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Serving Katy, West Houston, Cypress, Fulshear & Surrounding Areas

Via Champions Real Estate Group

Serving Katy, West Houston, Cypress, Fulshear
& Surrounding Areas

Via Champions Real Estate Group

Buyer FAQs

How do I know what price home I can afford?
What is the difference between mortgage pre-qualification and mortgage pre-approval?
Should we obtain mortgage pre-approval before we begin looking for a home?
How do I find the right home within my budget?
Should we sell our current home before we begin looking for a new one?
Why should I use a real estate agent when buying a home?
Should I use a real estate agent if I plan to buy a new construction home?
What issues is the seller obligated to disclose to me about their home?
How do I know how much to offer on a home?
Are there any typical contingencies that appear in offers?
What is earnest money?
What is an option period?
What happens if I make an offer on a home that gets multiple offers?
What is the difference between appraisal value and market value?
How does the appraisal process work?
What happens if the home doesn't appraise for the price I've agreed to pay?
How does the inspection process work?
Should I request the sellers make any needed repairs found during the inspection process?
Will the seller provide me with a home warranty?
What is a short sale and should I look at short sale homes?
What is a foreclosure and should I look at foreclosure homes?
Will I have to pay closing costs?
How are property taxes dealt with when buying a home?
How are HOA dues dealt with when buying a home?
Is there a difference between buying a home to live in vs. buying a home as an investment property?
When should I turn on the utilities?

How do I know what price home I can afford?

How much home you can afford is dependent upon the amount of money you have available as a down payment, how much the mortgage company is willing to lend you (in part based on your credit score) and what portion of your income the full mortgage payment (including property taxes and insurance) accounts for.

At the end of the day, it comes down to what the mortgage company is willing to approve you for. Which is why mortgage pre-qualification should be the first step in the home buying process.

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What is the difference between mortgage pre-qualification and mortgage pre-approval?

Mortgage pre-qualification is an evaluation of your credit worthiness at a glance. Pre-qualifications are provided with limited and unverified information from the potential borrower. A pre-qualification is not a promise by the lender to give you a loan to purchase a home: it is an indication that you should be able to qualify for a loan based on the limited information you provided.

Mortgage pre-approval is a more detailed process where the lender verifies your information, sends it through underwriting and is an acknowledgment that you indeed qualify for a mortgage, as well as a definitive amount a lender will approve for your purchase. In most cases, as long as the home you choose appraises for the price you’re willing to pay, a pre-qualification means the lender has every intention of allowing you to obtain a mortgage.

You can find more information about mortgage pre-qualification vs. pre-approval and the mortgage pre-approval process in general here.

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Should we obtain mortgage pre-approval before we begin looking for a home?

There is no downside to obtaining mortgage pre-approval prior to your home search, but there is an upside. Having mortgage pre-approval prevents you from falling in love with the proverbial pair of shoes that don't come in your size and ensures you're not wasting your time looking at homes you won't be able to obtain approval for. It also can give you an advantage in a multiple offer situation.

For these reasons, we require that buyers we work with go through the pre-approval process and obtain a mortgage pre-approval letter before beginning their home search.

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How do I find the right home within my budget?

If we're your buyer's agent, we'll have you fill out our detailed buyer questionnaire. This gives us some insight into not only the basic needs you have in a home (such as the number of bedrooms, location, or a minimum square footage), but also lets us know what features of a home are most important to you (like having a large kitchen or the master bedroom being downstairs).

We take that information and couple it with our extensive knowledge of the Katy area to find you homes that fit as many of your needs as possible within the budget you have to work with - without wasting your time (or our time) showing you homes that fit your basic needs but don't contain your desired features.

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Should we sell our current home before we begin looking for a new one?

There is no correct answer to this question. It comes down to personal decision. In a seller's market (where most houses are selling quickly and receiving multiple offers), sellers might be reluctant to accept an offer that includes a contingency for selling your current home. In a buyers market (where most houses aren't moving fast and are receiving few offers), a seller might be more willing to accept an offer that includes the contingency to sell your current home.

We can help advise you on what kind of market we're currently experiencing, but whether or not to sell your current home before searching for a new one is something only you can decide.

That said, we'd highly recommend you ensure you can obtain mortgage pre-approval to be able to purchase a new home before listing your current home. You can find out more about mortgage pre-approval and why it's so important here.

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Why should I use a real estate agent when buying a home?

