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Tag: home buying process

  • Inspection for Informational Purposes Only: What It Means For Buyers and Sellers

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    The clause “inspection for informational purposes only” became popular in the competitive housing market during the pandemic. You may have seen it in an offer, or even used it yourself. While the term sounds simple, buyers and sellers don’t always agree on what it means once the purchase and sale agreement is signed.

    An inspection for informational purposes only means the home inspection is for the buyer’s knowledge only, and won’t be used to negotiate over every minor issue. But the rules can vary by state, and misunderstandings can lead to conflicts during the sale.

    Here’s what you need to know to navigate negotiations and set realistic expectations, whether you’re buying a home in Boston, MA, or selling in Los Angeles, CA.

    What does “inspection for informational purposes only” mean?

    An inspection for informational purposes only, sometimes called an “informational inspection” or “info-only inspection”, is a clause that allows buyers to complete a home inspection while:

    • Agreeing not to request repairs or price reductions: Sometimes additional terms are added in case major work surfaces, like not requesting or negotiating repairs under $5,000.
    • Releasing the seller from any obligation to fix issues: While sellers aren’t (usually) required to fix anything that comes up during the inspection, an informational inspection reduces the risk of negotiations or unexpected costs for the seller.
    • Retaining the buyer’s right to walk away (depending on the contract): If the offer is accepted as an information only inspection, and maintains the inspection contingency, buyers can still walk away after the inspection. If an inspection for informational purposes only is combined with a waived inspection contingency, the buyer is likely locked into the contract.

    The original purpose of the clause allowed for the buyer to gain knowledge about a home’s condition without creating additional negotiation hurdles for the seller, an especially powerful move when combined with a waived inspection contingency in a competitive market. But depending on where the transaction is taking place, the phrase can hold different meanings.

    What this looks like in practice

    You’ve found your dream home in Kansas City, MO’s hot housing market. To make a strong offer, you waive the inspection contingency but retain the right to an informational inspection—showing the seller you’re serious and unlikely to back out.

    The inspection report uncovers $15,000 worth of electrical and plumbing updates. Normally, a buyer might try to negotiate with the seller to cover some of these costs, but with this type of offer in a competitive market, you’re committed or risk losing your earnest money. You move forward toward closing, knowing you had $20,000 budgeted for unexpected repairs.

    What an inspection for informational purposes means in your state

    Here’s where things can get murky: an inspection for informational purposes only doesn’t hold the same weight everywhere. Real estate contracts are written differently in every state, and the local market culture also plays a big role. While the phrase is common across the country, each state’s standard real estate forms handle it a little differently.

    • Massachusetts – Common in competitive Boston markets. Buyers usually won’t request repairs, but most contracts still allow withdrawal for major issues. “Informational only” doesn’t guarantee the buyer will stay.
    • New Jersey – Buyers may have an inspection contingency period. Even with an informational inspection, they can usually walk away if serious defects are found. Fewer repair requests, but no total certainty for sellers.
    • Delaware – Contracts prevent repair or credit requests, but buyers can terminate if uncomfortable with findings. Balances seller stability with buyer protection.
    • Virginia – Informational inspections often prohibit renegotiation, though buyers may retain a right to terminate for major issues. Legal guidance is recommended.
    • California – Buyer-protective agreements mean buyers can often cancel during the inspection period, even with an informational-only clause. Sellers should note it may carry less weight.
    • Illinois – Common in Chicago-area competitive offers. Buyers typically cannot demand repairs, but attorney review periods may allow withdrawal. Clarifying timelines is key.
    • Texas – The TREC contract allows buyers to terminate for nearly any reason during the option period, so informational inspections are less restrictive.
    • Florida – “As-is with right to inspect” provisions let buyers inspect without obligating repairs. Buyers can still cancel during the inspection period.

    Pros and cons of an informational inspection

    When possible, an inspection paired with a home inspection contingency is the gold standard for buyers. But when you need your offer to stand out, an inspection for informational purposes only can be what pushes your offer to the top — and convince sellers that you are serious about the home.

    Benefits for buyers

    • Instead of completely waiving the inspection, you still get knowledge of the home’s condition before buying. This reduces the risk of going in blind to a home purchase.
    • Depending on your state and contract, it might still be possible to walk away from a home if the inspection report reveals issues.

    Benefits for sellers

    • An info-only inspection reduces the risk of buyers coming back to negotiate. Less negotiation usually means a faster path to closing.
    • In a hot market, buyers with this clause are likely to be more serious about the deal.

    Risks for buyers

    • You lose your negotiation power — and it’s likely sellers have back-up offers waiting if you don’t like what was found on the inspection report.
    • If you also waived the inspection contingency, you could inherit expensive repairs.
    • The contract could remove your right to walk away after the inspection and lose your earnest money.

    Risks for sellers

    • Buyers could still try to negotiate if big repairs, like foundation problems, are uncovered.
    • If the buyer does walk away based on what was found in the report, any major defects might need to be disclosed to the next buyer.
    • Depending on the contract terms, the buyer might still be able to walk away without consequence after the inspection.

    Bottom line

    While an inspection for informational purposes has its advantages, both sides should understand the trade-offs of this approach. Buyers will come in with a stronger offer but have less leverage to negotiate. For sellers, it can mean a cleaner transaction, but it’s still not a guarantee the deal will go through. Understanding what an inspection for informational purposes only means can help set the right expectations — ideally creating a smoother path to closing for both parties.

    FAQs about inspection for informational purposes only

    Can I still cancel the contract after an informational inspection?
    It depends on your state and contract. In many states, yes, you can cancel, but you can’t renegotiate. But if an informational inspection is combined with a waived inspection contingency, it will be more difficult to walk away without losing your earnest money.

    Is an informational inspection the same as waiving an inspection?
    No. Waiving an inspection means no inspection at all. An informational inspection means you get a home inspection but agree not to request repairs or negotiate once you get the report.

    Do sellers have to disclose issues found in an informational inspection?
    Yes, in many states. Once a seller becomes aware of a major defect, they may be legally obligated to disclose it to future buyers.

    Should buyers always get at least an informational inspection?
    Yes. Even if you’re competing in a hot market, knowledge of a home’s condition is critical before committing to close.

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    Ashley Cotter

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  • Should You Get a Home Inspection on a New Construction Home?

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    The short answer: Yes. Even new homes can have defects, ranging from misinstalled appliances to roof damage to grading problems.

    New construction single-family home sales have been rising since the pandemic, with builders frantically trying to keep up with the housing demand uptick that began in 2020. Builder incentives, mortgage-rate buydowns, and cash toward closing costs have also made new builds more enticing, especially as the gap in sale price between new construction and older homes starts to close.

    Many buyers think that investing in new construction means they’re moving into a home with zero problems. But “new” doesn’t necessarily mean “perfect” — something that many new build homeowners may discover if they opt to skip a new construction home inspection, whether buying a house in Washington, DC or Dallas, TX.

    Is a home inspection needed for new construction?

    Yes, almost always. When you buy a pre-owned home, it’s practically a given that the buyer will get a home inspection. With new construction, many buyers assume that municipal building inspections or builder warranties make an additional inspection unnecessary — but what it comes down to is builder goals vs buyer expectations.

    “Builders are under a lot of pressure to deliver as many houses as they can, as fast as they can, to fulfill their financial obligations with their shareholders,” says Fred Rodrigues, owner and inspector at Damngood Inspection in South/Central Florida. “The builders’ goals are to deliver the house as fast and as efficiently as possible; the expectation buyers have is that what you are buying is a great quality product.”

    When to schedule a home inspection for new construction

    When you’re getting an inspection on a new construction home, there are a few key timing points to keep in mind: depending on whether you’re building and buying a new construction home, or closing on a newly completed spec house.

    1. From the ground up

    If you’re involved during construction, a 3-phase inspection is when a home inspector looks at the house during three crucial parts of the building process, with an optional check after move-in:

    • Foundation inspection: after the concrete is poured.
    • Pre-drywall inspection: before walls are sealed up.
    • Final inspection: when the home is nearly complete, before closing.
    • 11-month warranty inspection: before the builder’s warranty expires (optional).

    2. Buying a finished “spec house”

    If the home is already built or nearly done, schedule an inspection before closing. This is your chance to request repairs or negotiate with the builder, says Rodrigues. “The builder wants to close on the house to get the money, but you as the buyer need to make sure the product they are delivering is as promised.”

    What inspectors look for in new construction homes

    As long as the home is almost ready, an inspector will be checking for the same things they would on any other house.

    On a new construction home, inspectors will check the house’s:

    • Foundation
    • Exterior walls
    • Roof
    • Garage, crawl space, & attic
    • Electrical panels
    • Plumbing
    • HVAC
    • Appliances

    “One of the first things we do in a new construction inspection is to inspect the roof,” Rodrigues says. That’s where a lot of problems can start, either from improper installation or sustaining damage throughout construction.

    Common problems to watch out for in new construction homes

    The pressure to build quickly and the large number of sub-contractors working on a new build are often the biggest factors in construction mistakes. Some of the most common issues Rodrigues finds during new construction inspections are missing insulation, drainage issues, and small leaks that could turn into expensive repairs if not caught and remedied early on.

    A 2022 survey revealed the most common problems found during new construction home inspections:

    • HVAC system issues
    • Safety issues
    • Problems with finishes
    • Drainage issues
    • Structural problems
    • Leaks or water damage
    • Foundation problems
    • Drafty doors / windows
    • Roof problems
    • Non-functioning electrical outlets

    The same survey found that nearly 9 in 10 new homes still required maintenance sooner than expected, with the most frequent issues tied to electrical, HVAC, plumbing, flooring, foundations, and drywall.

    Bottom line: don’t skip the home inspection 

    New construction homes have a lot of moving parts, tight deadlines, and profit margins to consider. Even with new materials and modern construction, errors happen. A professional inspection helps catch problems early, so they can be fixed before closing or under warranty.

    That’s why it’s important to hire both an inspector and a real estate agent that will be on your side, says Rodrigues. If buying a new construction home, a Redfin agent can help you find a trusted inspector, guide you through phase inspections, and help protect you, and your investment, every step of the way.

    FAQs about new construction home inspections

    How much does a new construction home inspection cost?
    A standard new construction home inspection typically costs $300 to $500, depending on the size and complexity of the property. Larger homes or houses with basements, crawl spaces, or special add-ons can cost $600 or more.

    If you choose a 3-phase inspection package (foundation, pre-drywall, final, and optional 11-month warranty check), many inspectors charge $800 to $2,000 total. Each inspection phase can run between $100-$500, and some inspectors offer discounted rates if you book the full package upfront. These are typical estimates and can vary by location and provider.

    What is the biggest red flag in a home inspection?
    The biggest red flag in a home inspection is usually structural, like foundation cracks, uneven floors, sagging roofs, or framing problems. These can mean serious problems that are expensive to fix. Other major issues could include water intrusion, faulty electrical systems, and plumbing or HVAC failures, which can create both safety risks and ongoing maintenance headaches.

    What is the final walk through inspection for new construction?
    The final walkthrough on a new construction home is also called a “blue-tape walkthrough,” and is the last inspection before closing. Buyers walk the property with the builder to make sure all the work has been completed as planned, the systems and appliances work, and all the finishes meet expectations. Blue painter’s tape is often used to point out any flaws or unfinished details, otherwise known as a “punch list” of items the builder needs to fix before move-in.

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    Ashley Cotter

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  • What Is “Close of Escrow”? Timeline, Process, and What To Expect

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    When you buy or sell a home, the close of escrow is one of the most important steps in the process. It’s the point when the sale is finalized, funds are disbursed, all necessary documents are signed, and the deed is recorded, officially transferring ownership from the seller to the buyer.

    While it may sound straightforward, reaching this stage involves multiple deadlines and responsibilities for both parties, as well as coordination with the lender and escrow officer. Understanding how close of escrow works and what to expect ensures a smooth transition from contract to homeownership. 

