The MOST IMPORTANT QUESTIONS First Time Buyers Should Ask -- And Why

By
Commercial Real Estate Agent with Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker AZ BR 528507000

First time buyers need to know a LOT.

 

And they don't know the right questions to ask. Till the issues crop up later, and then anxiety makes what should be an exciting, fun and rewarding transaction terrifying.

 

 

The MOST IMPORTANT QUESTIONS that first time buyers SHOULD ask, and why:

 

Is this YOUR listing? Find out if you are dealing with the seller's agent, and how dual or limited agency is different from having your own exclusive representation. There's a difference, and you need to know.

 

How do I get prequalified? It ALL begins with ONE question, truly: Where will I get the money? That has to be the FIRST thing dealt with. In AZ, a completed lender prequalification form (PQ) needs to accompany an offer

 

When can I begin viewing properties? See answer to Q above. That's when. You may also need to time it for an expiring lease,  school year or other key considerations. Also taken into account, the briskness of the market. What you see today may be gone tomorrow.

 

How do I make an offer? Your broker should be providing drafts of the contract/LOI forms (LOI = letter of interest, used in commercial real estate, is non-binding letter offering basic terms to see if there is potential for a 'meeting of the minds') to review and discuss.

 

How much should I offer? Market comps or income analysis will get you in the groove of pricing, list/sale ratios (percentage of asking price recent properties have sold for), and with your broker, you can analyze 'value to you' and see if it comes close to the reality of the market. 

How do I conduct inspections, and how much will that cost me? Resources for property, pest, roof, environmental and structural review should be provided by your broker. Interviewing different experts will familiarize you with costs AND TURN TIME. This is critical when timing out a deal. If the inspector is 2 weeks booked out, you'll need 3 or more weeks of due diligence! 

When will I need to put money into escrow, and how much? This is specific to the deal, and can be contractually provisioned. A great broker will suggest the proper timeline to protect your earnest deposit.

 

What are costs paid outside of the transaction? Yep, you may and probably will be coming 'out of pocket' to perform full due diligence on a property. Property inspectors and appraisers typically get paid COD although it possibly could be 'escrowed'. It will also probably cost more, and you have to pay it even if the deal dies.

 

Can we get seller to contribute, and how much? Maybe so! A recent buyer I referred out was not surprised but shocked to find out that they could have asked the seller to kick in (hey, the worst they can say is 'no'!) The agent didn't bring it up. Fortunately, they were able to work with their lender and adjust their loan product. Now they can use some of their down payment money for repairs and updating!

 

How does the offer/negotiation process work? This is where you're gonna be glad you have an experienced broker. The degree of expertise in negotiation skills is CRITICAL to your success. 

 

How does the buying/escrow process work? Quite a few moving parts! Critical dates. Paperwork. The more prepared you are for the process, the easier it will be.


Explain title insurance to me, and why I need it. Most fresh-faced buyers have no clue what title insurance even is, but boy, is it important in assuring free and clear ownership of your property.

 

Explain when and how taxes are paid. You'll be paying property taxes, either through mortgage impounds, or being billed by the Assessor. Delinquent taxes can jeopardize ownership.

 

Who do I talk to about homeowner's insurance? IS the property insurable, for starters? How much will that insurance cost? That must be investigated during due diligence. Who can insure your property? Not all coverages are equal. A commercial property will need different coverage than a single family residence.


Do I need flood insurance? Your broker needs to help you investigate this, as it may be required by your lender. (I believe that everyone should have flood insurance that doesn't live on a mountaintop. Mother Nature cannot read a FEMA map!)

 

Do I need a home warranty? You might, and you might not (if you're buying a new build warrantied by the builder, or going to replace all the appliances). But the benefit is added assurance.

 

These are some of many questions to raise with your real estate professional, and the more dialogue you have BEFORE you begin scouting for property, the more enjoyable and fun the process will be.

 

Real Estate Feels Good. Sha ba da!

