all the things to know about making a move

What is a home inspection?

A home inspection is an objective visual examination of the physical structure and systems of a house, from the roof to the foundation. This is a key piece of most real estate transactions,  and we strongly encourage all homebuyers to have one done. While a home inspection is a cost to the buyer (typically between $275-450 & depends on the size of the home), it could end up saving thousands in surprise home repair costs down the road. 

On average, a single-family home inspection usually takes 1-2 hours to complete, though this is heavily dependent on the size and condition of the home. After the inspection process, the inspector will send the client an inspection report (often within 24-48 hours) that covers their findings, complete with pictures, analysis and recommendations. Once the inspection report is received and reviewed, buyers will have the ability to send a list of repair requests to the sellers. We encourage that these requests be limited to safety hazards, structural deficiencies, and issues related to the major systems in the house. Any cosmetic issues within the house should be talked about and taken into consideration when making the initial offer to purchase the home. Once the inspection requests are sent to the seller a new negotiation takes place. If both parties come to an agreement on what deficiencies will be remedied, the transaction will proceed as planned. If the parties aren’t able to come to an agreement and if the sale was made contingent on a home inspection, the deal will be cancelled and the buyer will be given their earnest money deposit back. 

Every once in a while a home will be sold ‘as is’, meaning the home will be sold in its current state and the seller will not be responsible for fixing anything. A seller might sell their home ‘as is’ if they don’t have the funds to make any repairs or if the home was left to them through death, divorce, etc.  If a home is sold ‘as is’ a buyer can still have an inspection done but should not be expecting the seller to make any repairs. 

What is earnest money?

Think of earnest money as your “good faith deposit”. After the buyers and sellers come to an agreement on the terms of the purchase agreement, one of these terms being how much the earnest deposit will be, the buyer will submit their earnest money. This deposit can really be any amount but primarily depends on the price of the home. The rule of the thumb is that the deposit equals 1% of the purchase price but that’s not always the case. For instance, a competitive, multi-offer situation may call for a 2 or 3% earnest deposit. Whereas an affordable home that’s been on the market for a while may require much less!

During the closing period, the deposit will typically be held in trust by the listing brokerage. The buyer submits earnest money to ensure the seller that they are committed to buying the home… It gives the buyer some skin in the game!

Assuming the deal gets all the way to closing, this earnest money deposit will count as a credit towards the buyer’s total cash to close. So, if a buyer put down $1,000 for their earnest deposit, that would be $1,000 less that they would have to bring to the closing table. If for whatever reason the purchase agreement becomes null and void and both parties walk away from the deal, who gets to keep the earnest money could be in question. If the reason for the deal coming to a halt is because of inspection items or a low appraisal, the buyer will likely get their earnest money back. If the reason for the deal falling apart is because the buyer decided they didn’t want the house anymore or because their financing fell through a week before closing, the seller will likely keep the earnest money.

How long is a closing period?

The length of the closing period is a term agreed upon in the purchase agreement but typically ranges from 30-60 days. The biggest factors that impact the length of the closing period are how the buyer is paying for the home and the sellers timeline.

If the buyer is paying cash for the property, it’s possible for the deal to close in as little as 2 weeks. in this case, the closing attorneys will just need enough time to prepare documents, clear up any title issues or liens attached to the property, and update the properties abstract.

If the buyer is obtaining financing from a bank to purchase a home, the closing period is typically 30 – 60 days. This gives the lender enough time to run the buyers financials through underwriting and get an appraisal ordered while the closing company clear up title issues or liens attached to the property.

Who pays the agent commission?

In almost all transaction that involve real estate agents, the seller of the home under contract pays both their agent (listing agent) and the buyer’s agent (selling agent). As a buyer, this means you don’t have to worry about having extra cash to pay us to represent you!

What is a home warranty?

A home warranty is a contract covering repairs and replacements on systems and appliances in a home, usually for a period of one year. Systems in a home that fall under the acronym P.E.A.C.H. (Plumbing, Electrical, Appliances, Cooling, Heating), are most often covered by basic home warranty plans. There’s an option to add additional coverage to your plan, though it comes at a cost. A home warranty plan is a term included in most purchase agreements and buyers have the ability to ask the seller to pay for their first year of a home warranty. Whether they agree or not will be up for negotiation.

Difference between seller credit and reducing purchase price?
Is the home price a good price?

It’s sometimes hard to tell, but we can help guide you to a comfortable price based on area comps, home condition, days on market (DOM) and market inventory.

One rule of thumb is to look at the cost per square foot, especially for ‘resale’ homes. In comparing homes, the higher the cost per square foot, generally speaking, the less work you will have to do.

And remember, what someone paid for a home has nothing to do with it’s market value now.

Regardless, you offer what you want to offer. We’re here to help make sure what you offer will get the home you want.

How do I know if this house is the one?

Trust your gut. Simple as that. It’s advice that has not failed us yet. Whether it’s the first home, or the 32nd home we look at, we’re confident that when you know, you know. Always trust your gut.

What does Subject to Sale mean?

