Ask a Broker: Purchasing a new house: How much to put down the first time around

By Peter G. Miller

Q: We're thinking of purchasing a home and we're first-time buyers. We know that mortgage financing is available with little down and we know that there will be costs for closing, but how much of a deposit should we make with an offer?A: As a buyer you want to have the smallest possible deposit, but sometimes you have to accept the marketplace reality that more than you want to put down may be necessary to have a successful bid. When a home is listed, the agreement between the owner and the broker will outline requirements that the broker must seek to earn a fee. The listing can include or exclude just about anything, but usually you find the sale price, a list of fixtures that stay when the property is sold and the size of a required deposit.To have a contract you need such things as offer, acceptance and consideration. A deposit is the "consideration" the buyer gives as one inducement for the seller to accept an offer.In a strong seller's market, it can be tough to offer less up front than what the owner wants. However, in markets where there is more balance, or in a buyer's market, there's room for negotiation. The seller, for instance, might want a $7,500 deposit, but you may offer less the seller can then accept, reject or counter your offer. Try to keep deposits low. Real estate contracts typically say that owners have the right to keep the deposit or sue or the right to both keep the deposit and sue if a buyer does not meet the terms of the agreement. For details, speak with your buyer broker or attorney.Q: We think we have squirrels in our attic. If they got in by themselves why can't they get out?A: They may get out by chewing through part of the attic and then they may come back with their friends and relatives.You need to have the squirrels removed immediately and any access holes repaired. Pest control companies often offer removal services, but be sure to ask what happens to the squirrel. By "humane" some companies mean the animal is killed quickly while others mean the creature is caught alive and relocated.If you're in a do-it-yourself mode, you can buy a humane trap from a hardware store. Bait the trap with bread and peanut butter. If you catch the squirrel, take it to a park several miles from your home for release. If you release it nearby it may come back. For specifics, speak with local animal control officials.Q: We're thinking of buying an existing home. What type of written guarantee can we get regarding parts of the home, say the roof, basement, foundation, appliances, etc? A: You have to first look at the age of the house and the location. In many jurisdictions, new homes have a required 10-year structural warranty so if you buy a home within 10 years of construction you may have coverage for major items such as the foundation, roof, etc.Appliances can be covered by manufacturer warranties for the first several years of ownership. Coverage varies widely, but you can be sure that all warranties and guarantees are limited.There are two other practical steps you can take.First, get a professional home inspection. You might require in your offer that the inspection must be "satisfactory" to you or the purchase is off and your deposit must be returned in full. Brokers or attorneys can provide proper language.Second, get a home warranty. These are typically provided by the seller or the seller's broker. The coverage offered under such warranties varies and there may be limits, deductibles and inspection costs, so ask lots of questions.Q: I'm planning to sell a condominium during the next year. What's the best time of year to put it on the market?A: When the property shows best and demand is greatest.The best time of year to sell varies according to local market conditions and preferences, but typically it's the period from May to August. However, homes in all markets sell year-round so there is little reason to wait if you need to sell.Also, in some areas there may be seasonal attractions that spur buyer interest. Selling at a beach resort before the prime summer season means the new owner may be able to rent the property and thus offset initial ownership costs. Speak with local brokers for more information. CTW FeaturesPeter G. Miller is the author of "The Common-Sense Mortgage" and a veteran real estate columnist. Have a question? Please write to peter@contenthatworks.com.