So far this year, this Fishers Realtor has been busy, busy, busy! A lot of my clients, and some of my favorites, are first time home buyers. Even though they may not know each other, first time home buyers typically ask the same, general questions. So, I thought I’d compile a list and use it as a cheat sheet for future reference! Here’s the Top 5 First Time Home Buyer Questions I get asked the most!
1) What is Earnest Money? Earnest money is typically 1% of the purchase price. Basically, earnest money is for the buyer to put ‘skin’ in the game. It is literally putting money where your mouth is (i.e. the purchase agreement). The earnest money makes it more difficult for the buyer to walk away during the negotiation process. However, the money is returned to the buyer at closing as part of the down payment and/or closing costs.
2) When Should We Start Looking for a Home? There are some buyers that walk into the first home and know it’s the one and there are others that take years to find their dream home. Typically, though, I have found that it takes anywhere from 10 to 30 homes for the buyer to find the right one. Looking at more than 9-10 homes a day can be overwhelming and make each home bleed into the next, so if you have 20 that you want to see, that should be broken up into 2-3 weekends. Then, it may take another week get the offer accepted and another 30-45 to get to the closing table. If your lease is up at the end of April, I would suggest beginning to look no later than March 1st.
3) How Much Money Do I Need to Purchase a Home? Well, you need that 1% for the earnest money ($1,500 if the home is $150,000). Then you need at least 3.5% of the purchase price if you are going to use FHA financing. Lastly, you will need about $1,500-$2,500 to cover closing costs (a great Fishers Realtor can help get the seller to cover some of these costs).
4) What Will a Typical Bid on a Home be? In reality, it is not a buyer’s market like it was a few years ago. Lowball offers are, more often than not, offensive to the seller and can kill the deal before it even gets off the ground. But, having Fishers Best Realtor is key. I will find comparable houses to make sure we are making a fair offer and I will contact the seller’s agent to determine motivation. Generally speaking, you can expect to pay 95-97% of the asking price.
5) Can I get that house on this lot? Short answer is no. I get this question all the time. Buying a home will always have compromises in terms of wants vs. needs vs. pricing. We may not be able to find everything you want, but we will make sure you find everything you need!