San Diego Real Estate Group

F.A.Q.

Home buyer or home seller, there are always questions that you need answered.  We’ve recorded a few here, and the answers we give to buyers and sellers.  Of course, every situation has its own unique characteristics, so we’re here to answer them again just for you.

• Is it the right time to buy a home? – For some people, it’s never the right time, and for others it could be the perfect time.  Down or up markets aside, if you need to relocate for a job, or if you must upsize or downsize, shopping right and negotiating well will usually make your purchase the right thing.
• Is it the right time to sell my home? – In markets where buyers are scarce, and/or inventory is high, it’s usually not a good idea to list your home unless you have to.  If you must relocate for work, unless you can rent your home out and handle another payment elsewhere, you should probably list it for sale.
• Is renting better than buying? – There are a number of Internet and published sources of “indexes” that calculate what’s called a “rent-vs-buy” ratio.  At times, many areas can have a ratio that shows it’s cheaper to rent than to own.  Of course, if you want to be secure in your home, not be forced to move due to a sale, and you want to modify your home to your desires, then owning is always better.
• Which is better, a new home or an existing one? – This is almost always a personal choice decision.  Yes, sometimes builders will be offering great deals, down payment credits and other incentives.  Those may sway you toward a new home.  However, if you can find the amenities and features you want in an existing home, you can get a more established neighborhood, and make changes to get the amenities that it may not have when you buy it.
• What is a CMA? – It’s short for Comparative Market Analysis.  A real estate agent does one or more of these for home sellers to compare their home to others recently sold and currently listed in order to come up with a listing price.  They’ll also do one for some buyers to help them to determine the best price to offer for a home.
• Should I buy a foreclosure? – For cash buyers, foreclosures can represent good value.  However, if you need a mortgage, it can make it very difficult.  Most foreclosures need extensive repairs, and lenders don’t want to give you a mortgage until they’re all done.  You can’t do them before closing, so it usually makes it a no-can-do situation.  If it’s a foreclosure in ready-to-buy condition, the bank knows what it’s worth, so you’ll not get a deep discount to value.
• Are there better areas to buy? – There are always neighborhoods, subdivisions and areas more preferred by buyers.  Whether it’s because of nearby employment or recreation, these areas are always in demand.  This usually means better and easier resale as well.  However, you should buy based on your life needs and preferences, and make area a secondary choice.
• How long before I can get my money back out of a home? – Gone are the days of double-digit annual appreciation.  You should expect to hold your home a minimum of 5 years, more like 8 years before you’ll get your costs of sale out of it, and maybe even some appreciation.  Of course, real estate is local, so your area will have its own appreciation characteristics.
• What’s the right listing price for my home? – The fast answer to this question is that it’s the price at which your home will sell at or sooner than the average DOM, Days on Market, for homes in the area.  However, it’s something you should discuss thoroughly with a real estate agent.
• What is a buyers’ and a sellers’ market? – Most people consider it a buyers’ market when there is a high inventory, demand is low, and buyers can negotiate better prices.  A sellers’ market exists when there is high demand, and homes are selling quickly.  Sellers can list at higher prices and their homes sell faster due to competition among buyers.
• Where is the best place to get a mortgage? – After the mortgage crisis starting in 2007, it became much more difficult to get a mortgage.  Higher down payments and credit scores are now required.  Going straight to one of the major lending banks is direct and usually carries lower fees, however you may do better going to a mortgage broker who represents those banks, but other lenders and underwriters as well.
• As a seller, is there a way to help a buyer with financing? – Depending on the lender the buyer is using, there are ways that sellers can help.  Sometimes paying part of the buyer closing costs is allowed.
• Are there any loans around with less than 20% down? – There certainly are.  They’re tougher to get, but the FHA is still allowing loans with 3.5% to 10% down.
• What does DOM mean? – It’s Days On Market.  It represents the number of days that a home has been listed for sale.  In some MLSs, there are two numbers.  When a property is taken off the market without selling, and relists within a certain period, there will also be a CDOM, Cumulative Days On Market number that shows the entire time it has been for sale.
• What length of time is excessive for a home to stay on the market? – This is very much related to the location and area.  In vacation home markets, the time homes stay listed can be 3 to 5 times longer than in subdivisions where people are moving in and out related to their family size and jobs.
• How are inspections handled? – Once the buyer and seller agree on a selling price and have a contract, the buyer will contact home inspectors and schedule inspections.  Once these are done, reports are prepared for the buyer to make decisions about what to ask for from the seller.
• How are repair negotiations handled? – Depending on the state, a form is completed that outlines the problems with the property, and the buyer can ask that the seller make some or all of the repairs.  The seller can refuse, comply, or partially comply.  It’s a second phase of negotiation.
• What is title insurance? – You have certain rights in owning property.  Title insurance covers your ownership, and will defend you against covered threats to your ownership rights.
• Are all surveys the same? – In most states, there are two types of survey-like procedures.  One is a survey in the normal sense.  The other is less complex, relies on previous surveys for information, and is done for the benefit of the title insurance company to issue coverage for the buyer.  It doesn’t carry the same warranties from the surveyor, and can’t be used by the buyer for other purposes, but it’s also faster and a lot less expensive.  These are usually called either Improvement Location Reports or something similar.
• What marketing do brokerages do for listings? – Every brokerage is different, but the vast majority do print marketing in newspapers and homes magazines, their own website, syndication to many other sites on the Internet, and direct mail.
• How does the MLS work? – The MLS, Multiple Listing Service, is a cooperative association formed by real estate brokers in an area.  They list their sellers’ properties on this MLS with an offer to cooperate with a commission to other member brokers or their agents if they bring a buyer for that listing.  The seller normally agrees to a percentage amount for listing with the broker, and the common share to a buyer agent is 50% of that commission amount.