FAQs & Useful Tools

The first step of the home buying process is getting pre-approved for a mortgage.  To start the process, you will need to get a pre-approval letter from a local lender. These are the reasons why you need to do this: 

1. First, you need to know how much you can borrow.  By understanding how much home you can afford, it will narrow down your online home search to suitable properties that fit your criteria; in other words, there is no time wasted considering homes that are not within your budget.  (Note: Pre-approvals are also helpful for preventing disappointment that is caused by falling in love with unaffordable homes.) 
2. Second, the loan estimate you obtain from your lender will help you understand how much money is required for the down payment and closing costs.  The loan estimate allows you to see that more time may be needed to save up money, liquidate other assets, or seek mortgage gift funds from family members. In all respects, you will have a clearer picture of what is financially required of you to purchase a home. 
3. Last, by being pre-approved for a mortgage you demonstrate that you are a serious buyer not only to your real estate agent but also to the person selling their home.  (Note: The majority of real estate agents will require a pre-approval before showing homes.)

The short answer is, to buy a home from start (i.e., searching online) to finish (i.e., closing escrow), it could take about 10 to 12 weeks depending on the market conditions (i.e., the factors that influence the housing market in a particular area).

Under normal market conditions, the average time it takes to complete the escrow period on a home is around 30 to 45 days, once a home is selected and the offer is accepted by the seller.  However, homebuyers who are well-prepared and can pay cash for their home have been known to purchase properties even faster than that.  Keep in mind that the current market conditions play a major factor in how fast homes are sold.  

In "hot" housing markets, with a considerable amount of sales activities, buying a home may take longer than normal.  When business suddenly picks up all of the parties who are involved with the transaction may fall behind.  For instance, the demand for property appraisals and home inspections increases when there is a sudden increase in home sales even though the number of appraisers and inspectors available who can perform the work remains the same. 

Another factor that can impact the amount of time it takes to buy a home is the lender turn-around time for loan underwriting.  For example, if it takes the parties involved in the transaction more time, even if it is just a day or two longer, it can slow down and potentially extend the entire home buying process. 

This is a great question! In reality, to buy a home, homebuyers pay nothing to an agent!  This is because for most home sales, there are two real estate agents involved in the deal: one that represents the seller and another who represents the buyer.  

To represent sellers, listing brokers charge a fee to represent them and market their property.  To properly market a property, marketing programs may include any or all of the following advertising expenses such as radio spots, print ads, television, and internet ads; open houses; signs; and photography.

In addition, the property is added to the local multiple listing service (MLS) database (i.e., a tool to help listing brokers find cooperative brokers working with buyers to help sell their clients' homes). Once the property is placed in the local MLS, other agents (both in the area and nationally) will be able to search and find the home for sale.  

Agents who represent buyers, or a buyer’s agent, are compensated by the listing broker for bringing home buyers "to the table".  After the home is sold, the listing broker splits the listing fee with the buyer’s agent. Therefore, buyers do not pay their agents. 

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A "buyer’s market" is distinguished by decreasing home prices and declining demand.  Like most other parts of the country, the Greater Rochester area has been in a "seller’s market" for several years in a row.  By most accounts, the last "buyer’s market" the Rochester area saw was from 2008-2009.

A "sellers’ market" or "hot market", is distinguished by an increasing demand for homes which inflates prices.  In other words, if there is a low inventory with strong and competitive buyer demand, it causes buyers to bid on homes and try to win multiple offer scenarios that are often 10-20% over list price, without a home inspection.  This is also known as a bidding war or a situation that arises when there are multiple buyers competing for the same property, which drives up the price of the home beyond what it was listed for, in order to win the home.

To buy a home, most loan programs require a FICO score of 620 or better.  When borrowers have a higher credit score it represents less risk to the lender, which results in a lower down payment requirement and better overall interest rate.  On the other hand, those who are shopping for a home with a lower credit score might need to bring a larger downpayment to the table, or else they may end up accepting a higher interest rate to offset the lender’s risk.

In 2021, the National Association of Realtors® (NAR) found the average down payment on a house or condo was just 12%.  However, this figure includes first-time as well as repeat home buyers. 

