The real estate professionals at Park Regency Realty have found there are particular questions that buyers in Los Angeles County have asked repeatedly. The questions (and answers) below address all the elements of buying a house, so you make smart decisions and enjoy a remarkable home buying experience.
1. What is the First Step of Buying a Home?
If you're planning to buy a new home, the first step is to get pre-qualified for a mortgage. You’ll need to find a mortgage lender and work out a financing plan. The lender will let you know how much you can borrow, the required down payment, and the closing costs, so you narrow down your options to homes you can afford.
Mortgage pre-approval demonstrates your commitment to both the property seller and your real estate agent.
2. What is the Typical Home-Buying Timeline?
The home buying process in Los Angeles typically takes 10 to 12 weeks, from online search to closing escrow. But you can buy a home faster if you are well-prepared and ready to pay cash.
Market conditions can influence home-buying timelines. For example, home buying transactions take longer in hot markets. Another factor to consider is how fast the involved parties will get their responsibilities done.
3. What is a Seller’s Market?
In seller’s markets, there are more home buyers than properties available for sale (inventory). That drives home prices up.
Low inventory can originate from the lack of new construction or exponential growth in the local labor market. A decline in interest rates means that more people can afford to buy homes, increasing the demand.
4. What is a Buyer’s Market?
A buyer's market occurs when there is a glut of properties for sale and not enough people buying them, so the sellers have less leverage. Factors that can contribute to low demand for homes include:
- Increase in interest rates
- High inventory
- Economic disruption
- Natural disasters
5. What is a Stratified Market?
A stratified housing market comprises both upper and lower tiers of property in a specific area. It can happen because a region’s economy consists of many sectors and is affected differently than others or because supply cannot keep up with demand in certain areas.
6. How Much Can I Expect to Pay an Agent? Are the Fees Negotiable?
In a typical real estate transaction, buyers do not pay their agents. The seller’s agent places the property in the local multiple listing service (MLS) with a predetermined commission for the buyer’s agent. At closing, the seller’s agent (listing agent) splits the agent fee with your agent.
Agent fee is negotiable. Negotiations are easier where one agent represents both the buyer and seller. But the flexibility to negotiate varies from one agent to another. For instance, an agent whose brokerage company cut a percentage of their commission can find it hard to haggle.
7. What is a Good Credit Score for Buying a Home?
You can qualify for a mortgage loan if you have a FICO credit score of at least 620. Borrowers with a higher credit score pay a lower down payment and a better interest rate because they represent less risk to the lender. In comparison, borrowers with a lower credit score will need to put more money down on a property and possibly pay a higher interest rate.
8. How Much Down Payment Do I Need for my New Home?
The average down payment in the U.S is 11%. But first-time homebuyer programs allow borrowers to put down 3%-5% on a home and accept down payment contributions from family members in the form of gift money. FHA loans only require a 3.5% down payment.
With VA and USDA programs, the borrower can get a mortgage with zero down payment.
With conventional loans, repeat buyers used their existing home equity as a source of down payment. This required a 20% down payment. New loan programs require buyers to buy private mortgage insurance (PMI) to put down as little as 3%.
9. What’s the Ideal Time to Buy a Home?
A report published article recommends buying a home in April if you are looking for new listings and ready to pay a premium. For a healthy inventory coupled with lower prices, consider purchasing in August. November typically has the best deals.
10. Should I First Sell My Current Home?
Many home buyers often face this question. It is an important decision, as you will have to consider your individual needs and the circumstances surrounding your home sale. Selling your home before narrowing down your options could mean staying with friends/family, finding a short-term rental, and/or paying for a storage unit.
However, you can use the proceeds from a home sale to make a compelling offer that will get you the home you want.
11. How Many Homes Should I Compare Before Buying?
The number of options to compare before deciding to buy is up to you. The web has added incredible inconvenience to the home buying process. You can now walk through an entire property from the comfort of your couch using a PC or smartphone.
