WORKING WITH A
STARTING THE BUYING
RENTING VS. BUYING
CHOOSING A COMMUNITY
HOME HUNTING TIPS
INSPECTIONS, LEGAL, INSURANCE
MAKING AN OFFER
CLOSING PROCEDURES AND
WORKING WITH A
What are the advantages of using a real estate professional to
help me buy a home?
Buying a home is certainly one of the most rewarding experiences
most of us ever have; it's also one of the most challenging. If
you're buying for the first time, the process may seem
overwhelming. And even if you've been through it several times,
every move is different and presents new challenges.
One clear advantage of enlisting the help of a sales
professional is simply that you don't have to go through it
alone. A good sales professional has the background and skills
to help you through each step of the process, and make the
experience of finding, buying and moving into your new home as
smooth, quick and enjoyable as it can be. Another advantage is
that a sales professional represents a valuable source of
information about market trends; communities and
neighborhoods; and especially homes for sale throughout the
area. Remember, not every home seller runs an ad in the local
paper or puts a sign up in the yard. In fact, many homes
actually sell before there is ever a need to advertise them. The
market expertise a sales professional offers you is augmented by
access to complete, regularly updated information about every
home listed by area sales professionals through the Multiple
Listing Service (MLS). As you'll see in the following
questions, such professional expertise and services can be of
considerable help throughout the buying process.
STARTING THE BUYING
Where do I begin the process of looking for a home?
The first thing you should do is to begin focusing on what
you're looking for in a home. You can start by establishing
priorities in the following three areas:
Are you relocating to a new town because of a new job or to be
closer to your current job? How will the location of schools,
shops, and transportation affect your choice of neighborhood?
How large of a home do you need? What style of architecture do
you prefer? What type of lot do you prefer? Depending on where
you move to, you may have a choice of homes in dozens of styles,
sizes, and settings.
How much home can you comfortably afford?
As you consider these issues, do a little research of your own.
Look through magazines for ideas about home styles and features.
Drive through neighborhoods that appeal to you to see what's
available. Read the real estate listings in the newspaper
to learn about current prices in the areas you're considering.
Talk to friends about the features that you'd really like to
have in your home. The more knowledgeable you become, the better
your final decision is likely to be.
Then sit down and consider carefully all the things you're
looking for in a home. The Homebuyer's Wish List worksheet later
in this section is a good starting point. When you've filled it
out, you'll begin to get a good idea of what you'd like your
dream home to be.
How do I find the right sales professional to work with?
The key word here is "right." While there's certainly no
shortage of qualified sales professionals to choose from, it's
important that you find one who can fully understand your wants,
needs and individual tastes, and whose personal and professional
judgment you respect.
Today's buyers also have more choices when it comes to choosing
the sales professional who can best represent them in a
real estate transaction. Until recent years, virtually
all real estate professionals involved in a given transaction
worked for the seller. However, a growing number of today's home
buyers are choosing to be represented by a "buyer's agent,"
who represents the buyer in contrast to the traditional
seller/sales professional relationship.
Many real estate companies throughout the
United States have both buyer and seller agencies. A sales
professional should present you with a disclosure statement
before any working relationship is created. That statement
should explain what a buyer's agent is and does, what a
seller's agent is and does, and what dual agency
means. It is very important to remember that real estate firms
are governed by laws that can vary by state. Disclosure laws
also vary by state.
How do I know how much home I can afford?
We've found that affordability is probably the single biggest
concern of today's first-time home buyers. Given the wide range
of media coverage regularly devoted to the issue, it's not
surprising that many young families wonder how long it will take
them to afford their first home.
Our advice: Don't sell yourself short. Talk to your real estate
professional. A good sales professional is committed to honestly
and responsibly working with you to determine your affordable
price range. There are many financing options available today,
and some include low down payments. Your sales
professional will help find an option that fits your budget, and
you may be surprised at just how much home you can afford.
For tips on various
more, see the "Financing" section of this site.
RENTING VS. BUYING
How does buying compare to renting?
Renting offers a lifestyle that's nearly maintenance-free. That
may appeal to you, but consider that renting offers you no
equity, no tax benefit, and most likely no protection
against regular rent increases.
If your rent has averaged $700 a month for the last 10 years,
you've spent $84,000 with nothing to show for it. Isn't it time
you invested in yourself instead of your landlord?
Several financing options hold special advantages for first-time
buyers or families with limited cash reserves. FHA-insured
and VA-guaranteed mortgages can minimize or even eliminate your
down payment. You may also consider a lease-purchase
agreement, or borrow cash for a down payment from life
insurance, profit-sharing or a retirement account.
