The Twelve Most Common Connecticut Homebuyer FAQS

Are you ready to buy a home, and have a few questions? It doesn't mean that you are naive if you have questions about the home buying  process and experience, and it doesn't matter if you have bought a home before or not. Conditions change, parameters change and the economy changes. There are many questions about the home buying process that are very common  for first time buyers to ask,  as well as anyone who has ever bought a home before.

How long does it take to buy a home?

You can expect the process to take anywhere from 45-60 days on average from the day you negotiate your home purchase. The time involved has mostly to due with fulfilling various contingencies and obtaining a mortgage.

How much should I spend for a house? How much can I afford?

The answer to this question is directly correlated to your income, your debt, and your liquid assets. You may have heard a few rules of thumb, such as purchasing a home between 1.5 and 2.5 times your annual income,  Other "rules of thumb"  say that you should spend roughly one quarter of your monthly income on a mortgage.

In general, your monthly prinicpal interest, taxes and insurance payment should not exceed 28 to 29 percent of your monthly gross income. Your total debt payments (car payments, credit card payments, etc. plus the monthly mortgage amount) cannot exceed approximately 36%-41% of your gross monthly income. The calculations can differ depending on your credit score, and the amount of time the current debt has to be satisfied  It's best to get initially pre-qualified from your real estate agent and ultimately through a lender.

What's the minimum downpayment that I need to buy a house?

Government backed loans are  available with as little as a three and one half percent deposit.  As a note, there are income and price parameters that must be adhered to within your area.

Should I buy a foreclosed home?

You can certainly save a lot of money on purchasing a repossessed home,  just be ready for the length of time it takes to come to an agreement with the bank, the additional paperwork necessary, and the deferred maintenance that will most likely need to be addressed at that particular property

How many houses should I look at before I buy?

 You can look at one, you can look at one hundred. The best thing for you to do is to have a good idea as to what your wants and needs are. When you see a home that "speaks" to you, whether it's the first home, or the tenth home, listen to what your heart tells you. Further, if your agent asks you enough questions, you may only need to see less than a dozen or so homes before you very comfortably find "the one".

How much should I offer for a house?

There is no simple answer to that question, since each property truly stands on its own, and  has its own unique set of circumstances.  Just as a seller obtains a market  analysis on a home, you should also receive one for the home that you want to buy. The analysis will help you decide what to offer, based upon list price to sales price ratios and comparable sales.

How do I know if I am spending too much for the house that I want to buy?

A market analysis  completed by your agent will tell you how much the home is worth, but ultimately it is worth what you are willing to pay, and what the bank is willing to lend you if you are getting financing. If the appraisal as commissioned by the bank does not equal your agreed upon price with the seller, the bank will notify you and you can either renegotiate or walk away from that house. It's a wonderful third party check on value.

How do I know if I am getting a good deal on a mortgage?

You must compare loan packages. There is just no way around it. Shop for rates, but do not give out your social security number to various lending institutions, as it will lower your credit score and raise your interest rate. Obtain your score from one  lender and use that  number to shop around. Make sure you add up all the fees  to compare apples to apples when you shop.

Do I really need to use an Agent to buy a house?

I would highly recommend it!  Buyer Agency contracts are generally  written with the proviso that the agent will obtain their fee from the seller. In that case, there is no cost to you to have an expert and advocate on your side, who is bound by law to hold a fiduciary responsibility to represent your best interests . 

Should I sell my current home first?

Although this will differ for some homeowners for  various reasons, generally speaking you should get your home under deposit first,  in either a buyers market or a sellers market.

Do I really need a building inspector?

YES! Unequivocally yes.  A home purchase tends to be emotional, and you may unconsciously overlook issues  even if you are very well versed and knowledgeable about homes, their components, and construction.

How much will my closing costs be?

Figure your closing costs to top out at about four percent of the mortgage amount, and we can work on shaving that number down depending on whhat time of year you close, what day of the month that you close, and what type of mortgage you obtain.

Just one closing thought (pardon the pun)  If you get the jitters the night that you put your offer in on your house, try and relax. It's absolutely normal.  It doesn't mean that you shouldn't buy that particular house. It's a big decision and having a  little anxiety as to whether you have done the right thing, or  whether or not the bank will approve your loan is quite normal- just try and relax.