    What does “close of escrow” mean?

    Escrow is a neutral arrangement in which a third party – often a title company or escrow company – holds money, documents, and possibly other assets until both buyer and seller meet all obligations of the contract.

    The close of escrow is the moment when the transaction is officially complete. At this stage, all contractual obligations have been fulfilled, funds are disbursed, the deed is recorded, and the buyer becomes the legal owner of the property. It serves as the final checkpoint between signing the purchase agreement and taking possession of the home.

    Escrow closes when:

    • The buyer’s lender funds the loan.
    • All required payments, including closing costs, are collected and distributed.
    • Both buyer and seller have signed all necessary documents.
    • The deed is officially recorded with the county or local jurisdiction.

    Once escrow closes, or “ends,” the seller receives payment, the buyer becomes the legal owner of the property, and the escrow account tied to the transaction is closed.

    Are the close of escrow and the closing date the same?

    These terms are often used interchangeably, but close of escrow and closing day don’t always mean the same thing.

    • Closing date is the date specified in the purchase agreement when the parties agree to finalize the sale. On this day, buyers and sellers typically sign their closing documents.
    • Close of escrow is the legal completion of the process, when funds are disbursed and the deed is recorded.

    In many cases, these steps occur on the same day. In others, escrow may close a day or two later, depending on local practices and recording times. For instance, all necessary materials might be exchanged ahead of time before the title transfer, so escrow technically closes before the official closing. In that case, the buyer could receive the title without the seller even needing to attend the final closing.

    Some states follow a “wet” closing, where funds are transferred and documents signed at the same time, while “dry” closings allow escrow to close once all requirements are met except for the disbursement of funds. Knowing which type is standard in your state is important, since it affects when the title and funds officially transfer – always check with your agent or escrow officer.

    Timeline and process of closing escrow

    The escrow process typically lasts 30 to 45 days from the time an offer is accepted to closing escrow. A cash purchase can be much quicker, often closing in as little as one to two weeks.

    While timelines vary by state and lender, here’s how the escrow process generally unfolds:

    1. Offer accepted and escrow opens

    Once the purchase agreement is signed, escrow is officially opened. The buyer deposits earnest money into a neutral escrow account, and the escrow or title company begins preparing necessary documents and coordinating the next steps, such as ordering a title search and outlining the timeline for the transaction.

    2. Title search and insurance

    The title company verifies that the property has clear ownership and no liens or claims, and prepares title insurance for both the lender and buyer.

    3. Loan processing and contingency period

    The buyer finalizes their mortgage application while the lender orders an appraisal to confirm the property’s value. The buyer also completes inspections, and any issues discovered, such as necessary repairs, are negotiated. Other contingencies, like financing or the sale of the buyer’s current home, are addressed.

    4. Final loan approval and disclosures

    The lender issues final approval, often called a “clear to close,” and delivers the Closing Disclosure, which details all costs and the exact cash needed to close. By law, this disclosure must be provided at least three business days before signing.

    This step generally signals that the escrow process is entering its final phase, with the transaction fully prepared to move toward closing.

    5. Final walkthrough

    The buyer inspects the home to confirm it is in the agreed-upon condition and that any requested repairs are complete. Usually, this occurs the day before closing day.

    6. Closing day/signing appointment

    The buyer and seller sign all required documents, including loan papers, the promissory note, the deed, and any affidavits or disclosures required by law. The buyer wires pays their down payment and closing costs, typically by cashier’s check or proof of wire transfer.

    7. Funding, recording, and verification

    In most transactions, the lender wires loan funds to escrow on the same day, and escrow confirms that all payments – including the buyer’s funds, lender funds, and closing costs – are received. The deed is then recorded with the county, legally transferring ownership to the buyer.

    8. Disbursement and close of escrow

    Escrow distributes funds to the seller, agents, and other parties, completing the transaction. Keys are delivered according to the contract, marking the official close of escrow.

    Why the close of escrow matters in your real estate transaction

    The close of escrow is the point at which a real estate transaction is officially complete. It ensures that both buyer and seller have met all contractual obligations, funds are properly disbursed, and the deed is recorded with the county, legally transferring ownership.

    This step protects everyone involved: buyers can be confident the property is free of liens, and sellers know they will receive their proceeds. It also triggers post-closing processes, like setting up an escrow account for taxes and insurance. In short, close of escrow turns the contract into reality, marking the legal transfer of the home and the conclusion of the transaction.

    FAQs: Close of escrow

    Can escrow close early?

    Yes, if all conditions are met, documents are signed, and funds are ready, escrow can close earlier than scheduled. Early closing requires coordination among the buyer, seller, lender, and escrow officer. However, closing escrow early doesn’t necessarily mean you’re able to move in sooner – always confirm with your agent and escrow officer.

    What type of issues can occur during close of escrow?

    Several issues can delay or complicate the close of escrow. Common problems include last-minute title or lien issues, appraisal or inspection discrepancies, incomplete repairs, missing documents, or delays in lender funding. Any of these issues may require additional negotiation, documentation, or an escrow extension to resolve before the transaction can be finalized.

    What happens if funding is delayed?

    If the lender doesn’t wire funds on time, closing is postponed until the money is received. This can affect recording and key delivery, so the buyer doesn’t officially own the home until escrow is fully closed.

    What happens if the closing date changes?

    Closing dates can be moved up or pushed back if all parties, including the lender and escrow officer, agree. Even if escrow closes early, possession and key delivery may still follow the terms outlined in the purchase contract.

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    Mekaila Oaks

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  • How to Estimate Utility Costs When Buying a House

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    When you’re shopping for a home, you’re likely focused on the list price and down payment. But don’t overlook utility bills. From electricity and water to internet and trash service, these monthly costs can add up fast, and vary a lot depending on the home.

    Whether you’re eyeing a home in El Paso, TX or New Haven, CT, understanding what utilities might cost can help you budget smart from the start. This Redfin guide covers how to estimate utility costs, what factors influence them, and what the typical homeowner pays each month.

    Key takeaways

    • The average monthly cost for the six most common utilities is about $523.
    • Get utility estimates early from your agent, the seller, or local providers..
    • For the top 6 household utilities, the average cost is $523/month.
    • Costs vary based on location, home size, usage habits, and climate.

    Table of contents

    3 ways to estimate utility costs

    If you’re looking to get a general idea of how much you’ll spend per month on utilities in your new home, there are three main ways to obtain this information:

    1. Ask your real estate agent

    Real estate agents can help estimate utility costs by reviewing historical data from the seller’s agent or annual utility costs of comparables. If you’re looking to estimate utility costs for a rental home or apartment, you can ask a landlord or apartment manager instead.

    2. Ask the current resident

    If possible, ask the current homeowner what they typically pay each month. You don’t need exact bills – even a ballpark range can be helpful. “The most reliable way to estimate monthly utility expenses before purchasing a home is to request a 12-month usage history from the current owner.” says Kelly Bedrich, the cofounder of ElectricityPlans.com, a comparison site for electricity in states where energy choice is deregulated. “While this will not account for differences like thermostat settings or number of occupants, it’s the best way to approximate your usage. “

    3. Ask utility providers

    You can reach out to local utility providers and ask for an estimate for the place you’re moving into. Most companies can give you an average monthly cost for your specific address based on the past year’s usage. 

    Average utility cost by type

    Here are the six utilities you should include when estimating your monthly costs, ranked from most to least expensive.

    1. Electricity

    The average electric bill in 2025 is $146/month according to SaveOnEnergy.

    2. Gas

    While this bill depends greatly on the season, the average gas bill in 2025 is around $90/month according to SoFi.

    3. Sewer

    This bill differs greatly by state, but the average national sewer bill in 2024 is $86/month according to Doxo.

    4. Water

    The national average for a family of four in 2024 is $73/month according to Lawn Starter.

    5. Internet

    According to Forbes, the average internet bill in 2025 is $65/month.

    6. Trash

    The average trash bill is $63/month according to Move.

    Total average

    Looking at only these six main utilities, a home’s average utility cost totals to $523/month.

    a chrome faucet fills up a large white tub with a leafy plant in the background begging the questions how to estimate utility costs when buying a house as answered in this Redfin article

    Factors that influence utility costs

    Utility costs vary greatly by home, state, size, etc. so it’s important to look at the variables that can affect these costs when estimating.

    • Location: Utility costs vary greatly by state due to differences in energy sources, pricing regulations, and infrastructure.
    • Climate: Climate plays a big role in specifically heating and cooling costs. For example, homeowners in colder climates may spend more on heat while those in hotter regions may have higher electricity bills from air conditioning usage. 
    • Number of occupants: Larger households can see higher electricity, water, sewer, and sometimes internet bills due to increased usage. Households with young children or retirees can also see higher bills due to the increased time spent at home.
    • Usage habits: Frequency and efficiency heavily influence utility costs, specifically the energy, water, gas, and sewer bills.
    • Home size: The larger the home, typically the higher the utility bills. More square footage means more energy to heat, cool, and power.
    • Home age: Older homes have the potential for outdated infrastructure like less efficient insulation or aging HVAC systems that will require more energy to operate. Some newer homes have updated systems and modern technology like double-pane windows or solar panels that can help reduce utility expenses.
    • Inflation: Inflation affects every aspect of the economy, including rates charged by utility providers so you can expect costs to change as the economy does.

    According to Kelly Bedrich, heating and cooling your home “accounts for around 50% of your electricity usage. You can keep your electricity bill low by using recommended thermostat settings and by running a DIY energy audit on your home shortly after you move in. That helps identify where air and energy are escaping from your home and driving up your utility bills.”

    FAQs

    How can I decrease utility costs?

    This depends on which utility you’re trying to save on, but we have a guide here.

    How do seasons affect utility costs?

    Seasons especially affect gas and electricity bills due to increased heating needs in the winter and cooling needs in the summer.

    How do I set up utilities?

    First compile a list of all the utilities you need, research providers for each, and schedule set-up with each provider prior to your move-in.

    How do local utility rate structures work?

    Local utility rate structures determine how to pay for utilities and can be flat rate, tiered (block) rates, time-of-use (TOU) rates, or real-time, so be sure to do your research when setting up your utility providers.

    What are energy efficiency ratings?

    Energy efficiency ratings indicate how effective a home (or appliance) is at using energy which can help when comparing options and reducing utility costs. The HERS (Home Energy Rating System) Index is the industry standing for home energy efficiency measurement where lower scores mean better energy performance.

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    Darby Mulligan

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  • How Long Does Signing Closing Papers Take? What to Expect on Closing Day

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    Closing day usually takes a few hours from start to finish, with the signing itself lasting about 1-2 hours for buyers and less than an hour for sellers. The exact length depends on whether you’re financing with a mortgage, paying cash, or if last-minute issues pop up. Knowing how long signing closing papers takes – and what to expect throughout the day – will help you plan your schedule and avoid surprises on closing day.

    Quick snapshot:

    • Signing appointment (buyer): ~1-2 hours
    • Signing appointment (seller): often under 1 hour
    • Full closing timeline (offer → keys): ~30-60 days

    What happens on the day of closing?

    Closing day is the finish line in the homebuying process: the seller transfers title, closing costs are paid, and you usually walk out with the keys to your new home.

    While the day is heavily focused on signing documents, several steps happen before and after those signatures. Here’s what to expect on closing day from start to finish:

    1. Arrival and identity check

    You’ll present a government-issued photo ID and provide any last documents the title company requested (like proof of insurance or wire instructions).

    2. Review of the Closing Disclosure (CD)

    The closing agent will confirm the final numbers – loan terms, closing costs, and how funds will be disbursed. By law, buyers should have received this document at least three business days in advance, giving time to review it and ask questions.