In addition to tax deductions you'll likely receive that can
partially offset the cost of real estate taxes, insurance and
home maintenance, your home may appreciate in value. If you
purchase a home that costs $100,000 and the property increases
in value only two percent each year, your potential appreciation
in just two years is nearly $4,200. And due to changes to the
tax code, subject to certain restrictions, up to $250K (or $500K
if married filing jointly) of the profit you make when you sell
the house is tax-free as long as you own the property for a
minimum of 24 months.
CHOOSING A COMMUNITY
If commuting time is important to you, take a "test drive"
— get up extra early a few days and drive to work from the
home you're considering.
What should I think about when I'm deciding which community I
want to live in?
Good city services, nice parks and playground facilities,
convenient shopping and transportation, a track record of sound
development and good planning — these are just a few
considerations that are important to many people when they
choose a community in which to live.
As for individual neighborhoods within a village or city, there
is no better source of information than your real estate
professional. Sales professionals know the people and the
communities they serve, and chances are they can help you find a
neighborhood that really fits your family's needs.
Where can I get information about local schools?
Again, a good real estate professional is perhaps your best
source. They know where the local schools are and can provide
you with valuable information about school districts, including
test scores, extracurricular activities, bus service and more.
If you're relocating, a sales professional may even be able to
put you in touch with teachers and principals when you visit the
area. And if you want to do a little searching on your own, the
Internet may also be a good place to start. Century21.com has a
special link to neighborhood information, including information
about area school districts.
How can I find out what homes are selling for in a given
In most areas, home sales are a matter of public record — you
can get all the information you want about recent sales,
including prices and listing times, by calling the
county Recorder of Deeds.
An easier way is to ask your real estate professional. If you're
interested in a particular home, a sales professional may be
able to provide you with a list of comparables — sale
prices of homes in your area that are roughly the same size and
age as the home you're considering. Although there will
certainly be some differences between the homes — the house next
door may have an extra bedroom, or the one down the block may be
older than the one you're looking at — it's a good basis for
evaluating the seller's asking price.
How can I find out what my property tax bill will be?
Usually, the total amount of the previous year's property taxes
is included on the listing information sheet for the home
you're interested in. If not, ask to see the seller's receipt.
Remember, tax rates change from year to year, so the previous
year's bill should be considered simply as a "ballpark" figure
of what you would pay. For a more precise projection, call the
local assessor's office for assistance, or ask your real
If I'm moving a considerable distance, is there any way I can
screen homes before I start traveling?
Yes. Today's Multiple Listing Services (MLS) — which
include as much as 90 percent of the homes listed in any given
community — have made it relatively easy for buyers to access
detailed information on homes for sale practically anywhere in
Our Real Estate has taken the MLS concept into the next
generation with Century21.com, our Web site, which features
over 50,000 domestic listings. It's a powerful way for
buyers to find the perfect home. The site also includes our
International listings, allowing interested buyers to expand
their search to other countries without ever leaving their home.
Pay attention to the original listing date of the homes
you look at. Sellers tend to be more flexible the longer
the house is on the market.
Real estate listings and ads seem to have a language all their
own. What do all those abbreviations mean?
Abbreviations are a necessity in real estate advertising because
so much information must be communicated in so little space.
Some common abbreviations and their meanings:
finished lower level
master bed room/suite
finished room over garage
central air conditioning
underground sprinkler system
modern eat-in kitchen
If you run across any other abbreviations or terms you don't
understand, don't be embarrassed — after all, you don't buy a
home every day. The glossary of real estate terms in the
back of this book provides further assistance, or you can simply
contact me; they'll be happy to "translate" for
HOME HUNTING TIPS
When I start visiting homes, what should I be looking for the
first time through?
The house you ultimately choose to call home will play a major
role in your family's life. A home can be an excellent
investment, but more importantly, it should fit the way you
live, with spaces and features that appeal to everyone in the
As you look at each home, consider these important factors:
Is there enough room for you now and in the near future?
Is the home's floor plan right for your family?
Is there enough storage space?
Will you have to replace the appliances?
Is the yard the size that you want?
Are there enough bathrooms?
How much maintenance and/or decorating will you need to do right
Will your present furniture work in this home?
How many bedrooms should I be considering?
Whether you are married or not, or have kids or not, spare
bedrooms come in handy when family and friends come to stay. And
when you're not having guests, extra rooms are useful as a
library, den, or TV room.