If it makes you feel any better, I have been in real estate for 27 years, and every time I purchase a home I even get a little anxious. You would think that helping buyers for this amount of time would make me immune to that. It doesn't.  So yes, I've been there. I understand how you feel. Get a good nights rest and it will be okay, I assure you. If you happen to be one of my future clients,  remember-I am always there for you.

When you are ready to buy a home, contact me. I'm there start to finish ....and beyond.

If you have a question about buying or selling Real Estate in Fairfield County, and are in need of representation, I invite you to contact me, and if you have an idea for a topic that you would like to see on The CT Realty Blog, please include it in the "Post a Comment" section link below this post. We appreciate the feedback and look forward to providing you with the best real estate content, advice and service in Fairfield County, Connecticut.

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What does the seller have to do after an offer has been accepted?

Congratulations! You've just accepted an offer on your home, and signed the binder. Now what?
First things first, your agent should let you know what you need to do at this point. Your agent and your attprney take it from here, and call you when they need you, or to give you updates on what is going on behind the scenes on your behalf.

Here's what occurs behind the scenes when I represent a seller whose property has just gone under deposit.  I suppose (and hope) it's the same for the agent that is representing you.

The Listing Agent makes sure that everyone involved in the transaction haas a copy of the fully executed and properly filled out binder paperwork, along with the necessary disclosures. That includes you as the seller,  your attorney, and the buyers agent representative.

If you have been making the appointments for agents to show your home, your agent should advise you the moment you have accepted an offer as to how to proceed  with making further appointments. You should not be fielding any calls from Realtors now.  Let your agent handle that. This is a bone of contention with me -personally, I do not believe in homeowners making their own appointments with other agents to show the property. I consider that as part of my services, and one less burden for the homeowner to bear while their home is on the market. Additionally, I always know how many showings there are at any given time, I can talk up the property to the agents before they show it, and build a rapport with the showing agent, if I don't already know them.  NOT ALL Listing agents will make  appointments, so ask when you hire that agent.

The listing agent reports your property's status to the MLS.  Most Multiple Listing Services have rules as to when the property must be reported as under deposit, or the agent will get fined. Our area MLS requires a status change to CTS within 48 hours of an accepted, fully executed offer.

For the sake of this article. I am assuming that you have already chosen your new home, and know where you are going.  At this time, you should be getting moving estimates, and start packing.  Go ahead, get at least four or five estimates, They can vary greatly.

The buyers agent contacts the listing agent to coordinate the building inspection's date and time.Your agent will call you  as soon as an appointment has been set to confirm it with you. Now, there is something to do! Make sure that the inspector can get to the major components of your house, and they are not blocked by furniture or various stored items. For example, if your  electrical panel, furnace, or attic has access blocked by any items, you should move them prior to the inspectors arrival.

Also, if your home is going to have a radon test, your windows and doors should remain closed for 48 hours prior to the test, and another 48 hours while the test is underway. Entering your home and leaving your home like you normally do is no problem, but the windows will need to remain closed. If you like to leave the front door or back door open, you will have to remember to leave both of those doors closed during this period.

If you have any manuals for any appliances or components that are remaining with the house, leave them out for the inspector.  If you have a record book of any work performed on your home, leave it somewhere where your agent ONLY can see it, and refer to it if necessary.

Last but not least regarding the inspection,  vacate the premises, but be available by phone to your agent if the buyers, buyers agent, or building inspector has any questions.

As a listing agent, I expect that the buyers agent will remain in the house during the entire inspection,  and I tell them so. Believe it or not, it's not always a given. I also stop by during the inspection to introduce myself to the buyers on your behalf, and to  get a "read" on the buyers, and how the inspection is going. I do respect the buyer's and the buyers agent privacy, so it will only be for a few minutes. I will be in touch with the buyers agent later in the day to see if there were any concerns that we should know about, if I haven't already found out about anything during my visit.

Remember, the inspector will still have to pick up the radon test if you are having one, so your agent will call you to set up that appointment.

The listing agent follows up with your attorney to make sure that contracts went out, and then follows up with the buyers agent to make sure that they are signed. Deadlines are outlined in your offer to purchase. You sign the formal contracts AFTER the buyers signs them, and they give the balance of their deposit.

Your agent follows up with the buyers agent to find out about the mortgage application,  and  you can expect a call from your agent to make an appointment with you for  the appraiser for the bank to make a visit to your home.  It's one of the last things that happen prior to the buyer obtaining their loan.

Wait to hear from your agent or your attorney that the mortgage is approved.

