Frequently Asked Questions - Buyers
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What is a Buyer’s Agent and why do I need one?
What will it cost me to hire a Buyer’s Agent?
What is a REALTOR®, and what makes them different from a Real Estate Broker?
What credit score and down payment requirements do I need to buy a house?
What is earnest money and what is its purpose?
What if I need to back out of my contract?
A Buyer’s Agent is a Real Estate Broker who will represent and protect you, as well as walk you through every aspect of your home purchase. Your agent has your best interests in mind while providing expertise and negotiation on your behalf, as well as informing you of all of your rights, options, and responsibilities during your home purchase transaction and beyond. As your Buyer’s Agents, we strive to provide excellent advice and coaching through every step of your transaction so that you feel empowered to make informed decisions regarding your home purchase.
In a standard real estate transaction, the commission earned by your Buyer’s Agent is typically paid by the sellers of the home you purchase through the listing brokerage firm. As a home buyer, in most cases, you are NOT responsible for paying commission to your Agent. Rarely, an uncommon scenario may arise where a Buyer’s Agent’s commission is not paid for by the sellers, and therefore must be paid by the buyer. One example of when this may occur is during the purchase of a home listed “For Sale by Owner”. I will discuss with you all of your options before we ever enter a situation where you are financially responsible for agency services. Most Real Estate firms will charge a transaction or Admin fee for brokerage services. The Madison & Company Properties admin fee is $295 and is paid upon a successful closing.
Not all Real Estate Brokers are created equally! There is a significant and valuable difference between a REALTOR® and a licensed Real Estate Broker. All REALTORS® are Real Estate Brokers, but not vice versa. The actions of a REALTOR® are regulated by the National Association of REALTORS®, who provide a strict Code of Ethics for practicing real estate. This is a standard which REALTORS® are held to while representing clients, while a Real Estate Broker is not. Every broker at Madison & Company Properties is a REALTOR®. When choosing representation in your home purchase, the choice of working with a REALTOR® over working with a Real Estate Agent may save you a lot of frustration down the road.
A credit score of roughly 620 or above is required for purchasing a home, though some lenders will provide home loan assistance with credit scores as low as 580. Depending on your loan type, a 3%-5% down payment is typically required, but there may be down payment assistance options available. They type of loan you use – Conventional, FHA, or VA – may have an impact on getting offers accepted, so it is really important to understand your options. A valuable benefit to working with Madison is access to our fantastic trusted lenders who will provide you with many financing options, help you find one which fits your needs, and put you in the best spot possible while negotiating.
Earnest money is a deposit paid by you, the buyer, usually within one to three days of your offer being accepted. It is typically 1% - 3% of the purchase price, and is held in escrow by the Title Company which will conduct your closing. Ultimately, your earnest money will be used toward your down payment or costs to close. Your earnest money shows the sellers that you are a qualified buyer with the funds to purchase a home. While you act in good faith as a buyer, I will help to protect your earnest money through every step of the transaction, so that if the need arises to properly terminate your real estate contract, you have the best chance at getting your earnest money back in full.
Sometimes, the home you put under contract isn’t quite what you’d hoped for. Luckily, the Colorado Contract to Buy and Sell Real Estate is extremely buyer-friendly. There are several opportunities for buyers who act in good faith to terminate their contracts with protection from losing their earnest money deposit. I will be happy to educate you on your rights per the contract, as well as what it means to act in good faith so that your earnest money is best protected.
Each transaction is a little different, but typically you will have both real estate and loan closing costs which total to roughly 2% - 5% of your home purchase price. Some other common upfront costs during the transaction include the cost for inspection ($300-$800) and the cost for appraisal ($400-$600). These costs range depending on service provider and options you choose.
From the time your offer is accepted, it will typically take 30-45 days to finish the home buying process. There are many home possession scenarios that can take place, including immediate possession at closing and rent-back options where the Seller retains possession for a period of time. I will help you negotiate the best option for your specific needs.