You are thinking of buying a Los Angeles home and probably have a ton of questions. Let me make things a little easier for you by addressing some of the most frequently asked home buyer questions. Hopefully, these will answer most of yours:
Q: How do I start my search for a home?
A: The very first thing you need to do is talk to a lender. You may think you know how much you can afford but you will not really know until you have had a professional go over your finances. And as soon as you have decided you want to buy a home be careful with those finances. Don’t open or close any accounts and limit your spending. Once you have established your buying power you will be ready to start looking.
Q: How do I find a home to buy?
A: There are many ways you can find a home. You can search the internet, drive around looking at signs and call each agent, or visit open houses. But the easiest and most efficient way is to hire a Los Angeles real estate agent. Their services are at no cost to you and they will have access to every property on the Multiple Listing Service (MLS), which is the bible of home search. That is the most updated information you will find. An agent can make the home search process so much more pleasant. Making appointments to view multiple properties alone is no small task.
Q: What happens when I find a home I like?
A: You are ready to make an offer but are not sure what you should offer. Is the home priced right? How much less can you offer? This is where using a real estate agent is going to be invaluable. Your agent will have researched the sale of comparable homes (similar condition, size, area, etc.) and determined the market value of that home. And especially in this sellers’ market they will advise you how best to sweeten the offer. In a multiple offer situation their advice can make the difference between getting your offer accepted or losing out to another buyer.
Q: What is a counter offer and do I have to accept it?
A: A counter offer means that the seller is willing to negotiate with you and is setting additional terms, an increase in your offer price most probably being one of them. You can agree to the new terms or do nothing. You are under no obligation to respond. Often you will be in a multiple counter situation which means that other buyers are involved. So if you are interested you will at this point need to present your best offer.
Q: What happens after my offer is accepted?
A: The day the contract is agreed to by both parties the clock begins. All timelines start from that date. Escrow will be opened and within three days you will need to put in your earnest money deposit, usually 3% of the purchase price. This is another reason to be represented by a Los Angeles real estate agent. They will keep you on track and work with you to meet all the timelines.
Q: Do I have to have a home inspection and who pays for it?
A: You, the buyer, are responsible for your own inspections. The seller generally will be asked to pay for a termite inspection and repair, but if they are unwilling to do so then this will be at your discretion. An average home inspection will be around $375 and is paid to the inspector upon completion. You should be present for the inspection, at least at the end to ask any questions you may have and to receive a verbal overview. Whether you have further inspections will depend on the findings of the home inspector.
Q: Who pays for the appraisal?
A: The buyer pays for the appraisal.
Q: What happens if the property doesn’t appraise?
A: You basically have three options: you can ask for a price reduction, you can pay the difference out of your own pocket, or you can cancel the contract, since you will have an appraisal contingency in effect. Sometimes a seller will request that you waive this contingency. If you are getting a loan this is not advisable to do so under any circumstances. The beauty of cash buyers is that they generally waive the appraisal, but they run the risk of overpaying for a property.
Q: What if I change my mind and want to back out of the contract?
A: Once all the contingencies are removed such as inspection, loan and appraisal, then if you back out of the purchase you run the risk of losing your good faith deposit, unless something unforeseen happens to the property. Prior to that, then if you find something that you can’t live with, then you can cancel the contract. However, a major purchase of this kind should not be entered into lightly.
Q: When do I own the home and when can I move in?
A: You will be able to move into the home once title changes hands on the day of recording. This is usually the day after the loan has been funded.
Of course there are going to be several more questions you have an you can read more about the buying process here.
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