Every real estate agent is representing someone in the transaction. If you're not officially being represented as a buyer via a Buyer Representation Agreement by an agent, then the agent is - by default - representing the seller. Yes - even if they're showing you homes! Entering into a Buyer Representation Agreement means you have an agent on your side in the transaction who is representing your interests.

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Should I use a real estate agent if I plan to buy a new construction home?

Home builders represent their own interests when it comes to selling homes and not yours. We're of the opinion that you should always be represented by a real estate professional with your interests as their top priority in any real estate transaction. Most new home builders have no issue working with buyers who are represented by real estate agents.

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What issues is the seller obligated to disclose to me about their home?

When a seller lists their home for sale, they're required to fill out a seller's disclosure form (in most cases). The purpose of seller's disclosure form is to have the seller disclose any known issues or defects with the property that they're aware of. They are obligated to disclose any item they have knowledge of that is addressed on the form.

In almost all cases the potential buyer will have the home inspected during the option period, so a seller attempting to "hide" issues would typically be a futile effort, as well as an unethical one.

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How do I know how much to offer on a home?

Once you find a home you'd like to offer on, as your buyer's agent, we would do a comparative market analysis (also referred to as a "CMA" or "running comps") of similar homes that have sold recently in the same area. This will help give you an idea of what a comparable home has sold for and can help you decide what the market value is of the home you're looking to offer on.

If three similar homes in the area have sold within the last three months for $210,000, it's highly unlikely an offer of $185,000 would be accepted because the seller's agent will have also run comps for the seller to give them an idea of what price they can realistically obtain for their home. While it's common to offer below the asking price on a home when starting off negotiations, if the home is priced well below its market value, then it will likely receive offers at or above the asking price.

We'll provide you with a CMA for the property and you'll need to decide what you'd like to offer having taken the information within the CMA into account. We can give an opinion as to the competitiveness of your potential offer, but the final decision as to what to offer is one only you can make.

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Are there any typical contingencies that appear in offers?

There are a wide range of contingencies that might be included with an offer and some are more common than others. The two most common contingencies are a financing contingency (which mean that the offer is contingent on the buyer being able to obtain financing confirmation within a specific timeframe) and a sale of another property contingency (which means that the offer is contingent on the buyer being able to sell their current home before a certain date).

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What is earnest money?

Earnest money is a deposit the potential buyer makes toward the purchase of the home if the seller accepts their offer. The earnest money is held in escrow by the title company and is applied to the buyer's down-payment at closing.

There is no official set amount required as earnest money, but in most cases it is a percentage of the sale price in the neighborhood of 1-2% of the agreed upon sales price.

If the offer contains an option period, then the earnest money would be refundable to the buyer if they chose to back out of the sale for any reason during the option period they set within the offer. If the offer contains a contingency agreed to by the seller, the earnest money would be refundable if that contingency was achieved by the buyer.

Once the option period has passed and if all contingencies (if any) are met, the earnest money is typically no longer refundable if the buyer doesn't complete the sale for whatever reason. If the buyer defaults on the contract for purchase, the seller will typically keep the earnest money as "damages" for the buyer's default on the deal. If the seller defaults on the contract, the earnest money would be returned to the buyer.

It's important to note that there are other (lesser used) options available to both the buyer and seller should the other party default on the sales contract vs. simply accepting a return of the earnest money (should the seller default) or acceptance of the earnest money as damages (should the buyer default) - including litigation.

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What is an option period?

An option period is an amount of time stipulated by the potential buyer when submitting their offer that allows the buyer to back out of the deal for any reason without losing their earnest money. Typically, it is during the option period that the potential buyer has the home inspected and negotiates with the seller regarding any issues (via having those issues fixed prior to the sale or via a reduction in sales price) found during the inspection (if any).

Having an option period is typical and usually requires a small, non-refundable fee to be paid by the potential buyer in exchange for the seller "holding" the home for the buyer while they decide whether or not to move forward with the sale. Including an option period in your offer to allow for a home inspection is recommended when making an offer on a home.

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What happens if I make an offer on a home that gets multiple offers?

A multiple offer situation is not uncommon - especially in a seller's market. In the case of multiple (appealing) offers, the seller could simply accept one of the existing multiple offers they've received or (more often) the seller will put out a call for "highest and best" offers from all potential buyers by a certain date.

In a "highest and best" situation, the seller is asking all potential buyers to put in one final offer for the home and will choose from those final offers once the deadline to submit "highest and best" has passed.

