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.
Question: What are the tax advantages of home ownership?
Answer: Four key advantages are:
- Mortgage interest is tax deductible.
- Real estate taxes are tax deductible.
- Local tax benefits are available in many areas.
- You can enjoy tax-free profits of up to $500,000 from the sale of a primary residence that you have occupied for two of the last five years if you are married and filing jointly. If you are single or married and filing separately, you can enjoy tax-free profits up to $250,000. Moreover, you can use the exclusion as often as you meet the qualifications.
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Question: What are the investment benefits of home ownership?
Answer: Five key benefits are:
- You build equity over time, which you can take in cash when you sell your home.
- The profits from home investment are often greater than from many other investments.
- Because you can borrow against it in most states, home equity can be a source of emergency funding.
- Land appreciation adds to the value of your home.
- For many, home ownership is an important part of retirement planning.
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Question: Who are the key players in a residential real estate transaction?
Answer: Buying and selling a home is a very segmented and specialized process. Apart from the buyer and the seller, the key players typically are the Realtors®, lenders, home inspectors, appraisers and attorneys.
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Question: What's the difference between appraised value and market value?
Answer: Appraised value is an opinion of a property's market value, based on an appraiser's knowledge, experience and analysis of a property. Comparative market analysis is an informal estimate of market value performed by a real estate agent or broker. It is based on sales of similar homes in the area and generally offers a range of values, including probable market value.
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Question: Do I need a lawyer when buying or selling a home?
Answer: Local customs dictate whether it's legally mandatory to have an attorney complete a real estate transaction. So check on what's applicable in your state. Consider, however, that since buying or selling a home is among the largest transactions people will make in their lifetime, many experts believe that using a qualified real estate attorney - particularly if any problems are anticipated - is a prudent course of action.
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Question: What percentage of homebuyers and sellers use the services of a real estate agent?
Answer: According to the latest survey conducted by the National Association of Realtors®, about 70 percent of homebuyers and 80 percent of home sellers in 2001 used a real estate agent in their transactions. The percentage of for sale by owner (FSBO) transactions has steadily declined since 1997 and comprised only 13 percent of sales in 2001.
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Question: If I use a real estate agent, what fundamental obligations are owed to me?
Answer: Typically, the common law obligations owed to you are to:
- Put your interests above anyone else's;
- Keep information confidential;
- Obey your lawful instructions;
- Report anything that would be useful; and
- Account to you for all money involved. Nonetheless when you start working with a Realtor®, ask for a clear explanation of your state's current regulations so that you know where you stand on these matters.
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Question: Are commissions negotiable?
Answer: The commission, the fee charged by a real estate broker or agent for negotiating a real estate transaction, is negotiable.
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Question: Who pays the real estate commission, the buyer or the seller?
Answer: Traditionally, both buyers' and sellers' agents are compensated by the seller. However, a buyers' agent may accept payment from both the seller and the buyer, as long as full disclosure is made to all parties. Some feel the transaction pays the compensation, to which both buyers and sellers contribute.
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Question: I understand that some real estate agents specialize in representing buyers and others in representing sellers? Can you tell me more?
Answer: Both buyers and sellers have the right to representation. This legal relationship is referred to as agency. The National Association of Realtors® recognizes seller agency, buyer agency and disclosed dual agency (representing both the buyer and seller), with informed consent as the appropriate form of consumer representation in real estate transactions.
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Question: When hiring a Realtor® to help me buy or sell a home, what types of questions should I ask?
Answer: The following questions would be appropriate:
- Do you have an active real estate license in good standing?
- What professional designations and affiliations do you have and from whom?
- How long have you and your firm been in practice?
- Do you work part time or full time?
- Which party will you represent - the buyer or the seller?
- What level of experience do you have with properties in my price range in this particular geographic area?
- As may be appropriate: What is your track record representing buyers or sellers?
- From the buyer's perspective: How can I expect you to serve me?
- From the seller's perspective: How will you market my home?
- Can you provide me with references? The names of a few buyers or sellers (whichever is applicable) whom you have worked with recently?
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Question: Should I try to get referrals?
Answer: Absolutely. The very best referral is from someone you know who has worked with a Realtor® and was impressed.
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Question: What are the benefits of using a Realtor® to buy or sell a home?
Answer: While all real estate agents must be state-licensed, not all are Realtors®. Realtors® belong to the local and state Realtor® associations, as well as the National Association of Realtors®. They subscribe to a strict, 17-article Code of Ethics that is committed to the fair treatment of buyers, sellers and fellow Realtors®.
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Question: What are the special benefits, if any, of using a Realtor® with a CRS designation?
Answer: Buying or selling a home is one of the most significant financial transactions of your life. In all areas of life, we rely on specialists for their advanced expertise and skill. For example, if we need medical or legal advice, we consult a specialist who has the credentials to address our specific needs. Similarly, to fill the specific residential needs of home buyers and sellers, the Council of Residential Specialists of the National Association of Realtors® represents a class of expert real estate professionals designated as Certified Residential Specialists (CRS).
The Council created the CRS designation, considered the "CPA" of residential real estate, to give home buyers and sellers an easy way to identify agents who have significant experience and demonstrate higher volume of real estate transactions or gross sales, as well as complete rigorous, advanced educational requirements.
Approximately 35,000 Realtors® have earned the CRS designation, equaling only 4 percent of all Realtors® in the world.
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Question: What special qualifications will a CRS bring to my transaction?
Answer: These are among the distinctive values offered by CRSs:
· Realtors® with the CRS designation have taken the initiative and time to expand their education beyond what is just required by law for licensing purposes.
· CRSs maintain professional affiliation with thousands of other real estate professionals on the local and national levels.
· CRSs have up-to-the minute industry information with respect to taxes, investments, legislation and other areas of critical importance.
· CRSs provide the highest level of residential expertise in your market area.
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Question: How can I obtain additional information about buying and selling a home, and the benefits of using a Certified Residential Specialist?
Answer: The Council of Residential Specialists maintains an informative Web site, which is continually updated. The Web site address is www.crs.com.
Or you can contact the Council of Residential Specialists:
- By e-mail: CRS Customer Service
- By mail: 430 North Michigan Ave., Chicago, IL 60611
- By phone: 800.462.8841
- By fax: 312.329.8882
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