Another good reason to choose a home with extra bedrooms: extra
space will make your home more appealing to a larger number of
interested buyers when it comes time to sell.
Is an older home as good a value as a new home?
It's a matter of personal preference. Both new and older homes
offer distinct advantages, depending upon your unique tastes and
New homes generally have more space in the rooms where today's
families do their living, like a family room or activity area.
They're usually easier to maintain, too.
However, many homes built years ago offer more total space for
the money, as well as larger yards. Taxes on some older homes
may also be lower.
Some people are charmed by the elegance of an older home, but
shy away because they're concerned about potential maintenance
costs. Consider a home warranty to get the peace of mind
you deserve. The Century 21 Home Warranty Plan protects you against
unexpected repairs on many home systems and appliances for a
full year or more after you move in.
You can assume that any appliances listed "as is" are on
their last legs.
What do I need to bring along when I'm looking at homes?
Bring your own:
Notebook and pen for note-taking
Flashlight for seeing enclosed areas
Tape measure for checking room sizes, clearances, etc.
Camera (digital or 35mm)
Be prepared to investigate a little. After all, you want to know
as much as possible about the home you buy. Sellers understand
that because their home is on the market, it will be looked over
If you need to go back to a home for another look, your sales
professional will be happy to schedule an appointment. Also,
be sure to ask any questions you have about the home, even if
you feel you're being nosy. You have a right to know, and the
serious seller will not mind making you feel more confident that
you've chosen the right house.
What should I ask about each home that I look at?
As a rule of thumb, ask any questions you have about specific
rooms, features, or functions. Pay particular attention to areas
that you feel could become "problem" ones — additions, defects,
areas that have been repaired. And above all, if you don't feel
your question has been answered, ask until you understand and
In most cases, your real estate professional will be able to
provide you with detailed information about each home you see.
What should I tell the sales professional about the homes I look
Tell the sales professional everything you like and don't like
about each home you see. Don't be shy about discussing a home's
shortcomings. Is the home too small for your needs? Let the
sales professional know. Was the home perfect except for the
carpeting? Let the sales professional know.
However, remember that there can be two types of sales
professionals involved in a real estate transaction;
those working for the buyer, and, frequently, those paid by and
working for the seller. The seller's agent is obligated
to help secure the best price for the seller. In addition,
seller's agents may also report any confidences you share with
them — including any willingness to pay a higher price should
the seller not accept your initial offer(s). This is why
you may want to be represented by a buyer's agent,
because he/she will keep your input confidential. A buyer's
agent puts the interests of the buyer — not the seller — first.
How many homes should I look at before I buy?
There is no set number of homes you should look at before you
decide to make an offer on one. That's why providing the
sales professional with as many details as possible up front
is so helpful. The perfect home may be waiting for you on your
first visit. Even if it isn't, the house-hunting process will
help you get a feeling for the homes in the community and narrow
your choices to a few homes that are worth a second look.
If you're looking in more than one community, try to make the
most of each house-hunting trip. Stop by the local Chamber of
Commerce to pick up promotional literature about the community
or ask the sales professional for welcome kits, maps, and
information about schools, houses of worship, and recreational
facilities. Also, be sure to take along a camera and snap some
pictures of all the homes you're interested in. That will make
it easier to remember and reach a decision.
HOME HUNTING TIPS
When you find a home you may be interested in buying, make sure
the sales professional asks the owner the following questions:
How much money do you pay for monthly utilities?
Have you had any problems with water or dampness in the
Are there defects or problem areas that need to be fixed right
How old is the furnace and the central air conditioning system?
How old is the roof? Have you experienced any leaking?
INSPECTIONS, LEGAL, INSURANCE
How do I know I'm getting the best value for my money?
A professional appraisal is the best way to tell if a
home is priced fairly. A real estate appraisal is an
unbiased opinion of a property's value based on its style and
appearance, construction quality, usefulness, and other factors,
including the value of comparable properties nearby.
When you apply for a mortgage, the lender will have a
professional real estate appraiser perform an appraisal of the
I'd like to have a professional look at the home before I buy
it. What does a home inspector do?
For your own safety, and to make sure you're getting your
money's worth in the home you choose, using a professional home
inspector is highly recommended. A home inspector will check a
variety of things such as your home's plumbing, heating,
cooling, and electrical systems, and look for structural
problems like a damp or leaky basement, etc.
Usually, you call an inspector immediately after you've made an
offer on a home. However, before you sign any written
offer, make sure (or have your attorney make sure) that it
includes an inspection clause, which says that your
purchase obligation is contingent on the findings of a
professional home inspector.
