Frequently Asked Questions
Seller FAQ's
First impressions matter in business, but especially in real estate. Anyone walking through a house or touring it virtually will be looking for ways to pass or negotiate down on the price. You must help clients make sure that the HVAC, plumbing, and electrical system all work properly. Each room should look clean and decluttered with no overt damage insight.
Getting a pre-sale home inspected is never a bad idea, especially to get your client the best price for their home. Some homebuyers will feel uncomfortable purchasing a house without seeing a home inspection. Many will often hire their own inspector. It’s better to be safe than sorry.
Once the house is on the market, it may take anywhere from four to six weeks to sell. However, if the market is fairly hot, a seller could see their house off the market within a week. On the flip side, if there is a lull in the market or issues arise such as negotiation, lack of exposure, or house conditions then the property can sit on the market for months.
The selling price of a house fluctuates depending on multiple factors. The most common ones are the neighborhood and what similar-sized houses are currently selling for. Also, look at the age and condition. Do major repairs need to be done? If so, that might lower the property. And again, the market matters. Like everything else, home prices vary depending on supply and demand. Your job as a realtor is to best inform your clients about these different factors and accurately list their house.
A public tax assessor gives the assessed value for a property. This assessment typically occurs yearly for taxation purposes. The fair market value is an agreed-upon price between a willing buyer and seller. There is usually a difference between the assessed value and market value. For homeowners, the assessed value is a double-edged sword. Because, if their annual assessed value increased then their yearly taxes will also be raised. On the flip side, when selling a house it can help boost its market value.
In a real estate transaction, the agent is usually paid by the seller via commission as opposed to a flat free. Typically, a real estate commission fee is 5–6% of the home’s final sale price. In many cases, both the buyer’s agent and the seller’s agent split the commission fee 50/50. Both receiving 2.5–3%. As a broker or agent, you can use this easy to use real estate commission calculator to determine your commission fee. Also, know that some real estate agencies will work at a discounted rate of around 3% or for a flat service fee. The discounted rate and flat fee can be cheaper, but can also result in a lower quality of service.
Yes, almost everything in real estate is negotiable. Typically, there is a difference between a home’s list price and how much it actually sells for. The current market’s saturation will determine how much wiggle room there is for negotiation. If you’re on the buyer’s side, expect the house to be able to be purchased for less if there is a lower demand than supply in the market. Vice versa, if you’re on the seller’s side expect it to usually sell for less. That being said, you never know who else is house hunting. Sometimes people will swoop in and offer the exact asking price.
Early spring and summer, especially June, is a great time to sell a home.
Research shows that home sales in May, June, July, and August account for 40% of total annual sales volume.
Overall, home sales are still pretty good through early fall, so it wouldn’t be a bad idea to sell a home during this period, either.
However, home sales drop once winter hits. January is the worst time to sell a home, as market activity is much lower.
Whether or not you should buy a new home before selling your existing home is a personal choice.
Having a new home lined up gives you peace of mind when selling, and you can move out on your own time.
It also prevents you from lining up temporary housing (and having to move twice), which can be a pain.
That said, you may get stuck paying two mortgages at once. This can be a problem if your sale takes longer than expected.
You can also feel rushed into quickly finding a house instead of waiting for a better deal.
A real estate agent has an in-depth knowledge of the area and how your home compares to others on the market.
They’ll have a good idea of how much you can get for your home and ways you can improve its value.
When it’s time to list, they’ll make sure your home’s priced just right, helping to maximize your offers and sell your home faster. They’ll also take care of all the paperwork, market your home, and coordinate open houses.
Real estate agents aren’t just helpful during the listing process, though. They offer a network of professionals throughout the entire selling journey.
You’ll have connections for everyone you need, whether that’s a closing agent or quality listing photographer.
You may want to pay for your buyer’s closing costs if it allows them to make a better offer or helps the sale close faster.