While the general down payment average is 12%, it is important to note that first-time homebuyers typically only put down 3 to 5% on a home.  This is because many first-time homebuyer programs do not require large down payments.  For example, the Federal Housing Administration (FHA) loan requires 3.5% down.  Interestingly enough, some programs allow down payment contributions from family members in the form of a gift.  Moreover, other programs require even less.  Veteran's Affairs (VA) loans and U.S. Department of Agriculture (USDA) loans can be made with zero-down.  Nevertheless, these programs are more restrictive in the long run: VA loans are only given to current or former military service members whereas USDA loans are only available to buyers who qualify as low to-middle income in USDA-eligible rural areas.  For several years, traditional loans required a 20% down payment.  These types of loans were generally taken out by repeat buyers who could use equity from their existing home as a method of down payment funds.  Yet, some newer traditional loan programs are available with 3% down if the borrower carries private mortgage insurance (PMI) (a type of insurance that a borrower might be required to buy as a condition of a conventional mortgage loan).

Your current home will naturally need to be sold first especially if the built-up equity in your current home will be applied to the down payment on the new home.  Moreover, some home buyers decide to turn their current home into an investment property by renting it out.  In that case, the current home does not need to be sold.  Nonetheless, your loan advisor will still need to evaluate your risk profile and credit history to determine whether making a loan on a new home is feasible while retaining the title to the old home.  

When buyers are relocating to a new city because of a job transfer, they often have a short time frame to sell their current home.  If you are relocating but accepting a position with the same employer, it would behoove you to check and see if they offer any relocation assistance to help offset some of the moving costs.

That is completely up to you!  The home-buying game has completely changed; luckily for you, home shopping today is much easier than in previous years!  Even before setting a foot outside the comfort of your own home, you have the unique ability to search for homes online and see pictures of homes that meet your specific criteria.  Although convenience is at an all-time high, nothing beats visiting a home in person to see how it looks and ‘feels’.

When you propose an offer on a home, your agent will ask for a check to accompany it.  In this instance, checks are the same as cash, and the deposit is typically 2% to 3% of the purchase price.  Earnest money is made in good faith to demonstrate, to the seller, that the buyer’s offer is genuine.  In other words, earnest money essentially takes the home off the market to anyone else and reserves (holds) it for you.  The check (or sometimes cash) is deposited in a trust or escrow account for safekeeping.  If a deal occurs, the earnest money is applied to the down payment and closing costs.  However, if the deal falls through, the money is returned to the buyer.  

It is important to note that if the terms of a deal are agreed upon by both parties, but then the buyer backs out, the earnest money may not be returned to the buyer.  It is vital to understand the different ways to protect your earnest money deposit.

When a written offer is generated, it should stipulate the timeframe in which the seller should respond.  A twenty-four-hour timeframe is usually sufficient.

Once an initial offer is submitted to the seller, they can either accept or flat-out reject it.  However, there is a third path that is very common: sellers can initiate a counteroffer.  It is crucial to remember that a deal isn’t dead until it’s dead.  Hence, if a counteroffer is offered by the seller, you’re still in the homebuying game.  You and your agent will just need to review the counteroffer and determine whether it is acceptable.  If it is, then approving it closes the deal immediately.  During this time it is important to understand that offers and counteroffers can go back and forth many times.  It is not unusual, and negotiations are a vital component of what realtors do as a matter of routine.  However, each revision should bring both parties closer together in the terms of a final deal.

This is another great question!  Yes!  Since purchasing a home is one of the biggest investments you will make in your lifetime, a home inspection brings peace of mind to the entire home buying process.  Nonetheless, this depends on each specific situation and property.  It is important to note that when market conditions are "hot", writing home inspections into your purchase moves your offer immediately to the end of the line, which can be risky in multiple offer scenarios.  Thus, buyers have the option to waive inspections in order to secure their offer holds a spot in the front of the line.

Although it is not required, completing a final walk-through is an excellent idea!  Final walk-throughs give buyers an opportunity to make sure that nothing has changed since their first visit.  By conducting a follow-up visit, it ensures that everything is squared away as expected, per the terms of the contract, especially if repairs were requested, as part of the offer.