Your inspector will not tell you whether he or she thinks the
home is worth the money you are offering. Rather, the
inspector's job is to make you aware of repairs that are
recommended or necessary. A seller may be willing to renegotiate
a price to accommodate needed repairs, or you may decide that
the home will take too much work and money. A professional
inspection will help you make an informed decision.
In choosing a home inspector, consider one who has been
certified as a qualified and experienced member by a trade
association. Your real estate professional can refer you to
qualified inspectors in your area.
Should I be present during the inspection?
Yes. It's not required, but it is very much to your advantage.
You'll be able to clearly understand the inspection report and
know exactly which areas need attention. Plus, you can get
answers to many questions, tips for maintenance, and a lot of
general information that will help you when you move into your
new home. Most importantly, you'll see the home through the eyes
of an objective third party.
Are there any other inspections I need to have done?
In addition to the overall inspection, you may wish to have
separate tests conducted to check for insects, the presence of
radon gas, and the quality of drinking water, to name a few.
Talk to your real estate professional for information about
these tests and companies in the area that perform them.
Do I need to use a lawyer to buy a home?
Because the legal contracts and other paperwork involved
in buying a home are complex and can be confusing to the general
public, many people prefer to work with an attorney.
Your attorney will review contracts and make you aware of
special considerations and potential problems, and can accompany
you to the closing to help make everything go as smoothly
If you don't know a real estate attorney, ask your real estate
professional for help. Sales professionals work with many legal
professionals every month and can provide you with the names of
several attorneys in the community.
If your move is work-related, many of your moving expenses
may be tax-deductible.
Do I need to talk to my insurance agent?
Yes, and the sooner the better. Your real estate professional
can help you with this, but most insurance professionals have a
lot of experience in working with homeowners and can offer
useful tips about homeownership, particularly regarding home
safety and keeping your premiums low.
Once you've found a home, work with your insurance agent to
develop a homeowner's policy that meets your individual needs.
You'll need to bring evidence of a fully-paid policy for your
mortgage lender when you come to closing. Make sure you take
this step with your insurance provider as early as possible; in
many locations you'll have trouble assuming title if you
don't have proper insurance in place.
Measure all rooms for your furniture — don't try to judge
by looking at the current owner's placement. Anchor link:
Making an offer
MAKING AN OFFER
When I've found the home I like, how do I make an offer?
When you've found a special house you want to call home, you'll
probably feel excited and a bit nervous. Let the sales
professional know you're ready to write an "offer to
purchase" — a written document that declares how much you are
willing to pay for the home provided that certain conditions are
met. Because it's a legally binding contract that you
will sign and date, it may be a good idea to have a lawyer
review it, within the grace period noted in the contract.
This is the time when it is most important for you to keep in
mind that, unless you have specifically retained the services of
a buyer's agent, the sales professional is working for
the seller. As the legal agent of the seller, he or she is
obligated to help the seller get the best price, and will report
to the seller any confidence you share.
It's best to make your offer without sharing with the agent your
willingness to offer any higher price if the seller does not
accept your offer.
Your offer should have a time limit for the seller to accept it,
reject it, or make a counter-offer. If a counter-offer is
made, you will have some time to respond. Often, several offers
go back and forth until an offer is accepted, or one party
decides to end negotiations.
How do I determine the amount of my initial offer?
There is really no rule to use in calculating an initial
offer. Naturally, the buyer wants the best value and the
seller want the best price, but negotiations can be influenced
by many factors, such as a seller who may be changing jobs and
wants to sell quickly, or a buyer who is set on a specific home.
After you've looked at the home's features, asked questions,
checked comparables, and talked about it with your sales
professional, you should have a good idea of what the home's
value is in the current market. Consider what you can
afford, and make an offer that you consider to be fair.
Most buyers and sellers negotiate on price, with both sides
"giving" a little until both agree.
At that point, you typically will begin the process of arranging
for an inspection and applying for a mortgage. See
the "Financing" section of this book for more information.
What is "earnest money" and how much do I need?
When you sign an offer to purchase, your sales professional will
ask you for " earnest money." This refers to a monetary
commitment that shows you are serious about wanting to buy.
Usually, you will be asked to write a check for one to 10
percent of the sale price.
This money will be held in a special escrow account. If
your offer is accepted, your earnest money will be included as
part of your down payment. If your offer is not accepted,
you'll get back all your earnest money. But keep in mind that if
you back out, you may forfeit the full amount.
Is there any way I can protect myself against emergency repair
bills in my new home?
