. Closing costs will likely include (but are not limited to) your down payment, title fees, appraisal fees, attorney fees, inspection fees, and points you may have bought to buy down your interest rate.

How Your Agent Works for You

 

What tasks will my agent perform for me?

Your agent will perform a number of tasks on your behalf to help you in the puchase of your new home. 

Explains Basic Real Estate Principals

  • Faciliates the process of buying a home
  • Discusses agency relationships
  • Walks you through the purchase and sales agreement

Selects and Researches Qualified Properties

  • Helps to determine the types of homes and neighborhoods that best fit your needs
  • Provide details information on those homes
  • Arranges tours of homes that meet your criteria

Negotiates the Purchase

  • Helps to determine market value of homes you are interested in purchasing
  • Provide you with the necessary legal documents to complete a transaction
  • Assists you in structuring, writing and negotiating a mutally accepted purchase and sale agreement

Coordinates Steps Prior to Closing

  • Helps to determine market value of homes you are interested in purchasing
  • Provides you with the necessary legal documents to complete a transaction
  • Assists you in structuring, writing and negotiating a mutally accepted purchase and sale agreement

 

Helps Close the Transaction

  • Works with the Title Company to ensure that all documents are accounted for and all paperwork is completed

Marketing Your Home

 

Internet Marketing

  • One Ocean Drive Realty's website utilizes the latest home search technology and is an effective marketing tool to attract buyers.
  • All listings are distributed to over 150 websites, including Realtor.com, Yahoo Real Estate, Trulia.com, Homes.com, Zillow.com, and PalmBeachPost.com.
  • Through our website, buyers can view photos and virtual tours of homes for sale and learn about local communities and schools.

Multiple Listing Services

  • One Ocean Drive Realty cooperates with all members of the local multiple listing associations, to improve your market position.
  • Your property is marketed to real estate agents with other firms who are representing buyers.

Preparing Your Home

  • Your agent will assist you in effectively preparing your home so your property makes a good first impression to potential buyers.
  • Attention to the exterior and interior appearance of your home is proven to reduce market time.
  • Proper preparation increases final sales prices.

Why Prepare Your Home?

  • Increases desirability
  • Provides a marketing "edge"
  • Results in shorter market time

Before Marketing Your Home to Buyers:

  • Remove clutter from the yard
  • Cut and edge grass
  • Trim hedges and weed gardens
  • Paint, fix or wash railing, steps, storm windows, screens and doors
  • Wash windows
  • Straighten up garage
  • Paint, wash and fix garage doors and windows
  • Repair dripping faucets and leaky toilets
  • Replace all burned out light bulbs
  • Oil door hinges, tighten door knobs
  • Give home an overall and thorough cleaning

Before Buyers Enter Your Home:

  • Turn on all inside lights
  • Vacuum floors
  • Remove all clutter
  • Keep temperature comfortable
  • Kitchen & bathrooms should be kept neat
  • Keep pets in a separate area; change litter boxes daily
  • Keep draperies and shades open
  • Open all doors inside the home, except closets
  • Make sure front walkway is clean and clear of any clutter

Market Factors

 

How long will it take to sell your home?

There are many factors that go into the purchase and sale of a home. It is important to recognize uncontrollable and controllable factors.

We Can Control:

  • Price - If your property is not priced appropiately, sale may be delayed or prevented.
  • Terms - Terms will determine the price you receive and timing of the sale. It is important to discuss terms with your agent.
  • Condition - Property condition will greatly impact the speed of sale and the final price of sale. It is important to stage your property and fix any and all cosmetic repairs.

 

Determining a price is the most important step in preparing your home for sale. Ideally, you will get the highest return in the shortest time span. You and your agent will determine a pricing strategy, marketing strategy and how to target the right buyers.

We Cannot Control:

  • Location - Location is one of the most important factors affecting the fair market value and desirability of your home.
  • Timing - The real estate market may reflect a buyer's or seller's market at any given time. Marketing conditions cannot be manipulated, however you and your agent can determine the appropriate marketing and timing strategy to ensure a sale.
  • Competition - Potential buyers will be comparing your property to properties that are simliar. The perceived value of your home may be determined based on other similiar, available properties.

Pricing Strategy:

  • Your pricing strategy will depend on the market conditions (buyer's or seller's market).
  • A well-priced home will inevitably sell quicker than the competition.
  • Pricing your home correctly will allow you to maximize your reach to qualified buyers.

Marketing Strategy:

  • Your home will receive the most and best exposure during the first 3-5 weeks on the market.
  • The Multiple Listing Service has proven that the longer a house is on the market, the lower the selling price.

Targeting Qualified Buyers:

  • If your price is too low, you could lose a large amount of your investment.
  • Pricing too high will turn away qualified buyers.
  • Agents will be less likely to show an overpriced home, knowing that their buyers will be uninterested and unable to buy.

 

Glossary of Terms

 

Appraisal Fee

The amount paid for the lender's appraisal of the property.

Closing Costs

A general term for all the estimated charges associated with the transfer of ownership of the property.

Credit Report Fee

The fee charged by the lender to obtain a credit report on the buyer.

Down Payment

The difference between the sale price and the loan amount.

Loan Amount

The amount of the mortgage based on the purchase price, minus the down payment.

PITI

The estimated house payment, including principal, interest, taxes and insurance.

Points

Fees charged by the lender to offset their interest rate, if the rate is below the prevailing market rate. One point equals one percentage point - one point on a $100,000 loan is $1,000.

Prepaids

Prepaid funds for future expenses on the property such as insurance and property taxes.

Principal and Interest

The loan payment, consisting of the amount to be applied against the balance of the loan and the interest payment, which is charged for interest on the loan.

Private Mortgage Insurance (PMI)

Insurance for the lender, to cover potential losses, if the borrower defaults on the loan.

Title Insurance Fee

A one-time premium that a seller typically pays to the title insurance company on behalf of the buyer for the protection against loss or damage in the event of an incorrect search of public records and/or misinterpretation of title. The title insurance policy also shows what the title on the property is subject to - in terms of liens, taxes, encumbrances, deed restrictions and easements. If borrowers are obtaining a mortgage, they will be required to pay for a mortgage title policy.

Total Cash Required

The total amount of cash the buyer will need, including down payment, closing costs and prepaids.