Certified Residential Specialist   FAQs

Below you will find a list of frequently asked real estate questions. You may browse the entire page or you may jump to particular questions using the links below.

1. What should I do to get my house ready for sale?
2. Is it better to add on to my existing home or buy a bigger  home?
3. What do all of those real estate acronyms in the ads mean?
4. What's the best way to negotiate with a seller?
5. Do sellers have to disclose the terms of other offers?
6. How long do bankruptcies and foreclosures stay on a credit report?
7. How can you clear up bad credit?
8. I have bad credit. Can I buy a house?
9. How does an FHA loan work?
10. How do you find government-repossessed homes?
11. Who is Fannie Mae?
12. How can Fannie Mae help me buy a house?
13. I am unemployed. Can I get a loan?
14. What are "no-doc" loans?
15. Which is better, a 15-year or a 30-year loan?
16. What about splitting my mortgage in two and paying biweekly?
17. How do real estate agents get paid?

Question: What should I do to get my house ready for sale?

Answer: First and most importantly, get your house in the best condition possible, especially if it is currently a buyers' market. You want your house to stand out from the others. Take care of any major repairs that could discourage a buyer (such as replacing any broken windows or repairing a leaky roof) if you can afford it. Curb appeal is also very important. Remember, it is the first thing a prospective buyer sees. Here are some ideas that don't cost a lot of money but will make a big impact:

• Make sure your landscape is pristine. Mow the grass, clean up any debris and weed the garden beds. Plant a few annual flowers near the entrance or in pots to be placed by the door.

• Clean the windows and make sure the paint is not chipped or flaking.

• Be sure that the doorbell works.

• Clean and freshen up rooms, furnishings, floors, walls and ceilings. Make sure that bathrooms and kitchens are spotless.

• Organize closets.

• Make sure the basic appliances and fixtures work. Replace leaky faucets and frayed cords.

• Eliminate the source of any bad smells, such as the kitty box. Use air freshener or bake a batch of cookies before your open house to ensure that the house smells inviting.

• Invest in a couple of vases of fresh flowers to place around the house and next to any information about the house you have prepared for buyers.

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Question: Is it better to add on to my existing home or buy a bigger home?

Answer: Consider these questions before making a choice between adding on to an existing home or moving up in the market to a bigger house:

• How much money is available, either from cash reserves or through a home improvement loan, to remodel the current house?

• How much additional space is required? Would the foundation support a second floor or does the lot have room to expand on the ground level?

• What do local zoning and building ordinances permit?

• How much equity already exists in the property?

• Are there affordable properties for sale that would satisfy housing needs?

• Ultimately, the decision should be based on individual needs, the extent of work involved and what will add the most value.

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Question: What do all of those real estate acronyms in the ads mean?

Answer: If you find yourself stumbling over weird acronyms in a real estate listing, don't be alarmed. There is method to the madness of this shorthand (which is mostly adopted by sellers to save money in advertising charges). Here are some abbreviations and the meaning of each, taken from a recent newspaper classified section:

assum. fin. — assumable financing

dk — deck

gar — garage (garden is usually abbreviated "gard")

expansion pot'l — may be extra space on the lot, or possibly vertical potential for a top floor or room addition. Verify actual potential by checking local zoning restrictions prior to purchase.

fab pentrm — fabulous pentroom, a room on top, underneath the roof, that sometimes has views

FDR — formal dining room (not the former president)

frplc, fplc, FP — fireplace

grmet kit — gourmet kitchen

HDW, HWF, Hdwd — hardwood floors

hi ceils — high ceilings

In-law potential — potential for a separate apartment. Sometimes, local zoning codes restrict rentals of such units so be sure the conversion is legal first.

large E-2 plan — this is one of several floor plans available in a specific building

lsd pkg. — leased parking area, may come with an additional cost

lo dues — find out just how low these homeowner's dues are, and in comparison to what?

nr bst schls — near the best schools

pvt — private

pwdr rm — powder room, or half-bath

upr — upper floor

vw, vu, vws, vus — view(s)

Wow! — better check this one out.

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Question: What's the best way to negotiate with a seller?

Answer: The more you know about a seller's motivation, the stronger a negotiating position you are in. For example, a seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow. Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home. Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sale prices of comparable homes in the neighborhood to see how the seller's asking price stacks up. Some experts discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sale and discourage the seller from negotiating at all.

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Question: Do sellers have to disclose the terms of other offers?

Answer: Sellers are not legally obligated to disclose the terms of other offers to prospective buyers.

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Question: How long do bankruptcies and foreclosures stay on a credit report?

Answer: Bankruptcies and foreclosures can remain on a credit report for seven to 10 years. Some lenders will consider a borrower earlier if they have reestablished good credit. The circumstances surrounding the bankruptcy can also influence a lender's decision. For example, if you went through a bankruptcy because your employer had financial difficulties, a lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, the lender probably will be less inclined to be flexible.

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Question: How can you clear up bad credit?

Answer: There is no fast and easy way to repair damaged credit that took months or years to incur. The law allows negative information to appear on an individual's credit record from seven to 10 years. The first step is to check your existing credit record. Anyone can obtain copies of their own credit report free of charge if they have been turned down for credit recently. For a fee, people can request copies of their own credit report from the three major credit reporting agencies: Experian at 800.392.1122, Equifax at 800.685.1111 and Trans Union at 312.408.1050. The bureau also should provide instructions on how to read the report and how to dispute any inaccuracies it contains.

