Serving the Salt Lake real estate market since
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Just me making it happen for you.
10 Questions Salt Lake Home Buyers Always Ask
1. If the appraisal comes in higher than the purchase price can we get a loan for the higher amount?
Wouldn't that be nice. But no, the lender will not exceed the necessary loan amount. For some reason a high appraisal also doesn't seem to make the loan any easier or faster to close. Just be satisfied that you negotiated a great deal. Later when you own the home and have a current appraisal that exceeds your principle balance then you may be able to get a second home equity loan. But that can be risky. Ask anyone who did this from 2005 to 2008.
2. Why should we make a large earnest money deposit? Isn't that an unnecessary risk?
A very large earnest money deposit is risky, but just as the earnest money binds you to the contract it also binds the seller. In most cases if a buyer defaults on the real estate purchase contract then the seller can retain the earnest money deposit as compensation for time and trouble. But this rule also works in reverse. If the seller defaults on the contract (fails to complete the sale) then you, the buyer, are entitled to a refund of your earnest money AND an equal amount from the seller for your time and trouble.
3. I know that the listing didn't include any appliances, but let's go ahead and ask them to throw in the washer and dryer. They can always say no.
Sometimes this is a good strategy, especially if you are offering at or near the asking price. But you want to stay focused on the goal of acquiring the home for the best price. You don't want to give the seller more reasons to counteroffer. Because while they are counter-offering your request for the 10 year old Maytag, they will probably go ahead and counter your offering price as well. Write a clean offer that can be accepted on the first draft. You can go back after the offer is accepted and offer to buy the appliances separately for a yard sale price. Remember that you are buying real estate not used appliances.
4. We've signed all the paperwork and given the title company our down payment check. Can we get the keys now?
Probably not. Completing the paperwork and making the down payment (called Settlement) is only one part of closing escrow. The trip point is called Funding. That is when your lender sends the loan amount in a wire transfer to the title company and the title company confirms it. Then they notify all the players that they are recording the sale with the county and dispersing funds (called Recording). Then you get the keys to your Barbie dream house (called Possession). This all usually happens one business day after Settlement. The real estate purchase contract will spell out exactly when possession occurs. Your agent's negotiation of this point to your benefit is a key part of the original offer. Sometimes there is a rent-back, or you may have negotiated extra move out time for the seller in exchange for a better price. A buyer with cash can usually get the keys the same day. And pretty much anything else they want.
5. Why should I test for radon gas? I'm a nonsmoker and we don't have any kids who will be sleeping in the basement.
Because you don't want to be the homeowner left holding the radon card. You have to consider that some day when you sell your home the new buyer will test for radon and use it to negotiate a repair or better price. Testing now, while you are the buyer is a much better strategy.
6. My loan officer said that the seller will pay my closing costs. Wouldn't that save us thousands?
First the facts. The seller never actually pays a buyer's closing cost. The amount is simply deducted from your offer price to create a net price. This "net" is what the seller looks at when considering your offer. On the final accounting sheet (the HUD document) this "paid amount" is deducted from the seller's proceeds and credited to the buyer, offsetting their closing cost. In negotiation the seller will often add the requested credit to their bottom line price for an acceptable offer. This means that the buyer has actually just paid more than the market price for the property in order to spread out their closing cost over the lifetime of the loan. This is a good deal for the buyer only if: · The buyer doesn't have a lot of cash for closing, or · The buyer would rather keep some cash on hand for remodeling. The risk is that the home won't appraise for this inflated amount.
7. I don't want to write a back-up offer. Won't the seller's agent call if the first offer falls through?
Don't count on the listing agent doing what you (the buyer) want them to do. They often "forget" to make that call. If the home attracted multiple offers the first time, it may very well do so again. If you have a backup offer in place and the first offer fails, then the sale immediately reverts to you with all the normal due-diligence time periods. A properly written backup offer is pretty much risk free. The earnest money check is not even cashed until the seller notifies you in writing that your are in first position. However, if you can really live without this house and can risk a divorce action over the loss then yes, the best negotiation is to play it cool. But have your agent "tag" the listing on the MLS system so that they are automatically notified when the sale fails.
8. Why should I consider buying that house? The living room was painted pink with green carpet.
Don't sweat the small stuff. Paint and carpet are relatively easy to fix. Let you agent use the seller's lapse in judgment to your benefit in negotiation. When considering a home, make your decision based on attributes that you can't change (location, neighbors, architectural style) or those items that are expensive to change (old furnace, bad roof, floor plan).
9. I know my credit score is great and I don't owe any debts except for my car. Can I just wait until we find the right house before meeting with a lender?
What if you find that house on a Friday or holiday weekend? Even in this market it is still possible to loose your dream home if you are not prepared to deal. And if the listing is a short-sale or a bank owned property, they won't even consider your offer unless it includes the pre-approval letter. With all these fancy computer thingys and internets the process is simple and fast. Qualifying with a lender does not obligate you to that particular lender. If you find a better rate or fee structure later then the decision to jump ship is yours.
10. No condos for us. That monthly HOA fee is a big rip-off.
Let's break it down.
1000 sq. ft. Condo per month
1000 sq. ft. Single Family House per month
HOA Fee @ $.19 per square foot
Contents Insurance (not required but advised)
|$13||$0 included in hazard insurance|
Hazard Insurance (required by any lien holder and common sense)
|$0 included in HOA Fee||$46|
Average water/sewer/trash bill in Salt Lake City
|$0 included in HOA Fee||$37|
Average do-it-yourself cost to maintain a lawn, lawn equipment, landscaping, etc.
|$0 included in HOA Fee||$21|
Snow Removal of sidewalk and driveway
|$0 included in HOA Fee||$7 / or Do it yourself?|
Insert your own favorite exterior maintenance
|$0 included in HOA Fee||
Savings account for big ticket items like garage door, roof, elevator, windows, etc.
|$0 included in HOA Fee Reserve Account||$15|
So the question you have to ask yourself is; Is my time and effort worth the difference? Condo owners say yes, house owners say no. Which are you?
Whether you're moving up, moving in or just moving on, call me today!
Stonebrook Real Estate
6375 South Highland Dr.
Salt Lake City, Utah 84121
24/7 phone or text: 801.550.0330