Subject to Sale (STS for short) offers are offers that have a contingency attached to them basically saying, “I want to buy your house, but I need to sell my current house first.”

 Most often the contingency is used when a buyer needs the proceeds from the sale of the current home to buy their next home.

 If a seller accepts a Subject to Sale offer from Buyer A, they are still able to market and receive other offers on their house until Buyer A accepts an offer on their current house. If the seller were to get a 2nd competitive offer from Buyer B after already accepting Buyer A’s Subject to Sale offer, they would notify Buyer A of the 2nd offer and Buyer A would have a certain amount of time, usually 24-48 hours, to remove the Subject to Sale contingency.

 If Buyer A is able to remove the contingency, the deal moves forward, and a closing date will be set — even if Buyer B’s offer was better. If Buyer A isn’t able to remove the contingency or “perform”, the seller can accept Buyer B’s offer.

From a buyer’s perspective, a subject to sale offer gives peace of mind. If they can’t sell their current home, they won’t be forced, by a contract, to buy a 2nd house. Also, STS offers allow homebuyers to be transparent with home sellers, in turn protecting their earnest money deposit. Without the contingency, homebuyers would risk losing out on the earnest money should they have to cancel the deal because their current house hadn’t sold yet.

From a seller’s perspective, subject to sale offers aren’t ideal because something out of their control has to happen before the sale can go through. However, since they can still market their house after accepting a subject to sale offer, they’re not necessarily wasting time waiting for the buyers to sell their house. They can still try to find an even better offer in the meantime.

The effectiveness of a subject to sale offer will vary by market conditions. With a lot of competition for a property, a seller may elect to go with an offer with a STS contingency even if the STS offer could net them more money. The uncertainty of not knowing a closing date (when presenting a STS offer) can cause a seller to go with an offer with a known closing date. In a market where we’ve seen more days on market, an offer with a STS contingency can be more successful.

What's the point of a Homeowners' Association?

Homeowners Associations or HOAs for short, are organizations typically found in townhome and condo communities, as well as some residential neighborhoods.

Their primary role is to manage and maintain the common areas and shared amenities within the community, as well as enforce certain rules and regulations established to maintain the overall appearance and quality of life in the neighborhood.

HOA’s collect monthly or yearly dues from the residents to pay for the services they offer. In our experience, Homeowners in townhouses or condos can expect to pay HOA dues monthly, while homeowners in associations with single family houses, often times pay annually. Association dues can sometimes draw the ire of homeowners because they can be seen as just another monthly charge on top of your mortgage, and other monthly bills. It’s important to remember than when an association is responsible for the exterior maintenance and other services, it’s simply money set aside that would you have to pay for in different ways if you didn’t have an HOA (i.e. pay for full siding or roof replacement of pocket in a lump sum). 

Depending on the services offered, HOA dues have a wide range of cost. In the Des Moines area, the AVERAGE HOA dues for a condo or townhome community are anywhere from $150-300 a month. In a luxury HOA these monthly Dues can be much higher! HOA Dues for a single-family development usually range from $150 -300 a year. Every so often the HOA will have to charge homeowners more than the normal HOA dues to cover the cost of major improvements within the HOA, for instance new roofs or siding. Sometimes these charges come in the form of assessments, which are often broken into a handful of separate payments, or the HOA will raise monthly dues until enough money is collected to pay for the upgrades.

Within a townhome or condo community the HOA usually covers the cost of exterior maintenance, exterior insurance, snow removal, and lawn care. In a residential neighborhood with single family houses, the HOA often times covers the common areas of the development, like trails, landscaping, and pools. Information regarding monthly HOA dues and what they cover is readily available and easy to find!

Be sure to do your research on the HOA before buying a home that belongs to one. Not all Home Owners Associations are created equal. Some make life easier for its residents, and some seem to just be a nuisance.

What is PMI?

Private Mortgage Insurance or PMI for short, is insurance that lenders require borrowers to have when putting less than 20% down (generally).  

Lenders require PMI to protect themselves incase the borrower defaults on their loan. 

The cost of PMI can vary. Loan amount, down payment percentage, and the borrower’s credit score all impact the cost of it but the insurance premium rate will likely be around 1% of the loan amount. The better qualified a borrower is, the lower that rate is. 

Typically PMI is paid on a monthly basis and is included in the mortgage payment.

Once a homeowner has paid down enough of their loan balance to have 22% equity in the home, the PMI will drop off the loan automatically. Though, there is a way to get PMI dropped before then, all thanks to the power of appreciation. 

Here’s how to go about doing so…

FIRST, a homeowner would contact their REALTOR® (us) and have us put together a CMA for their home. This CMA will give a fairly accurate idea of what the homes market value is and if trying to get the PMI removed is worth it. If the difference between the homeowners loan balance and the homes market value is more than 20%, the homeowners would have good grounds for getting rid of the mortgage insurance. 

SECOND, the homeowner would get in touch with their loan servicer and let them know they’d like to look at getting the PMI removed from their oan.  An appraisal will take place, which will confirm the homes value. If the existing loan balance is less than 80% of the appraised value, PMI will get removed.