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Question: I have bad credit. Can I buy a house?

Answer: While some people have rebounded from a foreclosure to buy another home within several years, for others, credit problems can last for years. Real estate experts say you should be candid with your lender in discussing these issues. If your bankruptcy resulted from losing your job due to your employer's financial difficulties, a lender probably will look upon your situation more favorably than if your bankruptcy was caused by overextended credit cards.

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Question: How does an FHA loan work?

Answer: The U.S. Department of Housing and Urban Development offers a variety of loan insurance programs through the Federal Housing Administration that require approximately 3 to 5 percent cash down. FHA loan limits vary depending on the county where the property is located. FHA loans administered by HUD are originated by private lenders. For more information, contact lenders who offer FHA loans, your regional HUD office or Lad Concepcion 773-4665 ext 22.

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Question: How do you find government-repossessed homes?

Answer: The U.S. Department of Housing and Urban Development acquires properties from lenders who foreclose on mortgages insured by HUD. These properties are available for sale to both homeowner-occupants and investors. You can only purchase HUD-owned properties through a licensed real estate broker. HUD will pay the broker's commission up to 6 percent of the sales price. Down payments vary depending on whether the property is eligible for FHA insurance. If not, payments range from the conventional market's 5 to 20 percent. One caution,. HUD homes are sold "as is," meaning limited repairs have been made but no structural or mechanical warranties are implied.

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Question: Who is Fannie Mae?

Answer: Fannie Mae is a congressionally chartered secondary-mortgage market company that buys loans from private lenders. Because the firm is so big and has been involved in purchasing packages of loans from lenders for 25 years, it has enormous influence on the mortgage market. For more information, call Fannie Mae at 800.732.6643.

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Question: How can Fannie Mae help me buy a house?

Answer: Fannie Mae's Community Home Buyers Program allows first-time buyers with little cash to obtain 95 percent financing. Participants may put down as little as 3 percent of their own money, with the remainder permitted in the form of a gift from family members, a government program or nonprofit agency. Mortgage insurance is required on all loans above 80 percent loan-to-value ratio when borrowers do not use their own funds for at least 5 percent down. The program is administered through participating lenders. There are income limits in different states. However, the income restriction is waived when borrowers participate in the Fannie Neighbors program. Fannie Neighbors also has lower income requirements for borrowers who want to buy in designated central cities. People who are borrowing in either of these programs must attend a seminar on home ownership and the home buying process. For a list of participating lenders, call Fannie Mae at 800.732.6643.

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Question: I am unemployed. Can I get a loan?

Answer: Generally, lenders will not make loans to unemployed persons because someone without an income would seemingly have no way of making monthly mortgage payments. However, there are home loans for which lenders require very little loan documentation as long as the borrower puts down a sizable down payment, generally 25 percent or more. These "no-doc" loans are common among self-employed people who say they earn a certain amount of money but whose income tax returns show that their earnings are much lower. Borrowers should check directly with lenders when seeking a no-doc loan. If specific lenders do not offer them, ask for a referral.

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Question: What are "no-doc" loans?

Answer: "No-doc" loans are mortgages for which lenders require very little loan documentation as long as the borrower puts down a sizable down payment, generally 25 percent or more. These mortgages are common among self-employed people who say they earn a certain amount of money, but whose tax returns show that their earnings are much lower.

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Question: Which is better, a 15-year or a 30-year loan?

Answer: The difference in payments and overall savings between a 15-year fixed-rate loan and a 30-year fixed-rate loan depends on the interest rate and the loan amount. Using a $100,000 loan and 7.25 percent interest rate as an example, monthly payments on the 15-year note would be $912.86. Monthly payments on a $100,000 loan at 7.25 percent fixed for 30 years would be $682.18. The 15-year note offers the opportunity to save considerable money over the life of the loan, since the period of amortization is half that of the 30-year note. This means that the total interest paid on a 15-year note as compared to a 30-year note is significantly less. However, calculating the overall savings of the 15-year note over the 30-year note depends on several individual circumstances, such as the borrower's changing income status.

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Question: What about splitting my mortgage in two and paying bi-weekly?

Answer: Some people set on paying off their home loan early and reducing interest charges opt for a bi-weekly mortgage. Monthly payments are divided in half, payable every two weeks. Because there are 52 weeks in a year, the program results in 26 half-payments, or the equivalent of 13 monthly payments per year instead of 12. Using the biweekly payment system, a homeowner with a $70,000, 30-year biweekly mortgage at 10 percent interest could save $60,000 in interest and pay off the balance in less than 21 years.

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 Question: How do real estate agents get paid?

Answer: Real estate agents or brokers are generally paid through the sales commission paid by the seller when a transaction closes. Agents have expenses and financial obligations just like you, so it will be to your mutual benefit if you choose a real estate agent and stick with that person. The agent will respect your loyalty and respond with a sincere commitment to you

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Lad Concepcion is a member of the National Association of REALTORS®, The St. Croix Board of Realtors and has been certified by the National Association of Realtors as a CRS - Certified Residential Specialist and GRI. Call him for professional real estate services toll free at (800) 964-9755 ext. 22 or (340) 773-4665 ext. 22 or e-mail Lad at lad@homesinstcroix.com. You may also speak directly with Lad's Licensed Personal Assistant at (340) 773-4665 ext. 27.