    3. Signing the loan packet (buyers only)

    For buyers with a mortgage, this is usually the lengthiest part of signing closing papers. You’ll sign the promissory note, mortgage or deed of trust, and all lender-required disclosures. Each document confirms your agreement to the loan terms and your obligations as a borrower.

    4. Signing title and transfer documents

    Both parties sign the documents needed to transfer ownership. Buyers sign the deed, settlement statement, affidavits, and other disclosures. Sellers typically sign the deed transferring ownership and their closing statement outlining final proceeds.

    5. Funds exchange

    Buyers provide their “cash to close,” which includes the down payment, closing costs, prepaid expenses (like property taxes or insurance), and any prorated fees. Most buyers wire funds in advance and bring proof of transfer, while some bring a certified or cashier’s check – a personal check is typically not acceptable. The title company verifies these funds to prevent fraud and ensure the seller gets paid.

    6. Notarization and recording

    Once all documents are signed, the closing agent notarizes the necessary papers and submits them to the county for official recording of the new ownership. This step makes the transfer legally binding and enables the lender to release funds to the seller.

    7. Keys and final steps of closing

    After recording and funding, buyers typically receive the keys to their new home, while sellers receive their net proceeds within the next day or two. In some states or situations, recording may delay key handoff until the next business day.

    How long does it take to sign closing papers?

    The average signing appointment takes between 1-2 hours for buyers and 15-45 minutes for sellers since they have fewer documents to sign. If you want to review everything line by line or ask detailed questions, plan for extra time.

    The actual length can vary depending on a few factors:

    • Loan vs. cash: Mortgage closings take longer because buyers must sign a full loan packet; cash buyers often finish more quickly since fewer lender forms are required.
    • Lender readiness and “clear to close”: If your lender has already issued a clear to close, the process tends to be smoother and quicker. If conditions are still outstanding, expect delays.
    • Number of borrowers/complexity: Extra borrowers, co-signers, or parties signing with power of attorney can extend the appointment.
    • State practices: Some states require a closing attorney to be present or additional legal steps, which can lengthen the time that closing day takes.
    • Electronic vs. wet-ink closings: eClosings – whether hybrid or remote notarization – can shorten the signing time or make it more convenient, though availability depends on your state, lender, and title company.

    Plan your schedule for at least two hours, but be prepared to stay longer if questions or corrections appear.

    FAQs: Closing day logistics and timelines

    Do buyers and sellers sign at the same time on closing day?

    Not necessarily. Some states or title companies schedule separate appointments for buyers and sellers, while others coordinate a joint signing. Regardless, the process is similar for each party, just with fewer documents for sellers.

    How long does closing usually take? 

    The closing process typically takes 30-60 days from accepted offer to getting the keys, depending on factors like financing, inspections, and the parties’ readiness. The closing day itself takes just a few hours. It’s possible to close in under 30 days (sometimes as quickly as 2 weeks), especially if you have an all-cash offer.

    >> Read more: 10 Steps to Expect When Closing on a House

    Can the seller leave once they’ve signed their documents?

    Yes. Once the seller’s portion is complete, they technically don’t need to stay for the buyer’s signing. The title or escrow company handles the rest of the process.

    When do buyers get the keys?

    Typically after the county records the new deed and the lender releases funds. In some cases this happens the same day, but in others it may be the next business day, which could affect when you can move into your new home after closing.

    What happens if closing is delayed?

    Closings can be pushed back if funds aren’t received on time, if last-minute lender conditions arise, or if the county recorder’s office is backed up. In most cases, the closing agent works quickly to resolve the issue and reschedule within a day or two.

    Do buyers need to bring anything besides an ID?

    Yes, there are several items buyers need to bring to closing. They’ll need to bring proof of funds if wired ahead of time, or a certified/cashier’s check if paying in person. Some title companies may also request the original homeowners insurance binder or any final documents from the lender.

    >> Read more: The Ultimate Guide to Closing Documents

    What if someone can’t attend the closing in person?

    Many title companies offer remote or mail-away closings, or allow a legal power of attorney to sign on the absent party’s behalf. Options vary by state, so it’s best to coordinate this in advance.

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    Mekaila Oaks

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  • How to Make an Offer on a House in 6 Steps

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    Making an offer is one of the most important steps in the homebuying process. It’s the point where you find out if the home will be yours or not. From deciding how much to offer to choosing contingencies and earnest money, and preparing for negotiations, there’s a lot to consider. 

    In this Redfin article, we’ll outline how to make an offer on a house in six steps. Whether you’re buying a home in Minneapolis, MN, or a townhouse in Austin, TX, here’s what you need to know about making an offer on a home so you have the best chance of getting it accepted. 

    6 steps to make an offer on a house
    1:     Decide on how much to offer
    2: Choose your contingencies
    3: Decide on earnest money amount
    4: Write up the offer letter
    5: Submit your offer and wait
    6: Negotiate the terms of the sale

    What to do before making an offer

    Before making an offer on a home, there are a few things you should do that can help make the process smoother. Let’s explore them.

    Get a mortgage pre-approval

    A pre-approval letter tells you how much a lender will loan you to buy a home. Most sellers won’t take an offer seriously without pre-approval, so having one ready lets you move fast when you find a home.

    Keep in mind that a pre-approval is different from a pre-qualification. A pre-approval is the more serious of the two, as a lender examines your finances to decide how much to lend. A pre-qualification only uses the information you provide.

    Learn about the local housing market

    If homes are selling quickly and above the list price, you’re likely in a competitive market. You could end up competing with other buyers or get drawn into a bidding war on a home. Knowing the market can help you decide what price to offer. Look up housing trends in your area and ask your real estate agent for their expertise.

    Get insight from your agent

    Your real estate agent may also know information about why the sellers are selling their home. If the sellers are in a hurry to sell, you may be able to submit a slightly lower offer. However, if the sellers aren’t in a rush, they may be more likely to wait for a higher offer.

    Understand the basics of an offer

    Your real estate agent will put together your offer using a standard template that includes all the key details:

    • Your offer price
    • Your down payment amount
    • The amount of earnest money you’ll deposit
    • A copy of your pre-approval letter
    • Any contingencies you want to include
    • A breakdown of the closing costs and who will pay each one
    • When you hope to close (i.e., complete the purchase)
    • The offer’s expiration date

    We’ll cover some of these, but your agent should be able to walk you through them all and help you decide how to make an offer that works for you.

    How to make an offer on a home

    Once you’ve learned what to do before making an offer on a house, you can move on to the steps of making an offer.

    Step 1: Decide on how much to offer

    If you’ve already been pre-approved, you probably have a good idea how much you can afford to spend on a home. But the price you decide to offer will depend on many factors – the competitiveness of the housing market, the home itself, your budget, and more. 

    Housing market conditions: 

    • Buyer’s market: More homes for sale than buyers – you may have the opportunity to offer lower than the home’s listing price.
    • Seller’s market: Fewer homes for sale than buyers – you may need to offer above the listing price to stand out above the competition. 

    Budget: Your budget is often the biggest factor in determining how much to offer on a house. Even if you’re approved for a larger mortgage, that doesn’t mean you should buy more than you can afford. Consider offering less than your mortgage amount to leave room for negotiation.

    The home: There are circumstances where it makes sense to offer an amount above or below the list price, and others where you should meet the list price. Your agent can help you determine the right offer for you. Some factors include: 

    • Time on the market: The longer the home has been on the market, the more likely the seller is to consider a lower offer.
    • Necessary repairs: If the property needs lots of repairs or is turnkey, it can affect how much you offer. 
    • Comparable homes in the area: Your real estate agent can pull comparable homes, also called “comps,” which are similar homes for sale or recently sold in the area. This gives insight as to whether the home is fairly priced. 
    • Competition: Competition for a home can highly influence your offer. Talk with your agent about handling a bidding war or making a backup offer if the seller has already accepted one.

    Step 2: Choose your contingency clauses

    Contingencies protect you as the buyer by giving you a way to back out of the deal if certain conditions are not met. When you use a contingency to cancel the deal, you can usually recover your earnest money. 

    Sellers prefer offers without contingencies, so use them sparingly if you can. The contingencies available depend on your location and the current housing market, but here are the most common ones:

    Step 3: Decide on the earnest money amount

    The third step is deciding how much to offer in earnest money. Earnest money is a deposit, usually 1-3% of the home’s sales price, that you pay after your offer is accepted. It shows that you’re committed to purchasing the home.

    If the sale goes through, it’s applied to closing costs. If you back out of the sale due to a reason covered in your contract, such as a contingency that isn’t met, earnest money will be refunded to you. The seller keeps the earnest money if you withdraw from the sale for another reason.

    Step 4: Write up the offer letter

    This refers to the legal offer document, not a personal letter to the seller. Personal letters to sellers are discouraged as they can violate Fair Housing laws.

    Your real estate agent will draft up the offer letter for you, but if you’re working without an agent, here’s what you’ll need to include:

    • Address of the home you’re offering to buy
    • Your name and anyone else’s name that will be on the house title.
    • Your offer price
    • Any contingencies you want to include
    • Any seller concessions you’re asking for, like repairs or closing costs
    • Your mortgage pre-approval letter
    • Items you want in the sale, such as appliances
    • Earnest money deposit amount
    • The date you anticipate the loan closing
    • The date you expect to move in
    • Deadline for the seller to respond to the offer

    Step 5: Submit your offer and wait

    Once your offer is ready, your real estate agent will submit it on your behalf. If the seller has received other offers or expects to, you may have to wait a few days for an answer. 

    Step 6: Negotiate the terms of the sale

    It’s common to negotiate with the seller, and having an experienced real estate agent is crucial. Discuss ahead of time which aspects of the offer you’re willing to negotiate and which are non-negotiable. Here are three scenarios you may face after submitting your offer. 

    Scenario 1: The seller accepts your offer

    If the seller accepts your offer, then you’ll move on to the next steps. This means signing the purchase and sale agreement, gathering your earnest money, and applying for a mortgage. 

    Scenario 2: The seller makes a counteroffer

    The second option is that the seller makes a counteroffer. It’s up to you and your real estate agent how you’d like to proceed. The negotiations are typically informal and help you come to an agreement – or walk away from the deal.

    Here are some things to consider:

    • You don’t have to negotiate the purchase price: While it may be that the seller’s counteroffer is a higher purchase price than you offered, that doesn’t mean you have to accept that. You can consider negotiating repair costs or other concessions. 
    • Learn what the seller is looking for: Your real estate agent will reach out to the sellers and their agent to determine what the sellers are looking for. Do they want you to remove contingencies? Were they looking for a higher price? This information can help you determine what to negotiate. 

    Scenario 3: The seller rejects your offer

    The final scenario is that the seller rejects your offer. Maybe your offer was too low, or there was a cash buyer. If your offer is rejected, then you can begin looking at other homes on the market. 

    What happens after your offer is accepted?

    Congratulations, your offer was accepted. Here’s what you can expect next:

    • Sign the contract: Read it carefully, and make sure you understand the details before you sign.
    • Secure your mortgage: You’ll need to apply for your home loan. Your lender will conduct a deeper financial review, finalize your loan terms, and order an appraisal to confirm the home’s value. 
    • Schedule your inspection and appraisal: Be sure to have a home inspection to uncover any issues with the property and arrange a home appraisal.
    • Close on your new home: When any contingencies are met and your mortgage is ready, you can sign the paperwork and close on the home. Your lender will transfer your funds to the attorney or title company to finalize your purchase and receive the keys.

    FAQs about making an offer

    How much should I put down?

    How much your down payment is will vary depending on your loan type and budget, but here are some things to consider. 

    • 0% down – VA or USDA loans
    • 3-5% down – FHA and some conventional loans
    • 10-20%+ down – Helps avoid private mortgage insurance (PMI) and lowers monthly payments. 

    What if I’m caught in a bidding war?