No doubt touring a home in person can be a time-consuming process, but it's worth the effort to verify the property’s size and general feel.
12. What is Earnest Money?
Buyers place a deposit on the home as soon as they make an offer on it. This deposit, known as earnest money or good-faith deposit, is usually 1% to 3% of the purchase price. It reserves the home for a particular buyer.
The earnest money is held in escrow during the home buying process. At the final stages, it goes towards closing costs or a down payment.
13. What is Title Insurance?
Title insurance protects you (as a homebuyer) and your mortgage lender against issues with the property title. The problems could be tax evasion, encroachments, ownership disputes (e.g., unknown heir), unpaid homeowner’s association fees, or failure to pay contractors fairly. Title insurance is a one-time premium (paid at closing) that averages between 0.5% and 1% of the property’s purchase price.
14. How Long Should a Seller Take to Review My Offer?
Common courtesy demands that sellers respond to written offers within 24-72 hours. A seller might take longer to respond or even neglect your offer for two reasons:
- There are too many offers to consider
- Your offer is too low
15. What are the Closing Costs for a Buyer?
Home closing costs range between 2-7% of the home’s purchase price. Below are the typical expenses buyers can expect to pay at closing:
- Mortgage application fee
- Loan origination fees
- Appraisal fee
- Wire transfer fees
- Credit report check
- Survey fees
- Lender-requested home inspection fees
- PMI application fee
- Mortgage transfer fees
Depending on the property’s location, closing expenses may also include natural disaster certification, pest inspection, and attorney fees.
16. What If a Seller Rejects My Offer?
A seller can accept your offer as-is, reject it, or make a counteroffer. You and your agent can review a counteroffer and accept or reject it. Counteroffers can go back and forth severally, but make sure you are not wasting your time.
Do not take offer rejection personally. You can revise the terms and structure and resubmit your offer for approval. If all efforts to get your proposal approved fail, consider other sellers.
17. How Can I Save Money When Purchasing a New Home?
You can save a ton of money by shopping for a good mortgage. If you are a first-time buyer, check if you qualify for an FHA (Federal Housing Administration) loan or a first-time buyer program.
You may also consider a VA (Department of Veteran’s Affairs) loan. This loan does not require a down payment and offers better terms and interest rates than conventional bank loans.
Additionally, make sure to put 20% down on a home purchase to eliminate the need to pay private mortgage insurance (PMI). You also want to check the availability of commission rebates (home buyer rebates) in your state.
18. Why is a Mortgage Necessary?
Getting pre-qualified for a mortgage streamlines the home buying process, helping you find a home and get settled more quickly.
When you apply for a loan, the lender will review your credit history, assess how much you earn and whether you have enough collateral to secure the loan. While the exact time for approval varies, it is much faster if you have a good credit score, good history of making payments on time, and a consistent income.
19. Do I Need to Have the Property in Question Inspected?
For FHA and VA loans, a home inspection is mandatory. Other mortgage programs don't require them, but it's always a good idea to get one.
20. Is a Final Walk-Through Necessary?
A final walk-through is not mandatory, but we highly recommend it. During the walk-through, you can confirm that nothing has changed since your last visit and that the property meets your expectations from an aesthetic and functional standpoint.
21. How can a Los Angeles County Real Estate Expert Help Me Buy a Home?
Buying a new house can be stressful. Many things have to come together for you to make an offer on a property and buy it.
The Los Angeles County real estate experts can execute several house-hunting tasks on your behalf, making the process easy for you. And leveraging their unique expertise in the local housing market, real estate experts can help you make educated buying decisions and find a home that meets your needs and financial situation.
Park Regency Realty specializes in helping locals buy and sell homes in Los Angeles County. Our mission is to make your home buying or selling process fast, easy, and affordable for you while allowing you to experience the best that real estate has to offer. Call us now at 818-363-6116 to find out how you can get a personalized experience!