Dear Michael: Do I have to pay the commission to my Realtor for showing me houses, or do they get paid with the commission from the seller?
Answer: Realtors are only paid upon the sale of a home when escrow officially closes. That said, all the time vested previewing houses with your Realtor should be taken into consideration when your Realtor gets paid. He/she will take time away from their family, activities, weekends, vacations and etc to show you homes—all this time spent by your Realtor has no guarantees that you will actually buy a home. This is why it is important for a buyer who is satisfied with his/her Realtor to stay loyal and commit to his/her representation. To answer your questions, the seller pays the commission cost for the Realtor fees. The Seller typically pays 2.5 to 3 percent of the selling price to the listing agent for listing and showing their home, then another 2.5 to 3 percent to the buyer’s Realtor for bringing in a buyer. The exchanging of money only happens at the closing of escrow. If it takes you 60 days to find the house of your dreams then add an additional 30 to 45 days to close escrow.
Dear Michael: We own a small home with 700 square feet living space and 2,300 lot. We need more space as my kids are getting older. Would it be better to add a second story or to sell our current home and purchase something bigger?
Answer. The challenge you face with building a second story is that you have a very small lot. As your kids get older you’ll want to spend much time outside enjoying fresh air, having BBQ’s and playing sports. I also know that when you decide to sell your home the smaller yard will be a major deterrent for any potential buyer no matter how big your house is. My suggestion is for you to carefully study your options and see what type of home you can afford before you make the decision to add a second story. If you do opt to purchase a new home instead of adding a second story you may be able to include a contingency that would allow you to sell your home before you can close escrow on your new home. It is best to speak with your Realtor, family and friends and explore all your options before making this decision.
Dear Michael: I am purchasing a new construction condo that has just been completed. Is there a reason why my lender wants to have a guarantee from the seller that he has sold 50 percent of all the units?
Answer: Financing new construction can be tricky as your lender will need to approve both you the buyer, as well as the condo complex itself. Your lender is going to want to make sure that the project is completed according to their standards, and that all the legal paperwork and entities have been properly established. Most lenders also have a pre-sale requirement. This helps them feel more comfortable with the property as collateral for the loan. Pre-sale requirements can be as high as 70 percent of units sold, so your situation is not uncommon. In most cases the builder will have an in-house lender that has approved the complex so this type of challenge is met. If this is the case I suggest you interview the in-house lender. If 70 percent of sale has not been met, it will be much easier for you to get loan approval with the in-house lender.
Michael Kayem is a Realtor with Re/max /Execs serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at: homes@agentmichael.com