Usually, paying for these costs comes in the form of a credit the buyer uses during closing. A buyer might put this credit toward:
Loan origination fees | 1% of the loan value |
Mortgage application fee | $25–150 |
Appraisal fee | $300–1,000 |
Points on mortgage | Varies |
Wire transfer fee | $10–50 |
Flood certification fee | $15–25 |
Private mortgage insurance application fee | Varies |
Lender-required home inspection fees | $300–1,000 |
Credit report | $30–50 |
Survey fee | $85–600 |
Prepaid homeowner’s insurance, mortgage interest, and property taxes | Varies |
Lender title insurance | Around 0.1% of the home sale price |
Mortgage transfer taxes | Varies |
Buyers may be able to put in a higher offer if there’s less money for them to pay upfront.
Paying their closing costs can also reduce the amount they need to take out in a mortgage, making it more likely they’ll qualify for the loan and the sale will go through without a hitch.
Additionally, if your house has been on the market for a while, offering to pay for a buyer’s closing costs can attract more offers and speed up the closing process.
Finally, if the inspection reveals small issues the buyer might want to repair, offering to pay the buyer’s closing costs can make them feel more comfortable going through with the deal.
The best way to save money when selling a home is to negotiate your realtor’s fees.
Sellers usually pay 6% in fees, with 3% going to the seller agent and 3% going to the buyer agent.
If you don’t want to test your negotiating skills, you can just use Clever to get your seller agent fees down to 1% or $3,000. Our large network of top-rated agents provide the same services you’d get with another agent, just cheaper.
You can also save money by trying to sell your home on your own to completely eliminate the seller commission.
But this isn’t recommended unless you have extensive experience and knowledge in the real estate industry.
That’s because selling a home involves a lot of complicated legal paperwork. An agent knows how to handle all of this so you don’t land in legal trouble.
One alternative is hiring a lawyer to take care of paperwork. However, they don’t come cheap (budget about $1,000-1,500 for the service), and you’d still need to manage your listing and coordinate showings and negotiations.
Selling a home requires some marketing know-how. Agents regularly handle the hassles of advertising and showing your property to potential buyers. And they alone have access to the multiple listing service (MLS), a local database of homes for sale. This allows them to list your home on all of the major listing sites.
If you’re selling your home on your own, you can use a flat-fee MLS company to get your home in the database and even post your listing to all the top real estate websites.
How much you actually get when selling your home depends on a lot of factors, but in general, expect somewhere between 90–92% of the sale price.
That usually includes 5–6% in realtor commissions and 2–4% in taxes and fees.
If you still owe money on your old mortgage, you will get less.
You’ll also get less if you agreed to pay for any of the buyer’s closing costs.
Buyer’s closing costs can add on another 2–5% of the sale price.
On closing day, your closing agent will distribute the funds to all the necessary parties. They’ll pay out your profits via a check or wire transfer.
Sellers usually pay about 8–10% of the total sale price in closing costs. Of that, 5–6% is realtor commission.
The rest is a collection of various other costs, including:
Title search | $150–400 |
Title insurance | $1,000–4,000 |
Escrow fee | 0.5% of the final sale price |
Transfer tax | Varies by state |
Prorated property taxes | Varies based on your local rates and when you sell |
If you decide to pay part of your buyer’s closing costs, you may end up paying a bit more. They can range anywhere from 2–5% of the sale price.
Buyers FAQ's
The absolute first step for your client is to get approved for a mortgage. Without being approved for a mortgage it will be quite difficult, if not impossible, to purchase a new home. If a potential client reaches out to you, have them go through the tenant screening process and then guide them to a reputable mortgage corporation and advisor that you trust.
This is a tricky question, and the answer primarily depends on one’s funds and ability to find temporary housing. If a client needs more equity to purchase a new home or meet a mortgage plan, then it is best to sell one’s current home before purchasing their next one. That being said, they will most likely need temporary housing at a friend or relatives, or by arranging a short-term rental elsewhere.
Yes, either order a home inspection for your client or have them order one. A home inspection is one of the most vital steps when purchasing a property. A professional inspector has a keen eye for how well the house has been taken care of. The inspectors can comment on structural and cosmetic issues, along with any local code issues. Moreover, a home inspector will help you better determine the home’s value.