Call the utility companies to disconnect service on the date of your closing. If you have automatic oil delivery, check your tank now, and if you have enough to last you, call the company and stop the automatic fill. Your attorney handles the water company, so that's onle less phone call for you to make.  Don't forget to get change of address forms from the Post Office. Call any creditors and let them know about your pending move, (or advise them in the space usually allotted when you send in your remittance) Give at least a three week lead time

Attending the closing is a personal choice. About 65-70 percent of my seller clients attend the closing with the buyers present. Its not mandatory, and in some instances you won't want to, or cannot go.

Sure, there can be setbacks, glitches, and maybe even delays, but you have professionals working on your team to handle that. As long as you are in capable hands, relax. The process is a lot easier for you than it is for the buyer who has MUCH more to do, and is a lot smoother  than you might think!

Why doesn't the listing agent show your home more often?

If your listing agent is not showing your home as often as you would like, it does not mean that your agent is not working hard for you. A lot of homeowners think it's only natural that their listing agent should be showing their home. And it is, to an extent- but it doesn't always happen, and try not to get too upset about it.

When you hire your agent, you expect your agent to market your home to the best of their ability, and to get as many buyers through the door as possible, so that one of those buyers ends up purchasing your home.

If we look at things realistically and statistically, most agents have a group of buyers that they are working with at the present time. Let's say, on average, that number is 25. Out of those 25 potentials, how many would be in the market for your home? Most agents work in a variety of price ranges, and towns, so the possibility of an existing buyer being interested in your home is somewhat slim.

Which brings me to the next point- If the agent is marketing your home, and marketing it well, wouldn't they get new buyers just from your listing, that would already have some interest? The answer to that is yes, but the amount all depends on how marketable your home is as well as the agent's marketing efforts. For example, if your agent made sure that your home had all the exposure it could possibly have, your home may not be as marketable  as you think it would be. The other point to make here, is that you must make sure that your agent presents your home in the best possible light to buyers. Even when all the conditions on marketability and presentation are met, the market may be very slow. It does not mean that your agent is not doing their job.

The last piece of the puzzle, and the most important one, is that your agent also markets your property to other Realtors. It is a well known statistic that the vast majority of agents RARELY sell their own listings. In addition, historically, less than 3% of all homes sell at public open houses.  

In our area of Fairfield County Connecticut, there are over 7,000 agents who are members of the Multiple Listing Service. If they all had 25 prospective buyers, wouldn't THAT be a great place for your agent to concentrate some of their efforts to secure a sale for you? What do you think the possibility is that just one of those 7,000 members has a buyer for your property. That would be,..... well 7,000 times greater than just your agent having a buyer, wouldn't it?

So try not to get too upset if your agent doesn't show your home as often as you would like. Some agents, myself included, show their own listings more frequently- and secure sales on their own listings, but that also is rare, and even for those of us who do manage to  find our own buyers for our listings, it's the exception, rather than the rule. Just remember, that your agent is  working on selling your property nonetheless.

Mechanic's Liens - Avoiding the seller nightmare!

Have you ever heardof a Mechanic's Lien?...If you haven't, let me enlighten you-  a Mechanic's Lien (sometimes called a Construction Lien) is a security interest taken in a property by contractors or other workers who have not been paid for their work. This type of lien can apply to anyone who has provided work, improvements, construction, materials  or goods to real property. To be technical, the minimum amount is $10.00, however paltry that may sound to you. A Mechanic's Lien against your property will preclude you from selling your home until the amount is satisfied, and it will have to be recorded in Town Hall as public notice, just as the lien was.

To reiterate, a Mechanics Lien  can be placed upon your property by ANYONE that performs work on your property and has a claim against you for non-payment . If you have sold your home before, you might recall that your attorney always asks you if anyone has performed work on the property in the last 90 days.  It may seem like an odd question, but your attorney asks you that for a reason. If you have had work done within the past 90 days, and have not paid for the work performed, there is a chance that a Mechanics Lien can be filed against your property. The reason for this seemingly innocent question is that any lien statement must be filed no later than 90 days after the supplies are delivered or the last day that work has been performed.

The work must be agreed to by the owner of the property and can occur on the building, in the structure itself,  or within the confines of the property owned. Besides the fact that the buyer will be unable to obtain Title Insurance for the bank, they may not be able to obtain the loan for your property because Title Insurance is required by the bank for a mortgage. This will cause an absolute mess at the closing table if that happens- if it doesn't ruin the sale altogether.