    A bidding war happens when a seller receives multiple offers in a short amount of time. Because buyers are competing against each other, they may raise their offer price, give up contingencies, or make other “concessions” to make their offers more appealing. Your agent can give you advice to help you avoid bidding wars when possible, and navigate them wisely when you can’t.

    How much is too low to offer on a home?

    Offering a lower offer on a house than the list price depends on several factors. Your real estate agent will have insight as to what is too low to offer. 

    How long does it take to close on a home?

    Closing on a home with a mortgage can take anywhere from 30 to 60 days. There are things you can do to prevent delays and speed up the closing process.

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    Alison Bentley

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  • How Much House $500K Buys in Major Cities Across the U.S. (and What This Means for Investors)

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    For many buyers and investors, $500,000 is a benchmark budget. But in today’s housing market, that number doesn’t stretch the same way everywhere – and the trade-offs reveal a lot about both affordability for buyers and opportunity for investors. In cities like San Francisco or Los Angeles, half a million dollars may only stretch to a condo or small starter home, while in markets like Boston or Seattle, buyers get noticeably more space for the same budget. 

    These differences aren’t just important for homebuyers, they also shape how investors think about where to put their money. By comparing how much house $500K buys in major U.S. cities, we can uncover not only affordability trends but also where opportunities may lie for long-term real estate growth.

    What determines how far $500K goes?

    A half-million dollars may sound like a big budget, but location ultimately determines buying power. In some metros, $500K secures a family home with room to grow; in others, it barely covers a starter unit.

    For homebuyers, these factors determine what kind of space you can afford. For investors, they highlight differences in affordability and entry costs across markets.

    Key factors that influence how far $500K goes include:

    • Cost of living and demand: In high-cost metros like San Francisco or New York, limited land and intense demand mean higher prices and less space for the same budget.
    • Price per square foot: Cities with lower housing costs translate into larger homes for $500K. By contrast, expensive coastal markets eat away at square footage quickly.
    • Inventory levels: When the number of homes for sale is low, competition drives prices higher and narrows buyer options. Expanding inventory, on the other hand, can stretch your dollars further.
    • Local economy and jobs: A strong job market pulls in new residents, which raises housing demand and pushes up prices, reducing affordability.
    • Neighborhood factors: School quality, public transit, and access to amenities can significantly impact what $500K buys, even within the same metro.

    With those dynamics in mind, here’s how much square footage $500K buys in major U.S. metros today.

    How much house $500K buys in major U.S. cities

    Using July 2025 housing data from the Redfin Data Center, here’s how much square footage $500,000 buys across five major metros:

    Metro SqFt for $500K Median $/SqFt Median Sale Price Home type for 500k
    San Francisco, CA 500 $1,000 $1,510,000 Compact condo or studio
    Los Angeles, CA 826 $605 $926,000 Condo or bungalow-style starter home
    Seattle, WA 1,046 $478 $849,388 Townhome or small single-family home
    New York, NY 1,042 $480 $807,000 1-2 bedroom condo
    Boston, MA 1,160 $431 $775,000 Large condo or modest single-family home

    In San Francisco, half a million dollars only covers about 500 square feet, roughly the size of a studio apartment. In Boston, the same budget buys more than 1,100 square feet, enough for a single-family home or spacious condo. Cities like Los Angeles and New York fall somewhere in between, with $500K stretching to just over 800–1,000 square feet.

    What this means for investors

    To understand what these differences mean for investors, we spoke with Dave Meyer, Head of Content Strategy at BiggerPockets, a leading online community and resource hub for real estate investors.

    “As more markets shift to a buyer’s market with flat or declining prices, investors are presented with both opportunity and risk.

    Investors should keep an eye out for opportunities to acquire strong assets in fundamentally strong markets, as modest price and mortgage rate declines are increasing affordability. Of particular interest are strong markets with great long-term growth potential, like Seattle, Dallas, and San Diego, for example, but are seeing softening prices and better buying conditions.

    Of course, as prices moderate or fall in many markets, investors need to protect themselves and should be wary of “catching a falling knife,” acquiring an asset that is likely to lose further value. The best way to protect against this is to aim to buy below list price and below current comps. While investors always want to buy for value, a sale-to-list ratio of 99% nationwide indicates that after many years of fierce competition, buyers have returned to the driver’s seat when negotiating on price.”

    Key takeaways for homebuyers 

    For buyers, the biggest lesson is that $500,000 doesn’t mean the same thing everywhere. In some metros, it’s enough to secure a spacious single-family home, while in others, it barely covers a starter condo. That’s why looking beyond just the price tag is so important.

    A few takeaways for homebuyers include:

    • Size vs. location trade-offs: A bigger home in a lower-cost city may sound appealing, but if your job, family, or lifestyle ties you to a pricier metro, you may need to compromise on square footage.
    • Affordability goes beyond the sale price: Property taxes, insurance, and HOA fees can vary widely from city to city and can significantly affect your budget.
    • Long-term value matters: Even if $500K buys less space in high-cost markets, those homes may appreciate faster, adding long-term value to your purchase.
    • Consider emerging markets: Cities with growing inventories and moderate prices could offer both affordability today and solid appreciation in the future.

    FAQs: How much house does $500K buy?

    Why does buying power vary so much between cities?

    Local housing demand, price per square foot, inventory levels, and cost of living all play a role. A strong job market or limited supply often pushes prices higher and reduces what $500K can buy.

    Is $500K a good budget for real estate investors?

    Yes, but it depends on your strategy. In some cities, $500K could fund a rental condo in a high-demand market, while in others it could purchase a larger property with strong long-term appreciation potential.

    What should buyers and investors consider before spending $500K?

    Beyond square footage, look at property taxes, ongoing costs, and long-term appreciation trends. Location determines not only what you can buy today, but how much your investment may grow in the future.

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    Allie Drinkward

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  • The Top 5 Home Inspection Red Flags to Look Out For Before Buying

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    You’ve found your dream home, had your offer accepted, and are heading into the inspection — congrats! You’re halfway there. But even houses that look move-in ready can be hiding issues or will need repairs — and some problems are more serious (and expensive) than others.

    A good home inspector looks at a home’s systems and around the property to ensure everything is in working order, safe, and livable. But the biggest red flags found during a home inspection are almost always those that could be extra costly to fix or reveal more than you bargained for. 

    Whether you’re buying in San Antonio, TX where foundation issues run rampant, or looking at homes in Charleston, SC, where past flooding could be at play, here are the biggest red flags to look out for once the home inspection report comes back.

    1. Structural problems

    One of the main things to look out for when buying a home is problems with the foundation, especially if there are horizontal cracks, says Redfin real estate agent David Palmer. “If I see those, it’s an immediate stop. At the very least, you’re going to need a foundation expert to take a look.”

    If the cracks are vertical, it’s not as worrisome — “unless it’s large enough to stick a coin into. Then it’s time to call in an expert. Foundations can be very expensive,” Palmer says.

    What’s a structural red flag? Old wooden foundations, sloping in the home, or sagging and cracks in the walls could also be signs you’re in for complicated (and spendy) structural problems after purchase.

    2. Water damage and past flooding

    Water stains on the ceiling or bad musty smells in a basement could mean leaks, roof problems, or bad sewer line drainage. Water in the home can warp wood, peel paint, and even weaken the structure of the house.

    Past flooding could also be the cause of excess moisture in the home, but at that point you’re not just dealing with water damage. Floods can leave behind hidden mold, damage to electrical systems, and compromise the integrity of the foundation. 

    If a home has been flooded, it can sometimes make it harder to get affordable homeowners insurance, or certain types of coverage altogether — so not only are you out the cost of fixing the problem, but you could be in for even more headaches during closing.

    3. Pests and rodents

    Another red flag that can pop up during a home inspection is signs of mice, termites, or other pests known to your location, like carpenter ants in heavily forested areas.

    “When walking around the perimeter of a home, I’m going to be looking at the vents into the crawl space to see if there’s any holes chewed into it,” advises Palmer. 

    Pests and rodents might just seem annoying at first, but they can cause structural damage, deterioration, and health risks, and could be an ongoing problem or happening unaware behind the scenes.

    4. Roof and chimney issues

    A roof has an expiration date, and even if it’s been replaced somewhat recently, it’s still a good idea to make sure it’s in decent condition and hasn’t been damaged or improperly installed. 

    If the home you’re looking at has a chimney, it’s also crucial to add a fireplace and chimney inspection to the regular home inspection to make sure it’s structurally sound and free of debris that could spark a sudden fire. 

    “I’m looking for waves in the roofline, discoloration that gives me an idea of how old the roof may be, and at the chimney — is it deteriorated or falling apart?” says Palmer.

    5. Outdated or unsafe electrical systems

    Older homes are especially susceptible to wiring and electrical systems that just no longer work with modern appliances. Fire is a real risk when putting strain on tired circuits or when knob and tube or aluminum wiring is present.

    Homes with faulty wiring or otherwise unsafe electrical might need to be fully replaced, likely even before moving in. Homeowners insurance policies often want this box to be checked before issuing a policy, and many lenders need proof of insurance before approving the mortgage — leading to an expensive and potentially stressful closing.

    >>See More: Most Common Home Inspection Problems

    The bottom line

    Red flags that pop up in the home inspection report aren’t just cosmetic or easy fixes; they’re usually complicated and costly. When structural issues, water damage, pests, electrical, or roof problems pop up, there could be even more going on beneath the surface. 

    “It’s like a string on a sweater: you start going down that rabbit hole and things could start to get more and more expensive,” says Palmer. “One of these things could be just the first sign of further damage.” 

    With an inspection contingency in place, buyers have the option to walk away if the issues seem too overwhelming or expensive. Otherwise, negotiating credits or a price reduction with the seller is a way to hang on to the deal without too much loss out-of-pocket — or as a last resort, buying the home anyway knowing there will be more money invested into repairs.

    FAQs about home inspection red flags

    What would be considered a structural red flag?
    Structural red flags could look like large foundation cracks, sagging or uneven floors, bowing walls, shifting chimneys, or doors and windows that don’t sit well in their frames. If you see these it could mean there’s underlying movement or damage that needs to be professionally repaired.

    What would cause a house to fail a home inspection?
    Technically, a house doesn’t pass or fail an inspection. The home inspection report just lists issues. But major, expensive items like foundation problems, unsafe wiring, roof failure, severe water damage, or unpermitted work can be serious enough that a buyer might decide not to go ahead with the home.

    When should you walk away after a home inspection?
    You should consider walking away if the inspection brings up repairs that are too expensive or risky to fix, like major structural damage, chronic water problems, widespread mold, or other costly or unsafe problems the seller won’t cover. If the cost or stress outweighs the value, it’s better to move on.

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    Ashley Cotter

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  • Buying Spec Homes vs Custom Builds: Which is Right for You?

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    If you’re shopping for new construction – whether its a  home in Austin, Texas, or a new development in Charlotte, North Carolina – one of the first choices you’ll face is deciding between a spec home and a custom build. Both fall under new construction but offer very different experiences. A spec home provides speed and convenience with most decisions made for you, while a custom build gives you complete control over design, layout, and finishes. The right option comes down to your timeline, budget, and how involved you want to be in the process. 

    In this guide, we’ll break down what each path looks like, their pros and cons, and how to decide which one is the best fit for your lifestyle.

    What is a spec home?

    A spec home (short for speculative home) is a type of new construction home built by a builder without a buyer lined up. The builder chooses the lot, floor plan, finishes, and features ahead of time, expecting to sell once the home is completed. Because they’re often finished or nearly finished, spec homes are also called “move-in ready” homes.

    Why buyers choose spec homes:

    • Faster move-in: Unlike a custom build that can take months or even a year, spec homes are usually ready to occupy soon after closing.
    • Less decision-making: The builder already picked the design details, so you don’t have to manage upgrades or floor plan choices.
    • New construction benefits: You still get a modern home with brand-new systems, appliances, and materials.