"Highest" refers to the highest price the potential buyer is willing to pay for the home. "Best" refers to aspects of the offer that are not based on price alone (such as the existence of contingencies or the closing date). And "highest" may not always be "best" for the seller.

As an example, let's say that the seller has received three "highest and best" offers on their home. One is for $200,000 from a seller with a mortgage pre-approval, but contains a 10-day option period, a contingency for financing, and that the sale is contingent on the buyer selling their current home with a 60-day close. One is for $195,000 from a seller with a mortgage pre-approval, but only requests a 7-day option period and a financing contingency with a 45-day close. The third is for $205,000 from a seller without mortgage pre-approval who requests no option period, but has a financing contingency with a 30-day close.

The seller has to weigh all of these offers based on their specific needs aside from price alone. If they need to sell fast, an offer with a longer closing date or option period may not be as appealing as one with shorter ones. The buyers with mortgage pre-approval will likely be more attractive than the offer from the buyer without pre-approval because there is a much higher likelihood that their financing won't fall through.

As an agent, we will do our best to find out and relay the seller's needs to help you craft an offer that appeals to both "highest and best" for the seller, while taking your needs and limitations as a buyer into account.

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What is the difference between appraisal value and market value?

Market value is the price a home is expected to be able to command based on its general features, visible face-value condition and the current conditions of the local real estate market. Appraisal value is an exact determination of the value of a specific home based on an in-depth assessment by a licensed appraiser.

Market value (which typically is in line with the eventual sales price) and appraisal value can differ for the same home. Mortgage companies will lend based on whichever number is lower - the sales price or appraisal price. So, if the agreed upon sales price of a home is $200,000, and the home appraises for $190,000, lenders will use the latter number as the value of the home in their loan to value scenarios.

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How does the appraisal process work?

Appraisals are done at the buyer's expense, but the appraiser is chosen by the prospective lender as the purpose of the appraisal is to protect the lender's interests and ensure they're loaning an appropriate amount for the home. Appraisals can only be performed by licensed appraisers and the appraisal industry is heavily regulated to help ensure unbiased assessments.

During the appraisal process, the appraiser will look at numerous factors including the age of the home, its square footage, the number of bedrooms and baths it has, the size of the lot the home sits on, its curb appeal, its location with regard to desirability and access to amenities, etc. and the condition of all of the home's structural features.

They'll typically provide a report (both the lender and the buyer will receive a copy) noting their opinion of the home's value - with a detailed account of the home's visible condition and other potential items that affected their appraisal value.

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What happens if the home doesn't appraise for the price I've agreed to pay?

The mortgage company will only approve financing for the sales price or appraisal price - whichever is lower. In the event that the home appraises below the agreed upon sales price, you'll have three basic options.

The first is that you bring the difference between the appraisal price and the sales price to closing. So if you agreed on $200,000 as the sales price and it appraises at $190,000, the mortgage company will only finance the $190,000, so you'd need to bring the difference (in this example, $10,000) to the closing table - on top of your mortgage downpayment.

The second is that you renegotiate the sales price with the sellers to be reduced to the appraisal price or to "split the difference" between the agreed upon sales price and the appraisal price. So, using the same example above, you could ask the sellers to reduce the sales price to $190,000 or you could ask them to split the difference with them reducing the sales price by $5,000 and you bringing the other $5,000 to closing.

The third option is that you don't go through with the sale and your earnest money is returned to you providing you had a financing contingency within your initial offer.

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How does the inspection process work?

It is recommended that you always get an inspection done of the home you plan to buy. Once your offer has been accepted by the seller, you'll want to schedule your inspection as quickly as possible so that you get the inspection report with time to negotiate any repairs or price concessions before your option period ends.

The inspector will provide you with a full report of the condition of the home, notating any issues or items in need of repair. The inspection is done at the buyer's expense and by an inspector of the buyer's choice.

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Should I request the sellers make any needed repairs found during the inspection process?

It never hurts to ask. The sellers will either agree to make any needed repairs, will offer a reduction in the sales price to cover the buyer performing them, or can stand firm and refuse to make any repairs and require you to accept the home "as-is" to move forward with the sale. Depending on the severity of any issues found, you'll need to decide whether or not to continue with the sale of the home if the seller doesn't agree to perform any repairs or concede to a price reduction in line with the cost or any needed repairs.

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Will the seller provide me with a home warranty?

A seller providing a buyer with a stipend for a home warranty is not required, but it is fairly typical. You can make your offer contingent on being provided with an allowance for a home warranty should you choose.

