image

Frequently Asked Real Estate Questions

Frequently Asked Real Estate Questions

Question: I've heard about buyer brokers who will represent me, as buyer, exclusively. How do I find one & how much do they charge?

Answer: Illinois is a designated Buyer Broker state. As such, the broker who represents you as a client is your Buyer Broker, protecting your fiduciary interests. There is no charge for this service. In the vast majority of real estate transactions, at closing, the seller pays his broker, who in turn pays the co-operating brokerage (the broker who brings the buyer) an amount offered as "co-operating commission" in the listing, essentially sharing his commission. No broker should ever ask the buyer for a commission or fee unless some very unusual circumstances exist.

---------------------------------------------------------------------------------------------------------------------

Question: I earn a nice salary, but have not managed to save much money towards a down payment. Can I still get a mortgage to buy real estate property?

Answer: Yes, in most circumstances, you can do so. Thanks to the low interest rates, and prevalence of mortgage lenders and products that they offer, if you have a fairly decent credit history, you can get a mortgage to buy property with very little downpayment, and sometimes no down payment. To cover the risks entailed in such scenarios, lenders will also ask you to pay Private Mortgage Insurance (PMI) as part of your monthly payment. The good news is that the IRS - in 2007- made this insurance tax deductible. Ask your tax accountant for precise details. We have worked with many buyers who used 100% mortgages. Ask us for a list of reputable lenders who will "pre-qualify" you for a mortgage loan.

Of course, it's always best to have some "earnest money" (which forms some of your down payment) offered with the contract, so that the seller feels comfortable enough to sign a contract with you & to take their property off the market. No seller likes to be surprised several days before closing with the news that his buyer can't get mortgage approval. Normally, the minimum "initial" earnest money offered with any contract is $1,000; contractually earnest money is increased to some higher negotiated amount (5% & 10%'s are common, depending on the price of the property), known as balance of earnest money, after attorney approval is reached.

---------------------------------------------------------------------------------------------------------------------

Question: I am a buyer & have an accepted contract (one signed by both sellers) on a home, yet, another Open House is scheduled for this Sunday. How can the home still be shown to other prospective buyers? And, can the seller accept another offer? I'm nervous.

Answer: It depends. Until midnight of the closing day, the seller owns the home. So, if the seller wants to be cautious, or is somewhat concerned or worried about the solidity of the buyers, that seller may instruct his broker to "continue to show" the home, so that he can attract "backup offers." However, the seller can only have one signed contract; any subsequent prospective buyers must be told that a contract exists. So unless the seller can legally terminate the first contract, or negotiate away the first contract, your accepted contract will stand as long as you give the seller comfort by meeting all of the terms and conditions in a timely fashion as agreed.

---------------------------------------------------------------------------------------------------------------------

Question: My wife & I love to attend Open Houses, but many real estate brokers that we meet are awfully pushy & ask us to sign our names, phones, address, etc. We don't like having our names & other information all around & being questioned. We just want to look at properties & get a feel for the market.

Answer: Well, this is an easy one. It's very natural for you to not like the signing in & being questioned when you just want to look. And, it's a great idea to go to Open Houses to learn about market prices for various areas. My suggestion is this: when you enter the Open House & are asked to "sign in" simply put down your last name and the name of your broker. This will ensure that: 1) you will not be contacted further by any new broker, 2) you are given respect for having an existing relationship with a broker, 3) you are taken seriously as a prospective buyer, 4) any questions that you ask will get the attention deserved.

Just be aware not to reveal confidential or financial information about yourself, the brokers at the Open Houses always represent the sellers. Even if you are not interested in a particular property, you may encounter this broker down the line at a property on which you make an offer & they may remember you as Mr. X with Broker Y. Putting two & two together may work against you if you have revealed too much information about your situation to the seller's broker.

The bottom line is that when negotiations involve significant dollars, be sure you have a strong broker on your side and don't convey information that can work against your position.

-----------------------------------------------------------------------------------------------------------------------

Question: I am a first-time buyer. What should I be doing to prepare myself for home ownership?

Answer: First, save your money. Protect your credit rating by paying bills on time. Find a good reputable real estate broker who will have your interests at heart when he/she advises you. Ask your broker for names of reputable lenders who will pre-qualify or pre-approve you. This means that they will analyze your financial situation (salary, savings, debt, credit history) and your preferred level of monthly payment & let you know what you should pay & how much they will loan you. Be wary of using someone found on the Web without checking them out thoroughly; some may promise one thing & deliver another. Make sure that you are dealing with reputable people. Ask your friends or family for recommendations. Check references. Go to Open Houses & get a feel for the market for at least three months. Once you feel comfortable with what you can spend, and what property you can expect for your money, call your broker & let him/her know that you are ready to shop for a home.

Your broker will be able to simplify this search because they know the market. They will be knowledgeable to guide you every step of the way.

-----------------------------------------------------------------------------------------------------------------------

Question: Why do we need a real estate attorney for buying or selling property in Illinois?

Answer: Our firm works with many clients who are not Illinois residents, some from states such as California, Colorado, Arizona, and such, do not use attorneys for the closing process. They are surprised when we recommend an attorney. While having an attorney for your closing in Illinois is not mandatory, our firm highly recommends that you have an attorney, and that the attorney be a specialist in real estate. The attorney's fee is normally nominal and well worthwhile. Your broker or agent will take you through the search and sales transaction, but will not allowed to practice law or give legal advice. Once you have an accepted (signed by all parties) sales contract, it allows for an attorney review period. Your real estate attorney will represent your interests best from that point on. And, an attorney who specializes in real estate will have seen many, many situations -- and will know just what to do to protect your best interests. Most real estate transactions go along pleasantly enough, but often nothing at first tips you off that the "Real Estate Transaction from Hell" is about to occur. When, and if, it does, you'll then know the value of a good real estate attorney. Please read my article about attorneys below.

------------------------------------------------------------------------------------------------------

Send your frequently asked question to Third Meridian Realty by contacting us using the form on our home page. We promise to get back to you as soon as possible.