    How buying a spec home works:

    1. Tour the finished (or almost finished) property.
    2. Make an offer, just like you would on a resale home.
    3. Go through the usual steps: financing, inspection, appraisal, and closing.

    The biggest advantage of buying a spec home is getting a brand-new house without the long wait and intensive design process.

    What is a custom build?

    A custom build is a type of new construction home designed and built specifically for the buyer. Instead of purchasing a move-in ready property, you work with a builder to choose the lot, floor plan, finishes, and layout. This gives you full control over how the home looks and functions.

    Why buyers choose custom builds:

    • Personalization: Every detail, from the kitchen design to the number of bedrooms, can be tailored to your lifestyle.
    • High-end finishes: You can select premium materials and upgrades that may not be available in spec homes.
    • Future planning: Custom homes are often designed with long-term needs in mind, such as space for a growing family or aging in place.

    How the process works:

    1. Meet with a builder to plan the design and floor plan.
    2. Secure financing  (often a construction-to-permanent loan) and obtain necessary permits.
    3. Construction begins, which can take several months to over a year depending on complexity.
    4. Once complete, you move through the standard closing steps, i.e. inspection, appraisal, and final paperwork.

    The biggest advantage of a custom build is that it’s truly your home, designed your way — but it requires more time, more decisions, and often a higher budget.

    Key differences between spec homes and custom builds

    Both spec homes and custom builds fall under new construction, but they differ in how much control you have, how long you’ll wait, and how much you’ll spend.

    Factor Spec home Custom build
    Customization Limited choices; builder pre-selects most details. Some finishes may be chosen if purchased early. Full control over layout, finishes, and features, tailored to your lifestyle.
    Timeline Faster move-in since the home is already built or nearly complete. Longer process with design, permits, and construction that can take months to over a year.
    Cost More predictable pricing; often lower upfront and may include builder incentives. Higher and variable costs depending on design choices, upgrades, and materials.
    Involvement Hands-off process with minimal decisions required. High involvement with ongoing meetings, approvals, and selections.
    Best for Buyers who want convenience, speed, and a set budget. Buyers who want a one-of-a-kind home and are comfortable with time and cost.

    Bottom line: A spec home is best if you want a new house quickly and at a more manageable price, while a custom build is right if you value complete personalization and don’t mind a longer, more hands-on process.

    Pros and cons of spec homes

    Pros

    • Faster move-in: Often completed or nearly finished, so you can move in quickly.
    • Simplified process: Fewer design decisions since the builder selects most finishes.
    • Cost advantages: Builders may offer lower pricing through bulk material savings.
    • Easier financing: Similar to buying a resale home, making the mortgage process straightforward.

    Cons

    • Limited personalization: Few opportunities to choose layouts or finishes.
    • Compromises on style: Built for broad appeal, which may not match your taste.
    • Possible higher price: Some include upgrades that raise overall cost.
    • Future renovation needs: You may need to update features that don’t suit your lifestyle.

    Pros and cons of custom builds

    Pros

    • Full customization: Control over layout, design, and finishes.
    • Higher quality options: Ability to select durable, premium materials and features.
    • Energy efficiency: Incorporate modern, sustainable building technologies.
    • Personalized style: Create a home that reflects your vision and lifestyle.

    Cons

    • Higher upfront cost: Unique design and specialized labor increase expenses.
    • Longer build time: Often takes months to over a year to complete.
    • More involvement required: Frequent decisions and project management can be stressful.
    • Resale risk: Over-customization may reduce appeal to future buyers.

    Should you buy a spec home or a custom build?

    Choose a spec home if… you’re looking for a faster move-in, prefer a simpler buying process, and want predictable pricing without having to make endless design decisions.

    Choose a custom build if… you want a home designed around your lifestyle, are comfortable waiting through a longer construction timeline, and have the budget flexibility to handle the higher costs of customization.

    FAQs about spec homes vs. custom builds

    1. Can “custom” homes be cheaper than a builder’s model home?

    Sometimes, but not often. Custom homes usually cost more, though a simple design with basic finishes can be less expensive than a model loaded with upgrades.

    2. Do spec homes hold their value?

    Yes. Their value depends on location, quality, and market conditions, just like any other home.

    3. How long does it take to build a custom home?

    Most take 9–12 months, but larger projects can take longer.

    4. Do I need a real estate agent when buying new construction?

    Yes. An agent helps with contracts, negotiations, and inspections.

    5. Can I finance a spec home the same way as a resale home?

    Yes. Spec homes use traditional mortgages. Custom builds, however, often require a construction loan that later converts to a standard mortgage.

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    Holly Hooper

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  • Is Earnest Money Refundable? When You Can (and Can’t) Get It Back

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    When you make an offer on a home, you’ll usually include earnest money – a good-faith deposit between 1% to 3% of the purchase price that shows you’re committed to the purchase. If the sale goes through, it’s applied to your down payment or closing costs. But what happens if the deal falls apart – is earnest money refundable?

    Short answer: Yes, earnest money can be refunded, but only if contingencies in your contract cover the reason the deal didn’t close.

    This Redfin real estate article will explain when you can expect to get your earnest money back, when you might lose it, and how contingencies safeguard your deposit.

    When is earnest money refundable?

    Earnest money is typically refundable if the buyer backs out of the deal for a reason covered by contingencies in your purchase agreement. These clauses are designed to protect your deposit, but they only apply if you meet the required deadlines and uphold your end of the contract.

    Here are a few common scenarios when a buyer can usually expect to get their earnest money refunded:

    1. Home inspection uncovers major issues

    If the offer includes a home inspection contingency and the inspection reveals serious problems, like foundation damage, mold, or an outdated electrical system, the buyer can back out of the deal within the inspection period. This allows them to have their earnest money refunded while avoiding a home with unexpected and costly issues.

    2. Buyer is unable to secure financing

    A financing or mortgage contingency protects buyers who are unable to secure a home loan. Even with pre-approval, unexpected financial changes or lender decisions can prevent final approval. When this contingency is in place, the buyer can typically back out of the deal and have their earnest money refunded.

    3. The home appraises for less than the purchase price

    An appraisal contingency lets buyers back out of the contract if the home appraises for less than the offered price and the seller refuses to adjust it. Without this contingency, the buyer could be responsible for the difference or risk forfeiting their earnest money if they walk away.

    4. Title issues are discovered

    During the home-buying process, a title search is conducted to ensure the property is free of ownership disputes, liens, or other legal claims. If the search uncovers unresolved issues that can’t be cleared before closing, a title contingency allows the buyer to cancel the contract without penalty. In this case, the buyer’s earnest money is refunded, protecting them from financial risk tied to hidden claims on the property.

    5. Seller backs out of the deal

    If the seller withdraws from the contract without a valid reason – such as deciding not to sell or failing to meet agreed-upon terms – the buyer is generally entitled to a full refund of their earnest money. This protection ensures the buyer isn’t penalized for circumstances outside their control and can pursue other properties without losing their deposit.

    When is earnest money not refundable?

    In most cases, earnest money becomes non-refundable when the buyer breaches the contract or backs out for reasons not covered by the agreement. Even if contingencies exist, failing to follow the contract’s requirements can result in forfeiture of the deposit.

    1. Buyer waived contingencies

    In competitive markets, buyers may choose to waive protections like the inspection or financing contingency to strengthen their offer. However, doing so limits their ability to cancel the contract without penalty. If problems arise later, the buyer may be unable to recover the earnest money.

    2. Buyer misses a deadline

    Contingencies only protect buyers within the time frames specified in the contract. If a buyer fails to complete an inspection, secure financing, or take other required steps on time, they may forfeit their earnest money – even if the reason for backing out would normally be covered.

    3. Buyer changes their mind

    If a buyer simply decides not to proceed with the purchase – whether they got cold feet, found a different property, or another reason not covered by a contingency – the seller is typically entitled to keep the earnest money deposit. This compensates the seller for time lost and potential offers missed.

    Common mistakes that can cost buyers their earnest money 

    Even when buyers include contingencies, certain missteps can still put their deposit at risk. These are often overlooked but can have real consequences:

    Failing to clarify the inspection scope

    Buyers sometimes assume that an inspection contingency covers all possible issues. If the contingency language is too vague or doesn’t include specific areas (like septic systems, pools, or roofing) and specialty inspections, the buyer may be unable to back out for problems discovered later.

    Not fully understanding appraisal conditions

    Appraisal contingencies may only allow the buyer to cancel if the home appraises below a specific threshold. Buyers who don’t confirm the terms may assume they’re protected for smaller discrepancies or negotiation gaps, and lose their earnest money deposit if the seller refuses adjustments.

    Failing to properly request deadline extensions

    Even if a buyer has valid reasons for needing more time – such as completing inspections or securing financing – missing a contingency deadline without a formally approved extension can be treated as a contract breach. This mistake can result in forfeiting the earnest money, even when the underlying reason for the delay is legitimate.

    Assuming seller delays or mistakes automatically protect the deposit

    Buyers sometimes believe that if the seller misses a deadline, they can cancel without consequence. Most contracts include provisions outlining how buyer deadlines are affected by seller actions, and misreading these can result in losing the deposit.

    How buyers can protect their earnest money

    Buyers can take several steps to keep their earnest money refundable and reduce the risk of losing it. Staying organized, following the purchase agreement, and documenting each step can help ensure the deposit remains secure.

    Key steps include:

    • Include clear contingencies in the contract
    • Meet all contract deadlines for inspections, financing, and other contingencies.
    • Document everything in writing, including contract changes, deadline extensions, etc.

    For example, a buyer who completes inspections late without requesting an extension could lose their deposit even if serious issues are found.

    FAQs: Earnest money and refunds

    Do buyers always have to put down earnest money?

    No, earnest money isn’t legally required, but in most markets, it’s standard practice. Without it, the offer may appear less serious, and the seller might choose a buyer who includes a deposit.

    When is earnest money due?

    Typically within 1-3 business days after the seller accepts the offer, as specified in the purchase agreement.

    Where does earnest money go?

    Held in a neutral escrow account, the deposit is applied to the buyer’s down payment or closing costs if the sale closes.

    What happens if I accidentally miss a deadline in the contract?

    Failing to meet deadlines can breach the contract, putting the earnest money at risk. The seller may have the right to keep the deposit if the buyer fails to meet the agreed-upon terms.

    Can a buyer extend a contingency deadline to protect their earnest money?

    Yes. Most purchase agreements allow buyers to request extensions for inspections, financing, or other contingencies. To protect the earnest money, the extension must be documented in writing and agreed to by the seller. Missing a deadline without a formal extension could result in forfeiting the deposit, even if the reason for the delay is valid.

    What happens if the inspection contingency expires?

    If the inspection contingency expires and the buyer hasn’t raised concerns or formally requested an extension, the right to cancel based on inspection findings is lost. At that point, backing out of the deal due to inspection issues would likely be considered a breach of contract, and the buyer could forfeit their earnest money deposit.

    When can the seller keep the earnest money deposit?

    The seller can keep the earnest money if the buyer cancels the contract for a reason not covered by contingencies, fails to meet deadlines, or defaults on the agreement.

    How can I get my earnest money back?

    To receive a refund, the buyer must cancel the contract according to the terms of a valid contingency and do so within the specified timeframe. The escrow holder will release the funds once both parties sign a release agreement or the cancellation terms are legally resolved.

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    Mekaila Oaks

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  • Can You Close On a House in Less Than 30 Days? Yes, Here’s How

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    If you’ve ever wondered whether it’s possible to close on a house in less than 30 days, the answer is yes – it can be done in under a month. Achieving a fast closing requires careful planning, organized documentation, and clear communication among all parties. Buyers often need to move quickly due to factors like job relocations, expiring leases, or competing in a fast-moving housing market.

    With a motivated seller and the right professionals – agents, lenders, and title companies – a 30-day closing, or even faster, is entirely possible. In this Redfin real estate article, we’ll explain how buyers can streamline the process and increase their chances of closing in less than 30 days.

