Does it cost money to use a Realtor? Exactly what does closing costs consist of and how much can I expect to pay?
These are just a few of the questions users have. See below for additional information regarding home buying in the Prairieville and Baton Rouge area:
1. If I want to purchase a home, does it cost to use a Realtor?
No. Our compensation comes from the seller paid commission. Even when working with FSBO's, most of the time we can negotiate our commission to be paid by the sellers.
2. Do I need a preapproval in order to buy a home?
Its not initially required but upon making offers, sellers are more likely to negotiate with someone who has already been approved for a mortgage loan than one who has not. In addition, it lets up know the amount that you are preapproved for.
3. What are my up front out of pocket costs when trying to purchase a home?
The deposit (can range between $500-$2000, depending on price of the home. This is given back though at closing), the home inspection (anywhere between $300-$500) however this is not a required cost and sometimes the appraisal from lender (generally around $400).
4. How long before I can move in once I have an accepted offer?
If there is a mortgage involved, depending on the type of loan, it will be anywhere between 21-40 days, give or take. Cash deals can close anywhere between 3-10 days if desired.
5. The home that I really like is in a flood zone. Can I still buy it and what will my premiums be?
The short answer is maybe. For starters, if you are paying cash for the home, then flood insurance is a moot point since there are no requirements for it. However, If the home you are buying is designated to be in a flood zone and a loan will be involved, the lender will require an elevation certificate. This is done by a surveyor who will go out and measure the elevation of the home and where it sits in relation to the area's BASE FLOOD ELEVATION or BFE.
Example: If an area has a base flood elevation of 15ft and the home sits at or higher than its BFE, then premiums are more than likely to be very favorable. Conversely, if the home sits lower than the designated BFE, then annual premiums could be somewhat costly, depending upon how low the home sits.
As a service to our clients, we usually know when a home is in a flood zone and look for any existing elevation certificates ahead of time as to manage everyone's expectation up front.
6. Do I need a realtor to purchase a home?
No. It is entirely possible and legal to conduct a sale without an agent; however, there is really no benefit to NOT use a buyer's agent as their compensation comes from the sellers. Although the internet has made it easier for buyers to conduct their own research, there are still many invaluable pieces of information that Realtors can provide such as:
-past property disclosures
-damage history (has home ever flooded, had termites, etc)
-number of owners
-school and flood zones
-comparable sales, neighborhood statistics, etc
-and generally just a wealth of knowledge of the areas
In addition to the mounds of paperwork, in using a buyer's agent, you not only get the services provided by the agent, but also access to the agent's network of proven professionals ie title companies, home inspectors, appraisers, surveyors, other various resources.
7. My credit is not quite up to par, can I still get a loan? If not, how long do I have to wait?
We have lenders that can often times assist and help qualify individuals with below the minimum 620 credit score. Depending on the situation, you may still qualify with a score as low as 580.
If they still cannot qualify you, most of the time they are able to perform an analysis and tell you specifically what you need to do to raise your scores.
8. I need to sell my current house in order to buy another one. Can I do that?
Yes. We can still make offers on properties that you are interested in. We just make your offer "contingent on the sale of home" The purchase agreement is set this way for a certain period of time. If your home doesn't sell in the alloted time frame, then nothing is lost.
9. I came across a For Sale by Owner home that I'd like to buy. Can you still help?
Yes. Most of the time, for sale by owners or FSBO's are willing to work with and compensate a buyer's agent.
10. How do I know how much to offer on a home that I'm interested in?
We have a number of tools and variables that we use to determine price. We take into account inventory, days on market, average selling price per sqft, supply/demand of the area, condition, amenities, signifcant improvements (outdoor kitchen, pool, workshops, etc). After gathering this data, we present to you what we feel is an appropriate offer. Ultimately though, we are just a guide and the decision is completely up to you.
11. How much money do I need for closing costs?
A simple estimate is generally 3% of the loan amount however closing costs can be broken out as follows:
a) Title company fees
b) Lender fees (unless property is acquired by cash)
c) Escrow items
a) Title company fees - These are charges for the title company performing title searches, preparing legal docs, wire transfers, title insurance, recording of deed/sale and much more. Most of these fees are pretty standard and vary little amongst title companies so not much to really shop for here.
b) Lender fees - Lenders charge either a flat fee or something known as an "origination charge" which is a percentage of the loan or a flat fee as well. Other things included in here are the appraisal fee, flood certificate, credit report and daily interest accumulated til the end of the month (If you can help it, close at the end of the month to save on paying daily interest). The obvious things to look for here are what the lender charges and how competitive of an interest rate can they offer.
c) Escrow/Miscellaneous Items - This consists of your homeowners insurance, flood insurance (if applicable), taxes, and prorated HOA. Insurance is definitely in your control so do your best to get the best coverage at the most affordable price. Your initial 1 year homeowners insurance will be part of your closing costs as well as 3 months worth of reserves. Taxes are also factored into this as you will pay the remaining number of months in the year in advance as well.
In summary, to minimize your closing costs, heed the following advice on what is in your control:
-shop lenders for best rate and whoever has the lowest "charge"
-shop for the best homeowners insurance with lowest rate possible
-close towards end of month
12. Do I have to have a home inspection done?
Answer: No. Home inspections are not required but are highly encouraged, especially for resale homes. Home inspectors are part of the due diligence process. There job is to point out deficiencies within the subject property. Sometimes these deficiencies can have a serious impact on whether you would like to continue with the sale of the home or cancel the contract. Deficiencies can range from smaller cosmetic things like a leaky faucet to larger high dollar items like a hot water heater or AC "on its last leg"
Take a look at our home buying video. Simple. Clean. Informative.