 

🎶Don't stop, get it, get it
Peep how your captain's in it
Steady, watch me navigate, ha-ha-ha-ha-ha!🎶

 

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Rainmaker
1,634,491
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

Good questions Candice A. Donofrio . MAYBE if NAR would spend a little of the budget promoting questions like this instead of showing stupid agents checking out showers with their clothes on we could get a little closer to the day of intelligent questions.

Oct 22, 2019 07:58 AM #1
Rainmaker
3,168,592
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great post, Candice.... to get the right answers you first need to know the right questions. Having worked with my fair share of first-time buyers (and sellers), I've learned how to present information so that they get their answers without even asking the questions.

Oct 22, 2019 08:58 AM #2
Rainmaker
3,388,160
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Candice - nicely presented.  Careful listening is key and when that is achieved, things often seem to flow.

Oct 22, 2019 09:07 AM #3
Rainmaker
1,551,225
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

great post that buyers & return buyers should read. Great post off that Q.

Oct 22, 2019 11:46 AM #4
Rainmaker
4,527,647
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Candice

Well done, as a matter of fact let me correct myself and say very, very well done!  Cheers, A

Oct 22, 2019 02:10 PM #5
Ambassador
816,267
Mimi Foster
Falcon Property Solutions - Colorado Springs, CO
Voted Colorado Springs Best Realtor

EXCELLENT list of questions, Candice! Congratulations on the Feature. I'd send that to every Buyer I'm working with.

Oct 22, 2019 04:38 PM #6
Ambassador
1,657,416
Alan May
Jameson Sotheby's International Realty - Evanston, IL
Helping you find your way home.

nice sequé.

Oct 22, 2019 04:38 PM #7
Ambassador
4,043,540
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hey Candice:

Glad you turned your answer to a question into a very educational post for first time buyers (oh, and other buyers, too!), plus the bonus of a feature so more will see it.

There is SO much to know as a first time buyer,and working with the right Realtor who will take the time to answer questions, including those the buyer doesn’t even know they have, and educate them along the way is priceless!

Jeff

Oct 22, 2019 07:28 PM #8
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Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

The very best compliment I EVER got from a client came from a first time buyer in a review on Z that was completely unpromted. She said "Tammy answers questions for me before I even knew to ask the question"  That was a decade ago and I've continued to try to live up to her expectations with other first time buyers. Of course I also strive to be the person my dog thinks I am as well.

Oct 22, 2019 10:03 PM #9
Rainmaker
66,530
Kris Collis, Associate Broker
Smart Way America Realty - East Stroudsburg, PA
Professional Results you Expect 570-507-7510

Perfect for first time buyers.  I try and break it down into bite size pieces like your categories delivered in "Next Steps" mails and calls at the appropriate time buyer will need the info or to start thinking about it.  Saves them those overwhelm and overload feelings.  Take it one step at a time.

Oct 22, 2019 10:05 PM #10
Rainmaker
794,376
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Such a good post. I do wish buyers would not always fight you when you ask them to sit down and discuss the buying process as then you can cover this ground up front. Today, everyone just wants to get out there and start looking.

Every time I have sat down with a buyer the conversationhas been helpful to set expectations and describe the process as it is different from state to state and even areas within a state.

Oct 23, 2019 12:22 AM #11
Rainmaker
1,458,407
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Great list of questions. First time home buyers don't know what they don't know, but if they read this list, they'll have a running start.

Oct 23, 2019 06:31 AM #12
Rainmaker
2,473,386
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I am one to read up on anything and then get into it...The reading is easy but the actual entering in while easy to say is where the real work begins. Journey well

Oct 23, 2019 07:06 AM #13
Ambassador
1,881,245
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Nice job turning a Q & A debacle into something positive. Good for you, Candice. Nicely done, as usual. 

Oct 23, 2019 07:48 AM #14
Rainmaker
354,894
Alan Brown
Coldwell Banker Montrose Colorado - Montrose, CO
29 Years of Real Estate Experience .

Very informative for buyer

Oct 26, 2019 07:03 PM #15
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Rainmaker
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Candice A. Donofrio

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