    How quickly can you close on a house?

    In certain situations, particularly all-cash transactions, a home can close in as little as one to two weeks. The timeline ultimately depends on factors such as financing, seller preparedness, and how efficiently inspections, appraisals, and paperwork are managed.

    In most cases, closing on a home takes about 30 to 60 days when a mortgage is involved. That window allows time for the lender to process your loan, verify income and credit, and order an appraisal. Cash purchases often move the fastest, since there’s no loan approval or underwriting required. allowing some buyers to close in less than 30 days.

    It’s important to note that the closing date is specified in the purchase agreement and agreed upon by both buyer and seller. While the contract sets the target, the actual speed depends on the circumstances of the transaction and how smoothly each step comes together.

    Factors that influence a fast closing

    • Financing type: Cash purchases close fastest with no lender approvals or contingencies. Conventional, FHA, or VA loans typically take 30-45 days (or slightly longer for government-backed loans) due to underwriting, income verification, and appraisals.
    • Seller preparedness: Sellers with a clear title, completed disclosures, and minimal repairs allow for a faster closing. In competitive markets, sellers often favor buyers who can meet a tighter timeline.
    • Team expertise and responsiveness: Quick, efficient communication from agents, lenders, and title companies helps prevent delays in inspections, appraisals, and document processing.
    • Document readiness and scheduling: Having pre-approval, proof of funds, and all necessary paperwork ready, along with promptly scheduling inspections and appraisals, keeps the process on track and can significantly shorten the timeline.

    How buyers can improve their chances of closing in less than 30 days

    Closing on a house in under 30 days requires careful planning, proactive communication, and strategic decision-making. While every transaction is unique, there are several practical steps buyers can take to improve their chances of a fast closing.

    1. Get pre-approved early 

    A full pre-approval involves a thorough review of your income, assets, credit history, and employment, completing much of the mortgage underwriting before you submit an offer. This speeds up the loan process and strengthens your position with sellers. 

    To keep the closing on track, avoid taking actions – like opening new credit accounts or making large purchases – that could jeopardize your mortgage approval.

    >> Read more: How Often Does an Underwriter Deny a Loan?

    2. Shop around for lenders before submitting an offer

    Not all lenders move at the same speed, and for a fast closing, the choice of lender can make a huge difference. Research and compare lenders ahead of time to find one known for fast turnaround and responsive communication. Choosing the right lender before submitting an offer can prevent bottlenecks once your offer is accepted and help keep a fast closing on track.

    3. Organize necessary documents ahead of time

    Having your paperwork ready allows the lender, title company, and other parties to move quickly. Delays often occur when buyers scramble to provide documentation after an offer is accepted. 

    Buyers should prepare: 

    • Pay stubs, and W-2s or 1099s
    • Bank statements
    • Tax returns
    • Proof of funds
    • Employment verification
    • Identification

    >> Read more: What to Bring to Closing Day: A Checklist for Homebuyers

    4. Schedule inspections and appraisals promptly

    Once your offer is accepted, immediately arrange the home inspection and appraisal if needed. Prompt scheduling ensures that any issues or adjustments can be addressed without slowing down the closing timeline.

    5. Be flexible with contingencies and move-in dates

    While it’s important not to skip critical inspections, shortening timelines for contingencies – like repairs or appraisal reviews – can help speed up the process. Similarly, being flexible on move-in dates (if possible) can make sellers more willing to accommodate a fast closing.

    6. Maintain clear and frequent communication

    Fast closings require coordination among all parties involved. Stay in regular contact with your lender, real estate agent, and title company to confirm deadlines and follow up on any outstanding items. Proactive communication can prevent small issues from becoming major delays.

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    Mekaila Oaks

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  • Should You Ever Consider Waiving the Home Inspection?

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    With the housing market more competitive than ever, more and more buyers are feeling the pressure to make their offer stand out. One tactic is waiving the home inspection contingency. While this move can make your offer more attractive to sellers, it’s important to know the risks of waiving the home inspection.

    Waiving the home inspection contingency means the buyer is giving up their right to negotiate repairs or back out after an inspection — potentially putting themselves on the line for expensive problems after move-in. And many buyers are taking that gamble. Data from the National Association of Realtors (NAR) shows that 25% of buyers waived an inspection contingency in April 2021, the first month the group began tracking this trend. That number climbed to 30% in June 2022 before dropping to 18% in August of this year.

    But is it worth the risk?

    What does waiving a home inspection actually mean?

    Some people believe that waiving a home inspection means skipping the inspection altogether. But that’s not the whole picture.

    When people say they’re waiving the inspection, what they’re actually referring to is waiving the inspection contingency. When a buyer waives the inspection contingency, you’re agreeing that you:

    • Won’t use the inspection results to cancel the purchase agreement — and if you do, you’re out your earnest money.
    • Won’t renegotiate the price or ask the seller for repairs after the inspection.
    • Are agreeing to purchase the home “as is” in the eyes of the seller.

    But homebuyers usually still have the right to hire a home inspector after an offer is made, even if they’re waiving the inspection contingency. This is called an inspection for informational purposes only, and is just for buyer knowledge rather than a negotiation tactic.

    Why buyers waive inspections

    In fast-moving housing markets, especially in cities with limited inventory, buyers can face fierce competition. Homes may receive multiple offers within days, sometimes even hours, of being listed. To stand out, many buyers may choose to waive the home inspection contingency, making their offer more appealing to sellers.

    Common reasons buyers waive the inspection contingency include:

    • Strengthening their offer: Sellers want certainty. An offer without contingencies means fewer potential holdups and negotiations, and sellers are off the hook for repairs.
    • Speeding up the sale: By removing the inspection contingency from negotiations, the transaction timeline shortens. This is attractive to sellers hoping for a smooth close.
    • Winning a dream home: In high-cost markets, buyers are sometimes willing to accept more risk if it means securing the property they truly want. When a home is more expensive, potential repair expenses are often a smaller percentage of the overall value of the home.
    • Investing in real estate: For investors, speed outweighs repairs. Renovations are usually expected, so waiving contingencies helps them lock in properties with strong rental or resale potential.

    Risks of waiving the home inspection contingency 

    A home inspection is a standardized practice in real estate, designed to uncover major issues in a home that could affect a buyer. After an offer is accepted, the buyer hires an inspector to look at the home’s key systems and overall condition. 

    In most cases, buyers don’t want to waive the home inspection contingency — not only does it financially protect the buyer, it could be a matter of safety as well. 

    When buyers skip the home inspection, they risk:

    1. Being accountable for hidden or expensive problems

    Without an inspection contingency, you could unknowingly purchase a home with serious problems. Structural issues, roof damage, mold, or outdated electrical are common, especially in older homes, and can easily cost tens of thousands of dollars to fix.

    2. Having negotiation power or a safety net for backing out

    An inspection contingency gives buyers the option to walk away without losing their earnest money if the inspection reveals problems the buyer can’t or doesn’t want to address. Waiving the inspection removes that safety net and the full cost of any major problems is your responsibility. If you decide later to back out, you risk forfeiting your deposit — which in competitive markets, can be heftier than usual.

    3. Emotional stress and buyer’s remorse

    While there’s a lot that goes into buying a home, it should ultimately be more exciting than overwhelming. Unfortunately, discovering major problems after you’ve already committed can lead to buyer’s remorse. Many homeowners who waived inspections have experienced the stress of unexpected, expensive repairs outweighing the joy of moving in.

    Alternatives to waiving a home inspection entirely

    While waiving an inspection contingency can make an offer more appealing to a seller, it also shifts more responsibility onto the buyer. But there are other ways to keep an offer strong while ensuring you’re not walking blindly into a home purchase.

    1. Pre-inspection walkthrough (the “walk & talk”)

    A growing trend in hot markets is the pre-inspection walkthrough, sometimes called a “walk & talk.” You hire a home inspector for a shorter time (usually around two to three hours) before making your offer.

    Instead of a full written report, the inspector walks through the home with you and points out visible potential problems, like areas where there might be water damage, foundation issues, or HVAC systems that are on the way out. They may even give you rough repair cost estimates on the spot.

    2. “Informational only” inspections

    Another option is to conduct an inspection for informational purposes only. This means you still hire an inspector after your offer has been accepted, but you explicitly state in the contract that the results will not be used to renegotiate price or request repairs.

    This gives buyers a heads-up about potential problems while keeping them committed to purchasing the home as-is, or risking their earnest money if they back out. The exception is if there is a serious safety issue that legally lets buyers off the hook for a home, even if they waived the inspection contingency.

    Buyers will choose this route to know what they’re getting without weakening their offer. Sellers like it too, since they know you won’t be coming back to nickel and dime them with a long list of repairs.

    3. Relying on seller-provided inspections and disclosures

    In some high-end competitive markets — especially in places like San Francisco, CA or Boston, MA — sellers might provide inspection reports, disclosure packets, and receipts for repairs upfront. Sometimes, major issues have already been fixed before the listing even goes live.

    These documents can give buyers a good idea of the home’s condition. The goal for sellers with this tactic is to get top dollar for their home and completely streamline the selling process. Still, it’s a good idea to have your own inspector go over the paperwork or walk through the home with you, just to double-check.

    How to make a competitive offer without skipping the inspection

    You don’t necessarily have to give up your right to an inspection contingency to help your offer in a seller’s market. There are other strategic ways to stay competitive in a bidding war without sacrificing the protection of a home inspection:

    • Get pre‑approved for a mortgage: A fully underwritten pre‑approval shows the seller that you’re not only serious about the home but financially positioned to close smoothly. It proves you’ve cleared financial hurdles and adds more weight to the offer. 
    • Move quickly: If homes are moving fast, match that speed. Sellers sometimes value a smooth, stress-free closing process over top dollar. If you can line up a lender who’s quick with paperwork, schedule inspections right away, and be flexible on closing dates, that kind of certainty can sometimes beat out a higher offer that comes with delays.
    • Use an escalation clause: This lets your offer automatically top competing bids by a set increment, up to a cap you choose — for example, outbidding other offers by $1500. Sellers appreciate the lack of back-and-forth and your offer is competitive without overpaying.
    • Offer stronger financing: Whether it’s a larger earnest money deposit, a heftier down payment, or even cash-offer financing, proving financial commitment makes your bid stand out. These moves can be equally as attractive to sellers as skipping an inspection contingency, and less risk for you. 
    • Write a personal letter (where allowed): A note explaining why you love the home and your situation can sometimes resonate with a seller (just don’t violate fair-housing laws in the process). This human touch could be what nudges you to the top, especially when other offers are equal on paper.

    Bottom line

    The home inspection is there to protect buyers — and waiving that right comes with real risks. For some, the trade-off may feel worth it to get their dream home in a hot market, especially when paired with pre-inspections or strong seller disclosures.

    Still, the smartest move is to never waive your right to understand a home’s condition. With the right approach, you can take steps to protect yourself while staying competitive. A local Redfin real estate agent can help you navigate these decisions, craft a strong offer, and strike a good balance between buying the home you want and looking out for your investment.

    FAQs about waiving home inspections

    Is it smart to waive a home inspection?
    Waiving an inspection is usually discouraged, but it can be strategic in competitive markets. If the home comes with recent inspection reports and you’ve done your own pre-inspection, it may make sense. Otherwise, it’s a big risk to buyers.

    What happens if you waive a home inspection?
    You lose your contractual right to walk away or renegotiate based on inspection results. Any issues that surface after closing are your responsibility.

    Why would a buyer waive an inspection?
    To make their offer stronger in bidding wars. Sellers prefer fewer contingencies because they reduce the risk of the home sale falling through.

    Can you still do an inspection after waiving?
    Yes. Many buyers hire inspectors “for informational purposes only.” You just can’t use the results to cancel the contract without penalty.