A final walk-through is not required but highly recommended. Final walk-throughs give buyers a chance to make sure nothing has changed since their initial inspection or previous visits. Also, if repairs were requested as part of the sale offer then a follow-up visit ensures all repairs are done according to the agreement and contract.
Earnest money is similar to a deposit when renting a place. It is made in good faith to demonstrate to the seller that the buyer’s offer is legitimate. As a real estate agent, you should ask your client for the earnest money as a deposit in the form of a check or cash. The amount is usually 1-2% of the selling price and essentially takes the property off the market. The money also gives the buyer extra time to conduct a title search, get an inspection and property appraisal, and financing.
The number of houses your client wants to view can depend greatly. However, it is much easier today to connect with your clients virtually. You can now see houses online by taking virtual tours or seeing detailed photographs. So, you can help your client by giving them access to your online systems so that they can view as many properties as they desire. Once a list is narrowed down, you can visit properties with them or on their behalf.
Yes, but you may lose earnest money (basically, a security deposit given to the seller upon signing a contract).
You can also face legal consequences if you back out of the agreement for a reason not outlined in the purchase agreement. This document outlines important details, such as repairs the seller is responsible for and contingencies of the real estate deal.
However, there are certain scenarios where breaking a purchase agreement is understandable. If you lose your job, can’t sell your current home, or can’t get approved for a mortgage, it’s best to wait until you reach financial stability before buying.
Other issues with the home, such as a failed home inspection, unrepaired problems, or difficulty with transferring the title, are also acceptable reasons to back out of an agreement.
If your client gets cold feet about a property that is okay. Sometimes, they have second thoughts or want to go in a different direction. Know that your client will have to forfeit the earnest money, which again, is around 1–2% of the home’s sale price.
A mortgage is a type of loan to finance a property. The majority of people are not wealthy enough to purchase a house in total. Thus, a mortgage serves as a secure loan that comes with a fixed interest rate and gets paid off over 15 or 30 years. If need be, your client can refinance their mortgage and payments in the future.
An escrow is a term that refers to a neutral third party hired to handle the exchange of money, property transaction, and related documents. The escrow holds the money and documents in a trust until all terms and conditions of the sale are satisfied. When depositing the earnest money, it is wise to use an escrow account.
If you are still unsure about some of the terms used, check out this terms guide for real estate professionals. With your newfound knowledge, you are now ready to close some deals and help make your customers’ homeowning dreams come true!
In 2019, it took buyers an average of 4.5 months to choose a home and make an offer. The buying process itself, which begins when an offer is accepted, takes about 30-45 days to finalize.
However, several factors can affect the buying process, including the property’s location, buyer demand, economic trends, and other variables. Before closing, you’ll also need to::
- Order a home inspection
- Get an appraisal
- Conduct a title search
- Finalize mortgage details
- Review closing documents
To speed up the home buying process, connect with a top real estate agent in your area. A knowledgeable agent can help you narrow down your options and negotiate with sellers on your behalf.
It depends whether you’re searching for the lowest prices or the greatest variety of options. According to a 2016 analysis, April is the most popular month for new listings, whereas November is the best time to find a good deal.
August seems to be a happy medium, offering both low prices and a wide selection of homes.
Since many sellers are eager to close deals before summer ends and school begins, buyers can expect to see plenty of price reductions in August. In 2016, for example, 15.1% of sellers reduced their listing prices before autumn. At the same time, 448,000 new homes were added to the market.
Closing costs usually fall between 3–5% of the home’s sale price. In 2020, the national average for closing costs was $6,087, including taxes. This payment covers several necessary items for the buyer, including:
Loan origination fees | 1% of loan value |
Mortgage application fee | $25–150 |
Appraisal fee | $300–1,000 |
Points on mortgage | Varies |
Wire transfer fee | $10–50 |
Private mortgage insurance application fee | Varies |
Lender-required home inspection fees | $300–1,000 |
Credit report | $30–50 |
Survey fee | $85–600 |
Prepaid homeowner’s insurance, mortgage interest, and property taxes | Varies |
Lender title insurance | Around 0.1% of home sale price |
Mortgage transfer taxes | Varies |
Depending on the location, closing costs might also include real estate attorney fees, pest inspections, or natural disaster certifications.
