Frequently Asked Questions - Drew's Got Answers

Purchasing property is exciting but can feel overwhelming. Here are ten key steps to make the journey smoother:

1. Know Your Budget
   Beyond the home price, factor in property taxes, insurance, and maintenance costs. A mortgage lender can help you assess your financial situation and estimate monthly payments.
2. Check Your Credit
   Your credit score affects your mortgage rate. Check your report for errors and work on improving your score if needed to secure a better rate.
3. Save for a Down Payment
   Aim to save 3%-20% of the home’s price. Explore down payment assistance programs
4. Research Mortgage Options
   Look into various mortgage types—like conventional or FHA loans—and decide which best fits your needs. Consulting a mortgage professional can clarify your options.
5. Get Pre-Approved
   A pre-approval letter strengthens your offer by showing sellers you’re serious and financially capable of buying.
6. Find a Real Estate Agent
   A knowledgeable agent can guide you through the market, find homes within your budget, and negotiate on your behalf.
7. Research Neighborhoods
   Consider factors like schools, amenities, and commute times to ensure the area fits your lifestyle and long-term plans.
8. Plan for Future Costs
   Beyond your mortgage, budget for maintenance, utilities, and repairs to avoid financial stress later.
9. Prepare for Closing Costs
   These can include appraisals, title insurance, and legal fees. Set aside funds to cover them in addition to your down payment.
10. Enjoy the Journey
    This is a major milestone—take time to enjoy the process. With preparation and the right team, you’ll soon find a place to call home.

The national median homebuyer typically puts down just 13%.  Homebuyers under 32 years old typically put down around 8%.  Some mortgage programs offer options as low as 3%, or no down payment at all.  While putting down 20% to avoid mortgage insurance can be beneficial if you can afford it, it’s not required.  Most buyers choose a smaller down payment, which can be a smarter move than stretching your finances to meet the 20% mark and risking financial strain. 

When it comes to deposits on home purchases, every state has its own rules, and in North Carolina, buyers encounter both an earnest money deposit and a due diligence fee. Interestingly, neither of these payments is required by law, yet they are commonly expected in most transactions. The specifics of these deposits often vary depending on market conditions, but let's break down what each one means.

The due diligence fee is paid directly to the seller, typically at the time the purchase contract is signed (or within 24 hours). It goes straight into the seller’s personal account and compensates them for taking the property off the market while the buyer completes their inspections and other due diligence. The amount is often tied to the price of the home and the length of the due diligence period. One key point to remember: in North Carolina, a buyer can walk away from the deal for any reason during the due diligence period, but if they do, the seller keeps the due diligence fee—even if something major turns up during inspections or the appraisal falls short. The only scenario where the buyer can get this fee back is if the seller breaches the contract.

On the other hand, the earnest money deposit is held by an escrow agent, which may be the listing agency or a real estate attorney. This deposit is meant to demonstrate the buyer's commitment to the purchase. If the sale goes through, the earnest money is applied toward the buyer's closing costs. If the buyer backs out during the due diligence period, the earnest money may be returned to them. However, if they withdraw after the due diligence period has ended, the seller keeps the earnest money.

Naturally, sellers prefer a higher due diligence fee, as they get to keep it if the buyer pulls out. Buyers, on the other hand, usually aim to keep this fee as low as possible for the same reason. Neither deposit is legally required, but both are common due to the current market environment.

Together, they serve to protect the seller's time and show the buyer's sincerity. This might sound a bit complex, but that’s where having a knowledgeable real estate broker comes in. A buyer’s agent is there to guide you through the process, protect your interests, and help you make informed decisions. It’s not something you want to navigate alone!

• Hire a Great Real Estate Agent
  A skilled agent can help you avoid costly mistakes, negotiate the best price, and guide you through the process.
• Boost Curb Appeal
  First impressions matter. Simple fixes like planting flowers or painting the front door can make your home more inviting and attract potential buyers.
• Declutter
  Clear counters, closets, and living spaces. A tidy home helps buyers visualize how much space they’ll have.
• Depersonalize
  Remove personal items, family photos, and bold decor to create a neutral space where buyers can imagine themselves living.
• Neutralize Paint Colors
  Opt for light, neutral wall colors to appeal to more buyers and make it easier for them to imagine their own style.
• Touch Up Scuffs
  Fix small imperfections like scuff marks and loose handles to show that the home is well-maintained.
• Fix Minor Issues
  Address any loose handles or small repairs that could raise doubts about the home's condition.
• Add Plants
  Fresh greenery and flowers can make your home feel more lively and welcoming.
• Eliminate Odors
  Get an unbiased opinion on odors. Deep clean to remove any lingering smells rather than masking them.
• Deep Clean
  Ensure your home is spotless, especially in kitchens and bathrooms. Buyers expect a clean, move-in-ready home.
• Hide Valuables
  Store away anything valuable to avoid theft during open houses or showings.
• Consider Staging
  A professional stager can rearrange or add furnishings to make your home look more appealing and up-to-date.

Real estate agents can represent parties in various capacities, and it’s essential to grasp how your agent operates and whom they represent.

Seller's Agent (Listing Agent): If you plan to sell your property, you can list it with a real estate firm and its agents. To do this, you must sign a listing agreement, which legally empowers the firm and its agents to act on your behalf. This establishes a fiduciary relationship, making you the Principal, while the Seller's Agent owes you loyalty, obedience, accountability, and diligence.

Buyer's Agent: If you’re looking to buy real estate, you can hire an agent to represent your interests. You have several options:

• Buyer's Agent: Works solely for you.
• Dual Agent: Represents both you and the seller.
• Subagent: Represents the seller while still providing some support to you as the buyer.

Dual Agent: You may choose to allow an agent to represent both the buyer and the seller simultaneously. This commonly occurs when you work with a buyer's agent who is also listing the property you wish to buy. In this scenario, the agent must balance the interests of both parties fairly. To facilitate this, firms may employ “Designated Agents,” where separate agents represent each party while still operating under the same firm.

Seller’s Agent Working with a Buyer: Remember that this agent is primarily representing the seller, so avoid sharing information you wouldn’t want the seller to know. This arrangement is known as co-brokered sub-agency. While the agent and sub-agent must disclose material facts, they still owe duties to the buyer as a third party.

In North Carolina, there are three types of agency relationships to understand:

1. Universal Agency: Grants an individual broad authority to make decisions on another's behalf, typically through a power of attorney. This is less common in real estate but may apply when family members manage a parent’s property.
2. General Agency: This type of agency has a more limited scope. A real estate agent serves as a general agent for their firm, acting within the specific role of real estate brokerage without making overarching financial decisions for the company.
3. Special Agency: This empowers an agent to act on behalf of another for a specific task. Once the task is completed or the time frame expires, the agency relationship ceases. In real estate, a listing agent typically operates under a special agency agreement, as do buyer agency agreements and property management agreements for individual properties.

The laws and regulations governing the relationships between agents and their principals are outlined in the "Working With Real Estate Agents" brochure. This resource is designed to help buyers and sellers comprehend the nature of their relationship with a real estate agent. It is essential to ask questions before engaging with an agent to ensure you fully understand the dynamics of your relationship with them.