    What’s the difference between waiving an inspection and waiving an inspection contingency?
    Waiving an inspection contingency means you give up your legal right to walk away penalty-free. Waiving the inspection itself means you skip it entirely — a much riskier move.

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    Ashley Cotter

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  • How to Buy Land and Build a House: A Practical 5 Step Guide 

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    Key takeaways: 

    • 5 steps: Buy land, prepare, finance, build, and close.
    • Pros and cons: Full control and customization, but higher costs and longer timelines.
    • Keys to success: Check zoning, secure financing, hire professionals, and budget for delays.

    Many people dream of building a home from the ground up, whether it’s purchasing land in Concord, New Hampshire, or finding a lot near Spokane, Washington. No matter the location, the process begins long before construction; it starts with buying the right piece of land. While the idea of creating a custom home is exciting, buying land and building requires careful research, financing, and step-by-step planning to make sure everything goes smoothly. In this Redfin article, we will cover how to buy land and build a house in five steps, from finding the right property to closing, building, and moving into your new home.

    Is buying land and building right for you? Pros and Cons

    If customization and location flexibility are top priorities, building can be worth it. If you need speed, simplicity, or a lower upfront cost, buying an existing home is often the better fit.

    Pros

    • Design freedom: You have the freedom to customize the home exactly how you want, from the layout to the finishes, rather than working within someone else’s design.
    • Flexible location: Buying land opens up more choices. You can build in a rural area, a suburban neighborhood, or on the edge of a growing city.
    • Lower early maintenance: A brand-new home typically requires less maintenance in the first few years compared to an older resale property.
    • Potential builder warranties: Many builders offer warranties that cover certain repairs or structural issues, giving you added peace of mind.

    Cons

    • Higher costs: Between land, permits, construction, and unexpected expenses, the total can be more than purchasing an existing home.
    • Longer timelines: Building a home often takes months or over a year, so it’s not the best option if you need to move quickly.
    • More complex process: From financing land to working with contractors, there are more moving parts than a standard home purchase.
    • Potential frustrations: Delays, weather issues, or construction setbacks are common and can test your patience.

    Step 1: Buying the land

    Quick summary: Find the right property, confirm it’s buildable, secure financing, and close.

    1. Where to find land

    The first step is finding available parcels of land that fit your needs. You can use Redfin and filter your search specifically for land sales, which makes it easier to narrow down options that meet your criteria. It’s also smart to work with a real estate agent who has experience in land transactions, since they’ll understand the unique challenges that come with evaluating and negotiating land deals.

    2. Zoning and restrictions

    Before you buy, make sure the land is zoned for residential use and not limited to agricultural, commercial, or mixed-use purposes. Local rules may also include setbacks (how far your home must be from property lines), easements (whether others have legal access to cross your land), and view ordinances that could limit additions like a second story. If the land is in a neighborhood or subdivision, check for HOA restrictions that might affect the type of home you can build.

    3. Visit and evaluate the property

    Photos and listings only go so far, visiting in person is essential. Look at the availability of utility hookups such as electricity, water, sewer or septic, and even internet access. Consider the slope and soil quality, which affect construction costs and drainage. Verify street access, since landlocked parcels without a road connection may require costly easements. Also, think about everyday factors like commute times, proximity to schools, and whether nearby development could impact your property’s future value.

    4. Land survey and soil test

    A professional land survey confirms the exact property boundaries and can protect you from disputes with neighbors. A soil test evaluates the ground’s stability and drainage, ensuring the land is suitable for building and can support foundations, septic systems, or other required infrastructure.

    5. Title search and ownership

    Before closing, a title search will uncover any liens, unpaid taxes, or encumbrances tied to the land. Confirming clean ownership ensures that you’ll hold the property free and clear once the sale is finalized.

    6. Financing options for land

    Financing land is different from financing a traditional home purchase. Options include:

    • Land loans: These come in three types, raw land (undeveloped), unimproved land (partially developed), and improved land (with access to utilities and roads).
    • Construction loans: These short-term loans can cover both the land purchase and the cost of building, and are usually converted into a permanent mortgage after the home is complete.
    • Alternative financing: Some buyers explore personal loans, land contracts (direct agreements with the seller), or pay in cash.

    Keep in mind that lenders see land loans as riskier, so they often require higher down payments (usually 20% or more) and interest rates that are above standard mortgage rates.

    7. Make an offer and close

    Once you’ve done your due diligence, you can make an offer on the land. Your real estate agent can help with pricing, negotiations, and including protective clauses in the contract. If financing, an appraisal may be required by your lender. At closing, you’ll finalize financing, transfer ownership, and ensure all legal paperwork is in order. Working with professionals like an attorney and title company helps protect your investment and prevents costly mistakes.

    Step 2: Preparing to build

    Quick summary: Preparing to build means assembling the right team, securing permits, and budgeting for site prep so construction can start smoothly.

    Who to consult before buying land

    Before committing to a property, it helps to bring in professionals who can spot potential issues early.

    • Builder: Provides a realistic estimate of construction costs.
    • Land surveyor: Confirms property boundaries and identifies terrain challenges.
    • Attorney: Reviews zoning rules and contracts.
    • Real estate agent: Guides you through negotiations and paperwork, especially if experienced with land transactions.

    Who to hire when building

    Once the land purchase is complete, you’ll need a team to bring your vision to life.

    • Architect: Designs custom plans or adapts pre-designed layouts to fit your lot.
    • General contractor: Oversees construction and coordinates with engineers for structural and utility systems.
    • Inspectors: Ensure the build meets code requirements and passes all necessary checks.

    Designing your home and getting permits

    At this stage, you’ll decide between using pre-designed floor plans (often faster and more affordable) or creating a fully custom design with an architect. Either way, permits are essential before work can begin. Depending on your location, you may need building, electrical, plumbing, and environmental permits. Your builder or contractor can usually help secure these approvals.

    Budget for land prep

    Raw land often needs additional work before construction starts. This can include clearing trees or debris, grading the site for drainage, and removing rocks or obstacles. You’ll also need to budget for utility connections, such as water, sewer or septic systems, electricity, and internet. Clearing, grading, and utility hookups can range from a few thousand to tens of thousands depending on site condition and proximity to infrastructure.

    Step 3: Financing the build

    Quick summary: Financing a new build often requires a short-term construction loan that converts to a mortgage. Expect stricter credit and down payment requirements, and always budget extra for unexpected costs.

    How construction loans work

    Most people use a construction loan to cover the cost of building a home. These loans are short-term and often come with variable interest rates. The money is released in stages, called “draws,” as different phases of the project are completed. Once the house is finished, the loan is converted into a permanent mortgage that you’ll repay over time.

    Permanent mortgage options after construction

    When your construction loan ends, you’ll roll it into a long-term mortgage. This works just like a traditional home loan, with monthly payments based on either a fixed or adjustable interest rate. Choosing the right option will depend on your budget and how long you plan to stay in the home.

    Higher credit and down payment requirements

    Construction loans are considered riskier for lenders, so the requirements are stricter. You’ll often need a higher credit score to qualify, along with a larger down payment. Lenders also require detailed building plans and a construction timeline before approving the loan.

    Importance of budgeting for unexpected costs

    Even with careful planning, building costs can change. Delays, rising material prices, or land challenges can push your budget higher than expected. Plan for 10–15% over your estimate to cover delays or cost spikes.

    Step 4: Construction process

    Quick summary: The construction process starts with site prep, moves through key phases like foundation, framing, and finishes, and requires inspections at each stage to keep the project safe and on track.

    Site prep

    Before building begins, the land needs to be prepared. This usually includes clearing trees or debris, grading the land for proper drainage, and installing utilities such as water, sewer or septic systems, and electricity. Preparing the site ensures that construction can move forward safely and smoothly.

    Major phases

    A new construction of a home typically follows a set order:

    1. Foundation: Pouring the slab or building the basement/footings.
    2. Framing: Putting up the walls, floors, and roof structure.
    3. Roofing: Installing shingles or other roofing materials.
    4. Plumbing and electrical: Running pipes, wiring, and HVAC systems.
    5. Insulation: Adding insulation to regulate temperature and improve energy efficiency.
    6. Interior finishes: Drywall, flooring, cabinets, paint, and final details.

    Each phase builds on the last, moving the project closer to completion.

    Required inspections

    At several points in the process, the city or county will perform inspections. These checks confirm that the work meets building codes and safety standards. Inspectors typically sign off after the foundation, framing, electrical, plumbing, and final finishes are complete. Passing each inspection is required before construction can continue to the next stage.

    Step 5: Closing and moving In

    Before you can move in, your home must pass a final inspection and receive a certificate of occupancy, confirming it’s safe to live in. If you used a construction loan, this is when it’s converted into a permanent mortgage. The last step is completing any landscaping and finishing touches, so your new home is fully ready to enjoy.

    FAQs about buying land to build

    1. Do I need a real estate agent to buy land?

    You’re not required to use an agent, but it’s highly recommended. An agent with land experience can help you find listings, review zoning rules, and negotiate terms.

    2. Can I finance both the land purchase and construction together?

    Yes. A construction loan can cover both the cost of the land and building the home, then convert into a permanent mortgage after construction is complete.

    3. How much does it cost to buy land and build a home?

    Costs vary by location, size, and design. Buying land can range from thousands to hundreds of thousands of dollars, and the average new home in the U.S. costs several hundred thousand dollars to build. Always budget for land prep and unexpected expenses.

    4. What’s the timeline to build a house from scratch?

    On average, building a home takes 6 months to over a year. The exact timeline depends on the size of the home, local permits, weather, and construction delays.

    5. What types of land loans are available?

    There are three main types: raw land loans (undeveloped), unimproved land loans (partially developed), and improved land loans (with roads and utilities).

    6. What permits are required before building?

    Most areas require building, electrical, plumbing, and environmental permits. Your builder or contractor can help you secure them.

    7. Can I build on any piece of land I buy?

    No. Zoning laws, soil quality, setbacks, and utility access all determine if a property is buildable.

    8. Do I need a soil test or land survey?

    Yes. A soil test confirms the land can support a foundation and septic system, and a survey verifies boundaries to prevent disputes.

    9. What’s the minimum down payment for a construction loan?

    Most lenders require at least 20% down, and some may ask for more depending on credit and land type.

    10. Is building a home cheaper than buying one?

    Not usually. Building often costs more than purchasing an existing home, but it gives you full customization and new construction benefits.

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    Holly Hooper

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  • Can I Use My 401(k) to Buy a House? Yes, Here’s How

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    If you’re struggling to save enough for a downpayment, you may be wondering if tapping into your 401(k) is the right option. While it’s possible, doing so comes with significant risks, like early withdrawal penalties and lost investment growth. 

    In this Redfin article, we’ll answer your questions about using your 401(k) to buy a home through loans or withdrawals and the drawbacks of the process. That way, whether you’re buying a home in Tampa, FL, or in Newark, NJ, you’ll know what options are available if you want to use your 401(k). 

    Key takeaways

    • You can use your 401(k) to buy a home with a 401(k) loan or withdrawal.
    • A 401(k) loan allows you to borrow the money without penalty, but you need to repay it.
    • A 401(k) withdrawal is subject to a 10% penalty and income tax.

    Can I use my 401(k) to buy a house?

    The short answer is yes, you can use your 401(k) to buy a house. There are two options to consider – 401(k) loans and 401(k) withdrawals. 

    401(k) loans to buy a house

    The first option is a 401(k) loan for your home purchase. A 401(k) loan allows you to borrow from yourself, so you don’t have to pay penalties or taxes on the funds. However, you’ll need to pay back the loan with interest. 

    Most 401(k) loan interest rates and repayment plans are pre-determined by your employer or 401(k) provider. It’s common to repay the amount within five years, but some plans allow you to repay over 15 years if the funds are used to buy a home. 

    You can usually borrow up to half of the money in your 401(k) that you fully own (your “vested balance”), but no more than $50,000.