Buyers can negotiate with sellers about who should be responsible for covering the closing costs, but be aware of seller contribution maximums. These guidelines limit how much a seller can pay for closing costs based on your mortgage type.
You can check if you’re eligible for financial programs or loans available through the FHA (Federal Housing Administration) or the VA (U.S. Department of Veteran’s Affairs). If you’re a first-time buyer, for instance, you may qualify for an FHA loan or a home buying program.
If you meet the criteria for a VA-backed loan, you might not have to make a down payment on a home. You’ll also receive better terms and interest rates compared to most traditional bank loans.
For additional ways to save, financial experts recommend saving up for a 20% down payment on a home. Doing this will ensure that you won’t have to pay for private mortgage insurance, which can cost anywhere from .3% to 1.2% of a loan’s principal balance every month.
Lastly, home buyer rebates (also known as commission rebates) are currently available in 42 states and could potentially save buyers thousands. With a home buyer rebate, the real estate agent or broker shares a percentage of the payment they receive at closing with you, so you get some of your money back.
Title insurance protects homeowners from claims against their home that happened before they purchased it, such as a prior owner’s failure to pay taxes or fairly compensate contractors.
If you have title insurance, you’ll be covered for legal fees or title disputes that may come up during your time as the homeowner.
There are actually two kinds of title insurance:
- Lender title insurance is usually required when selling a home. This type protects the lender from any claims made on the house.
- Owner title insurance is completely optional, but paying this one-time fee will protect you from unexpected issues with the home’s title for as long as you own the house.
Purchasing both insurance policies is usually a good idea, and the combined cost is only about 0.5% of the home’s purchase price.
If you can get pre-approved for a loan, it can help speed up the underwriting and buying processes, getting you into your new home sooner.
During the underwriting process, loan underwriters will review the “3 Cs:”
- Your credit history
- Your capability to repay the loan
- Collateral
If you have a positive history of making payments on time, a good credit score, and a consistent income, the turnaround time can take just a few days.
Once a lender approves your loan application, you will be “clear to close.” After this, your agent will have you sign closing documents, pay the down payment, and transfer the home’s title to you!
A buyer’s agent can help you find homes within your budget, schedule visits to houses you like, and negotiate with sellers. Top real estate agents have in-depth knowledge about your area and can save you time and money by narrowing down your best possible options.
Real estate agents also have access to the multiple listing service (MLS) database, which can help you find homes in popular locations before other buyers. Since realtors are plugged into the local market, they might even hear about potential properties before they’re officially listed!
Buying a home can seem overwhelming and confusing, but an experienced real estate agent can put your mind at ease. Clever can connect you with some of the best local agents at reduced rates to help you find the perfect home without breaking the bank.
Mortgage FAQ's
A mortgage is a loan that a lender extends to a home buyer to help finance the purchase of a property. The monthly mortgage payments are made up of:
- Principal – the amount that goes towards the equity;
- Interest – the rate you are charged to obtain the loan;
- Insurance – if your down payment is less than 20% of the purchase price;
- Taxes – calculated based on the property’s value.
The purchased house acts as collateral in exchange for the borrowed funds.
There are various options out there in the world of mortgages:
- Fixed-rate mortgages– The interest rate on a fixed-rate mortgage remains constant throughout the term of your loan, which means your payments will always be the same. You lock into a specific interest rate, which will not change until the term is up. The amount you pay towards interest will be large at first, but will gradually decrease as you make payments. This option is generally favorable if the current rates are low.
- Adjustable-rate mortgages– The interest rate on an adjustable-rate mortgage will fluctuate, which means the interest portion paid on your monthly payments will change.
- Government-insured loans– These loans are insured by the government, and typically include FHA loans and VA loans.
- Conventional loans– These mortgages are not guaranteed by the federal government.