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What is a short sale and should I look at short sale homes?

A short sale is when a seller is selling their home, but doesn't expect to obtain a sales price that will be high enough to pay off their entire mortgage and any other liens that may be on their home. In a short sale, the lender agrees to accept the price from the sale of the home as satisfaction of the debt, even though it will be "short" of the full amount owed.

A home being sold as a short sale is typically in "pre-foreclosure." A short sale can often times net more money for the lender and can take less time than a full blown foreclosure, which is why lenders are sometimes willing to accept a payoff short of the debt owed.

Just because a seller is willing to accept your offer doesn't mean their lender will, and the final decision as to whether or not to accept an offer is in their court. Getting an answer as to whether or not your offer will be accepted can take anywhere from a few weeks to a few months.

Buyers have to decide if they're willing to potentially spend months waiting for an answer from the seller's lender and be willing to start the home search process all over again if the seller's lender declines their offer.

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What is a foreclosure and should I look at foreclosure homes?

A foreclosure occurs when the property owner has stopped making payments on their mortgage for an extended period of time. Once a home is foreclosed on, it goes to auction. The only form of payment accepted at a real estate auction is cash.

If the home doesn't sell at auction, it becomes an REO (real estate owned) property of the lender. At that point, the home will often be listed much like any other home as a standard listing with a real estate agent and put on the market, many times at a price that serves to sell the home fast.

The downside to foreclosure homes is that they're often in need of varying levels of TLC and there may be a lot of competition with regard to the number of buyers making offers on them.

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Will I have to pay closing costs?

Yes. When it comes to closing on a home both the seller and the buyer will incur closing costs. The buyer typically pays between 2% and 5% of the sales price in closing costs. The seller typically pays between 6% and 10% of the sales price in closing costs.

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How are property taxes dealt with when buying a home?

Property taxes for the current year are typically paid at the end of the year and are pro-rated at closing. Depending on the date of the sale, and whether or not the property taxes have already been paid for the year, this will result in a credit to either the seller (if they already paid the taxes for the current calendar year) or to the buyer (if the buyer will be the one who has to pay the taxes at the end of the year).

Tax responsibilities are calculated per day through the day of closing. The seller is responsible for their portion of the property taxes up through the day of closing. The buyer is responsible for the portion from the day after closing until the end of the year.

Example: The property taxes for 123 Main Street are $3,650 for the calendar year. $3,650 divided by 365 days is $10 per day. The sale closes on June 13th. This means that the seller is responsible for the property taxes for January 1st through June 13th (164 days multiplied by $10 per day equals $1,640 as their portion owed). The buyer is responsible for the property taxes owed from June 14th through December 31st (201 days multiplied by $10 per day equals $2,010 as their portion owed).

Since the taxes for the current year would not yet have been paid, the buyer would have to pay the full amount ($3,650) at the end of the year. So during closing, the buyer will receive a credit from the seller of $1,640 (the portion of the taxes the seller owes).

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How are HOA dues dealt with when buying a home?

While property taxes are typically paid at the end of the year they're for, HOA dues are typically paid in advance. This means that the seller usually has to pay the dues for the entire year at the beginning of that year. HOA dues are pro-rated in the same fashion as property taxes.

Example: The HOA dues for 123 Main Street are $365 for the calendar year. $365 divided by 365 days is $1 per day. The sale closes on June 13th. This means that the seller is responsible for the HOA dues for January 1st through June 13th (164 days multiplied by $1 per day equals $164 as their portion owed). The buyer is responsible for the HOA dues for June 14th through December 31st (201 days multiplied by $10 per day equals $201 as their portion owed).

Since the HOA dues for the full current year would have already been paid by the seller, the seller will receive a credit from the buyer of $201 (the buyer's portion of the current year HOA dues) at closing.

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Is there a difference between buying a home to live in vs. buying a home as an investment property?

As far as the bare basics, no. You find a home you'd like to purchase, submit an offer, and close on the sale if the seller accepts it. There can, however, be a difference in the requirements by a mortgage lender to finance the property.

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When should I turn on the utilities?

Ideally, sellers will keep the utilities on through closing day to allow for a proper walk-through by the buyers should they want to perform one. As such, we typically recommend buyers schedule utility connection for the day of closing to help ensure there will be no interruption of service.

For utility services that require someone be present in the home when its turned on, such as cable or Internet, we recommend scheduling them no earlier than several hours after closing is expected to be complete to account for any potential delays.

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