Yes. Home warranties offer you protection against many
potentially costly problems not covered by your homeowner's
insurance. Such warranties have become increasingly popular in
recent years, and for good reason. The coverage can save you
thousands in the event of a major mechanical breakdown at a time
when your cash reserves have been depleted by your down
payment and moving expenses. For more about home warranties,
see the information on the Century 21 Home Warranty Plan.
CLOSING PROCEDURES AND
There's so much to remember before I close. What do I have to
Your sales professional can help you with many of these
Are all the necessary inspections complete?
Are all the required repairs complete?
When will you conduct your final walk-through inspection?
Is your attorney satisfied that title to the property is
clear (no one else has a claim on it)?
Have you confirmed a date, time, and place for your closing?
Who will conduct the closing?
Is your insurance policy paid and ready to go into effect the
day you close? You'll need a receipt for proof.
What form of check should you use (and who should it be made out
to) to pay for the closing costs?
Has your closing sales professional told you the closing amount?
Do you have receipts for the items you have already paid for,
including your deposit and inspection fees?
Bring your checkbook to cover any last-minute extras that might
have been overlooked.
What should I look for on my final walk-through?
In most cases, you'll be given the opportunity to inspect the
home immediately prior to closing. At this time, it's
important to check on any work the seller agreed to have done in
response to your initial inspection. You should also
carefully check the condition of walls and ceilings from which
window treatments, pictures, or any other attached furnishings
have been removed. If you find any problems, don't hesitate to
bring them up at the closing. It's the seller's responsibility
to correct them.
What will happen on closing day?
The lender's agent will ask for your paid home insurance
The agent will list the adjustments. These include the
money you owe the seller (the remainder of the down payment;
prepaid taxes) and what the seller owes you (unpaid taxes;
You will sign the mortgage. This gives the lender legal rights
to the property if you don't make your payments.
You will sign the mortgage note (the promise to repay the
loan in regular monthly payments).
You will get title from the seller in the form of a
The lender's agent will collect the closing costs from
you and give you a settlement statement of all the items you
have paid for.
The deed and mortgage will be recorded in the town or county
Registry of Deeds.
Is there anything I should do immediately after closing?
The first thing you'll want to do is have the locks changed.
Also, put your deed and other important paperwork from
the closing in a secure place, preferably a safe deposit
box. Even though it's all on file with the county, it's smart to
know where your copies are and have access to them at all times.
Should I move myself or use a moving company?
In almost every case, you can save yourself time and energy by
using a reputable moving company to help you move.
Ask your sales professional, friends, and co-workers for
recommendations, then get estimates from several companies.
Don't choose a mover based on price alone — consider the
reputation and professionalism of the company, too.
Work closely with the moving company to coordinate your efforts
and your move will be achieved with maximum efficiency.
Can a sales professional help with the move itself?
Yes. Most sales professionals are more than willing to offer
advice and assistance to new homeowners; all you have to do is
38. Do real estate forms have to be notarized?
A: Most real estate forms must be notarized to be recorded in
the land records. Examples are deeds and mortgages. Forms that
will not be recorded generally do not have to be notarized, such
as a lease form.
39. What is the difference in a warranty and a quitclaim
A: A warranty deed assures
the buyer that the Seller will defend his title to the property
from all other persons. A quitclaim deeds conveys whatever
title the seller owns but with no warranty against the claims of
40. What is a disclosure statement?
A: A disclosure statement,
as used in the real estate context, is a form the seller of
property must complete and provide to the buyer disclosing to
the buyer all defects and various other information about the
41. What is a closing?
A: Although this term may
mean different things in different states, the "closing" is a
meeting where all of the documents are signed and money changes
42. Who is the grantee and grantor?
A: Grantee - The person to whom an interest in real property is
Grantor - The person conveying an interest in real property.
42. What is Truth-in-Lending?
A: A federal law that
requires lenders to fully disclose, in writing, the terms and
conditions of a mortgage, including the annual percentage rate
(APR) and other charges.
43. What does tenancy in common mean?
A: As opposed to joint
tenancy, when there are two or more individuals on title to a
piece of property, this type of ownership does not pass
ownership to the others in the event of death.
44. What is the Real Estate Settlement Procedures Act (RESPA)
A: A consumer protection law that requires lenders to give
borrowers advance notice of closing costs.
Beyond that, we're sincerely interested in helping make the
experience of selling your home as smooth and easy as possible.
So even if you're not ready to list your house — if you simply
have questions about the market in your area, price or mortgage
trends, or anything else about real estate as it relates
to you — just pick up your phone and call your real estate broker