It is possible to lose your home if you continue to fail to make your regular monthly mortgage payments. Even just one missed payment technically means you are in default. If this happens, the lender typically will allow a 15-day grace period to allow you to make up for the missed payment(s).
Once the lender chooses to note the mortgage as being in default, a Notice of Default will be filed with the county recorder. If the lender does not get a response from you, and still doesn’t receive the missed payment, the foreclosure process can begin as early as three months after the first missed payment. A lawsuit is filed, and notice is given about the lender’s intent to sell the home. After about six months following the first missed payment, the lender can sell the home and notify you of your obligation to vacate the property.
This will depend on the terms of your mortgage with your lender. Typically, lenders will allow extra payments to be made to shorten the life of the mortgage. There are also options to put down a lump sum once a year to put towards the principal of the mortgage, though the limit of this amount will depend on the lender and your specific mortgage contract. Some lenders charge a penalty fee for early mortgage repayment, so it’s important to check first before making a larger payment.
Usually, the answer to this question is yes. The faster you pay off your mortgage, the less interest you will have paid at the end of the mortgage term (use our early payoff calculator to get the sums). Paying a mortgage off faster can translate into tens of thousands of dollars saved, depending on the interest rate and the loan amount. For instance, a $200,000 mortgage at 3.5% paid over 30 years will cost $123,312 in interest over the life of the mortgage. Shaving 10 years off the mortgage lifespan will cost $78,381 in interest, a savings of $44.925.
However, many homeowners choose to hold onto their mortgages if they have a low-interest rate, and put their money towards higher-interest investments. If, for example, money is placed in an investment that pays out 7% per year, it might make sense to keep the mortgage ongoing while using capital to earn more money on higher-interest investments.
The interest you’ll be charged will depend on a number of factors, starting with the current rate being offered by the lending industry. As of this writing, the interest rate for 30-year fixed-rate mortgages is 3.62%. However, your credit score and financial history will play a key role in what your lender charges you on your mortgage.
Borrowers with a high credit score and solid financial positions will typically be offered the lowest rate. But those with poor scores and volatile financial histories will often be charged much more. This is because lenders will want to protect themselves against the higher risk of mortgage default.
Yes, but the number of mortgages that you take out will depend on the loan program. It’s not against the law to have too many mortgages, but you’ll be paying for these services with higher interest rates and fees. Many Americans take out additional mortgages to finance other properties, such as vacation homes or investment properties.
Yes. Many Americans take out second mortgages in order to free up equity in their homes to be put towards large purchases, such as university tuitions or major home renovations. They might also take out additional mortgages to consolidate debt, or cover part of the down payment on the first mortgage in order to avoid property mortgage insurance (PMI) requirements.
This will depend on the term of the mortgage that you agree to. The average mortgage term is about 25 years; however, it can typically range anywhere between 10 to 30 years. The shorter the term, the higher the monthly payments will be.
However, shorter terms also mean much less money goes towards the interest portion of the loan, which can translate into significant savings. Of course, the term you opt for will depend on how comfortable you’ll be at making mortgage payments. If you can realistically only afford a smaller amount, then a longer term may be best.
Yes, which is why it’s wise to shop around from one lender to the next. There are hundreds of different banks and lenders that compete with each other to offer eligible borrowers the lowest rate and best terms. May of the mortgage packages offered by various lenders are entirely unique. What may suit one borrower may not necessarily suit another. Of course, your credit health and financials will play a role in what various lenders will offer you.
That depends on how low your score is. Typically, anyone with a score under 520 will likely be denied a conventional mortgage. However, there may be private lenders out there willing to extend a loan for those with a lower score, although the interest rate charged will be very high.
Generally speaking, the lower your credit score, the higher interest you’ll be charged, if you get approved. Lenders need to protect themselves in the event of a mortgage default. They typically see borrowers with a low credit score as being less likely to be capable of making payments in full and on time, which is why a higher rate is typically tacked onto riskier mortgages.
Yes, depending on your credit score and financial history. With 100% home financing loans, there’s no need to put a down payment towards the purchase. New and repeat buyers may be eligible for 100% financing through various government-sponsored programs.