A few things that are VERY IMPORTANT to know:

• Check your contractor out thoroughly before hiring him/her. If your contractor has a history of non-payment, I would be wary. You can always ask if he has ever been involved in any type of Lawsuit. It's a basic question and the only people that would be offended by that are people that have. So do yourself a big favor, and ask. There are ways to find this out as well without asking, and you can always contact me to look up records if you wish- it only takes a few minutes, and is well worth the effort. 
• Also important to know: If your contractor does not pay the supplier for goods used in the work at your home, and the supplier is aware of your address for those materials, the supplier can even file against you. If there are sub-contractors involved, they can also file against you, if the contractor has not paid them.
• Make sure you have a contract for work to be performed with a stated cost, and get a receipt for your payment. 
• The contractor filing the lien has up to one year to file a foreclosure notice on your property to get paid. Contact an attorney and handle this NOW.
• If a Mechanics Lien is filed against your property, contact an attorney NOW. Even if you are not selling your property at this very minute, contact an attorney now.

If you have any legal questions about Mechanics Liens, contact your attorney. This article is not intended to give legal advice.

How can you save money on closing costs?

You  get your Truth in Lending Statement from the bank and it says your closing costs are WHAT???? Yes, that piece of paper can certainly be a shocker, but here are a few ways that you can save thousands on closing costs, and try to relax, that number is intentionally high.

The bank estimates a number of fees at worst case scenario, such as your attorney costs- so the first thing to do is to look at those figures.  They may not coincide with your legal fees.  They may also include POC fees. ( P.O.C. means Paid Outside of Closing)  and that most likely, you have paid aready, so subtract those fees off the total

Did you know that the actual day of the month that you purchase your home also affects your closing costs?  That's right!

• Tip: 1:  If your mortgage payment will be $4,000 for example,  the day that you close can affect your closing costs by up to $4,000. If you know that the bank collects mortgage  payments for the month ahead, then it would make sense to you that if you close on the 2nd of the month, the bank (in this example) would require $3733. for the remainder of the month at closing. If you closed on the 30th of the month before, that same line item charge would be less than $134.  There's over $3,600 savings just  because you closed on your purchase 3 days earlier.   

You may have heard that you are supposed to close at the end of the month- now you know why. A few times, I have had clients that needed to close in the first few days of the month, and they would have incurred that big expense. What I will tell you is sometimes, but not always, you can negotiate  with the bank to NOT take this amount at closing. The result would be that your first mortgage payment would be due  the 1st of the next month, instead of the first of the following month .

Then, there are pro-rated taxes. The bank likes to have a two month share of taxes in escrow, even though the taxes are included in your actual payment, which leads me to my next closing cost cutting measure:.

• Tip: 2:  Each town collects taxes from the bank in their own manner- some collect every 6 months, some collect every 3 months, and here's where it can get somewhat complicated.  If you are closing on a home in the most inopportune month of the cycle in a town where tax collections are made from the bank every six months,  the bank will require more of an escrow (holding account) at closing.

In some cases , there  can be  7 months worth of taxes to  include in your closing statement.  Closing on the same house in a different month  will only cost 3 months of taxes in advance. If the monthly taxes work out to be $500 per month, which is still fairly cheap, your timing alone on this item alone can save you $2,000  in this minimal scenario.  When every penny counts, speak with your mortgage broker to discuss the tax collections and anticipated closing costs for the town that you are planning to move in.  Most realtors do not know about this cost-saving measure, and to be honest, I only found this out about 15 years ago- so talk to your mortgage broker or your attorney regarding  when is the most cost effective time to close on a home in the town(s) that you are interested in moving to.

• Tip: 3: Fuel costs.  If the home you are purchasing has oil heat, or propane heat, there will be a storage tank for the fuel on the property. You re-imburse the seller at market rates for the fuel that is left in the tank. So kindly ask the seller NOT to fill up the fuel tank(s), and only have the minimum delivery if they are low. New clients can often work out a deal with a fuel company, and I can almost guarantee you that the price you pay for fuel will be less than what you will need to re-imburse the seller for. Depending on the size of the tank, your estimated  re-imbursement costs can save you upwards of $500 at closing.

As always, consult professionals regarding the purchase or sale of your home. We are available 7 days a week, nights and weekends, and you can even set up an appointment online for the date and time that's most convenient for you.