    Depending on your 401(k) plan, you may not be able to make additional contributions until you pay back the loan. Any loan repayments are not considered new contributions either. 

    401(k) withdrawals to buy a house

    Withdrawing from your 401(k) can be riskier, but there are reasons why it may work for you. Some 401(k) providers don’t allow loans, so withdrawing may be the only option available. Additionally, if you need more than $50,000, withdrawing can give you more funds. 

    There are other drawbacks to keep in mind: 

    • If you’re under 59 ½ years old, you’ll incur a 10% penalty for withdrawing from your 401(k), unless you meet certain exemption requirements. You’ll also need to pay income tax on any money withdrawn from your account, even if you meet the exemption requirements. 
    • If you have a Roth 401(k), your contributions are made after taxes, so you can usually withdraw contributions without additional taxes. However, withdrawing earnings before age 59½ (and before the account has been open for at least five years) may trigger taxes and penalties.

    When can you withdraw from your 401(k) without penalty?

    A hardship withdrawal allows you to withdraw from your 401(k) without penalty, but is restricted to “immediate and heavy financial need.” Here are some examples of what circumstances may qualify:

    • Certain medical expenses or medical debt
    • Expenses to prevent eviction or foreclosure
    • Income after the withdrawal age of 59 ½
    • Funeral expenses for certain family members
    • 12 months of educational expenses, like tuition

    There are additional circumstances that may qualify as a hardship withdrawal, so be sure to research your options. For example, you may qualify for a hardship withdrawal to cover your down payment or closing costs. However, these rules can be strict and you may still need to pay the 10% penalty on the funds you withdraw.

    How to borrow from your 401(k) account to buy a house

    To borrow from your 401(k) loan to finance a down payment, you’ll need to talk to your employer’s benefits office or HR department, or with your 401(k) plan provider. You can also consult your plan document to find out if your plan permits borrowing from your 401(k) to purchase a home.

    You’ll want to find out how much you’re able to borrow, the interest you’ll have to pay, and the repayment period. Additionally, ask about repayment options, such as whether your employer will deduct the monthly payment from your paycheck or if they will allow you to make 401(k) contributions while you pay back the loan.

    If you choose to leave or lose your job during the repayment period, your repayment schedule will change. Most times, you’ll need to repay the total amount by the next tax deadline. If you don’t, you’ll face a 10% penalty. 

    Pros and cons of buying a home with 401(k)

    Here are some factors to consider before using your 401(k) to buy a home: 

    Pros of using 401(k) funds

    Easier qualification process: With most loan approvals, they’ll examine your finances and run a credit check. Typically, applying for a 401(k) loan doesn’t need that information since the money is already yours. 

    Receive funds faster: You’ll usually get the funds within a few days since the approval process is much faster. 

    You receive the interest payments: Unlike a mortgage loan, your interest payments don’t go to the lender. Any interest payments go back into your 401(k) as part of the repayment process.

    401(k) loans don’t count towards your debt-to-income ratio: Your debt-to-income ratio (DTI) is typically used when you apply for a new line of credit or loan. A 401(k) loan won’t impact your DTI, meaning you could apply for a new credit card or get a car loan if needed.

    Cons of using 401(k) funds

    Reduced retirement savings: When you withdraw or take out a loan, you’ll lose some of your retirement savings. While you’ll eventually pay them back, this temporary reduction in savings may lead to long-term losses.

    Taxes and additional penalties: If you choose to withdraw 401(k) funds, you’ll have to pay income taxes on the funds. You’ll also have to pay a 10% penalty for withdrawing those funds early. 

    Lost investment growth and contributions: Some 401(k) accounts won’t let you contribute to the account while you repay your loan. You may lose out on the interest your funds build as well.

    Additional monthly payments: While you repay your loans, you’ll have to factor that into your monthly payments. In some cases, repayments are made with after-tax dollars and may be taken directly from your paycheck, which could cause additional financial strain. 

    Is using a 401(k) to buy a home a good idea?

    Using a 401(k) to buy a home can work in certain situations, but it comes with risks. It may make sense if:

    • You have no other savings
    • You qualify for a 401(k) loan with reasonable repayment terms
    • You plan to stay in the home long-term

    Alternatives to using your 401(k) to buy a house

    There are several alternatives to using your 401(k) to buy a home. Let’s take a look at them:

    Individual retirement accounts (IRAs)

    Individual retirement accounts (IRAs) have options available for first-time homebuyers and those who have not owned a primary residence for two years. This gives you the opportunity to withdraw up to $10,000 for traditional or Roth IRAs with no penalty, even if you’re under 59 ½ years of age. Consider speaking with your financial advisor if you have questions. 

    Low and no-downpayment mortgages

    There are plenty of low and no-downpayment mortgages available for qualified homebuyers, like FHA, USDA, and VA loans. For example, FHA loans, backed by the Federal Housing Authority, offer loans with down payments as low as 3.5%. These loans have more stringent requirements, so it may not be the right option for everyone. 

    Down payment assistance programs

    Whether you’re a first-time homebuyer or a repeat buyer, there are plenty of down payment assistance programs available. Most are geared toward first-time buyers, but there are lots of options that reduce the amount you pay in down payment or closing costs.

    FAQs about using your 401(k) to buy a house

    What is a 401(k)?

    A 401(k) is a type of retirement savings account, where you elect a certain portion of your income to go into the account. There are two types of 401(k) accounts, a traditional 401(k) and a Roth 401(k). Traditional 401(k) contributions are pre-tax, so you’ll be taxed once taking them out. On the other hand, a Roth 401(k) has taxes taken out before contributing, so you won’t have to pay tax on them later.

    Will my employer know if I withdraw from my 401(k)?

    Your employer, most likely the human resources department, will know if you withdraw from your 401(k), but not your direct manager.

    How does withdrawing from a 401(k) affect mortgage approval?

    Using a 401(k) loan or withdrawal can impact your mortgage application in different ways. While a 401(k) loan won’t count against your debt-to-income (DTI) ratio, a withdrawal could reduce your available assets and affect your lender’s view of your financial stability. Always check with your lender before using 401(k) funds for a home purchase.

    Can I use a 401(k) loan and withdrawal at the same time to buy a house?

    In most cases, you can’t combine a 401(k) loan and withdrawal at the same time. Most plans only allow one type of 401(k) distribution at a time, but this depends on your employer’s plan rules.

    Is there a 401(k) first-time homebuyer exemption?

    There are no exemptions for first-time homebuyers looking to use their 401(k) to fund their home purchase.

    Can I use my 401(k) to buy a second home?

    Yes, you can use your 401(k) to buy a second property. You’ll still face the same penalties and repayment regardless of whether you have a loan or withdraw funds.

    Can I use my 401(k) to cover closing costs?

    Yes, you can use a 401(k) loan or withdrawal to cover closing costs, including lender fees, appraisal costs, and escrow expenses. Withdrawals still come with penalties and taxes, while loans must be repaid.

    The post Can I Use My 401(k) to Buy a House? Yes, Here’s How appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

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    Alison Bentley

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  • How Long After Closing Can You Move Into Your New Home?

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    Buying a home is exciting, but one of the first questions most buyers ask is: “When can I actually move in?” In many cases, most buyers can get the keys and start moving in immediately on closing day. But depending on agreements with the seller, new construction, or administrative timing, your move-in date could be a few days – or even weeks – later.

    Here’s what to expect and how long after closing you can realistically move in.

    How long after closing can you move in?

    The answer depends on one key detail in your purchase agreement: the occupancy date. 

    This is the official date when you’re legally allowed to take possession of the property. For most buyers moving into a standard, move-in-ready home, this date coincides with closing, meaning you can usually get your keys and start moving in immediately.

    But if your contract sets the occupancy date later – whether for a seller rent-back or other reasons – you’ll need to wait until that date arrives. Understanding your agreed-upon occupancy date will help you plan your movers, utilities, and any interim housing without surprises.

    Moving in on closing day

    So, can you move in on closing day? In many cases, yes. If your occupancy date is the same as your closing date and the sale is funded and recorded that day, you can pick up the keys and start moving in right away. For the majority of homebuyers purchasing a ready-to-occupy home, moving in on closing day is the norm.

    Scenarios where your move-in date might be after closing

    While many buyers move in the same day they close, it’s not unusual for the occupancy date to be set for a later time. Sometimes this is simply part of the negotiated terms in your purchase agreement, while other times it’s tied to practical or legal requirements. Here are situations where your occupancy date may come after closing.

    1. Short grace period for sellers: agreed-upon delayed possession 

    Timeframe: A few days to a week

    Sometimes, a seller may stay in the home after closing, or the buyer and seller may agree on a later possession date for mutual convenience. For example, a seller might need an extra few days to finalize their move, especially if they’re coordinating with the closing on their next home or arranging temporary housing. In these cases, the buyer legally owns the home but agrees to let the seller remain for a brief, specified period.

    The key is that this arrangement is agreed upon in advance and documented in the possession or occupancy clause of the contract.

    2. Rent-back or lease-back agreement

    Typical timeframe: A few days to a month or more

    In a rent-back or leaseback agreement scenario, the seller remains in the property for a set period, often because they need time to move, are waiting to close on another home, or are relocating. 

    During this period, you technically own the home, but the seller acts as a temporary tenant. The agreement outlines critical details such as the daily rent, security deposit, utility responsibilities, and a firm move-out date.

    3. New construction finalization

    Typical timeframe: Days to weeks for completed homes; months for pre-construction purchases

    When buying a new construction home, your closing date and your actual move-in date don’t always align. In many cases, buyers close on the property either just before or after the home is finished. Even after you’ve signed the paperwork, the builder may still be completing final tasks like installing fixtures, connecting utilities, finishing landscaping, or addressing small punch-list items identified during your walkthrough. 

    In many areas, you also can’t move in until the home passes all required inspections and a certificate of occupancy is issued, confirming it meets local building codes and is safe to live in. These final steps can be affected by weather delays, supply chain issues, or inspection scheduling, so it’s smart to confirm the builder’s timeline well before closing.

    4. Delays in closing that affect move-in

    Typical timeframe: Same day to 1-3 days

    Even in a move-in-ready home, delays during the closing process can push back when you receive your keys. For example, funding issues, last-minute lender requirements, or delays in recording the deed at the county office may prevent the transaction from officially completing. 

    While these delays technically affect your move-in, they are administrative rather than contractual. Once the closing is finalized, possession of the property usually proceeds as normal.

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    Mekaila Oaks

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  • Are Mortgage Rates Dropping?: Explaining What’s Happening to Interest Rates in 2024

    Are Mortgage Rates Dropping?: Explaining What’s Happening to Interest Rates in 2024

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    The short answer to the question “Are mortgage rates dropping?” is yes. On August 5th, daily average 30-year fixed mortgage rates dropped to 6.43% which is the lowest since April 2023. For home buyers, this poses a great opportunity to enter the market after over a year of record-high mortgage rates. 

    So if you’re beginning to look for homes for sale in Seattle, WA after renting an apartment or renting a house in the city or elsewhere in the U.S., now may be a good time to buy. Read on to learn more and make the decision for yourself.

     

    Are mortgage rates dropping right now?

    Today’s mortgage rates are influenced by investor expectations regarding the Federal Reserve’s actions. Investors believe the Fed has finished its efforts to control inflation and anticipate a gradual decrease in mortgage rates for the rest of the year. 

    Although the Fed is poised to cut interest rates in the next month, economists do not foresee a significant drop in mortgage rates beyond current levels, as today’s rates already account for the expected interest rate cuts projected for September.

    is-now-a-good-time-to-buy-a-house

    Why are mortgage rates so high?

    Mortgage rates in the U.S. are influenced by various factors, including inflation, Federal Reserve policies, and economic conditions. Currently, rates remain high due to persistent inflation and the Federal Reserve’s efforts to curb it through interest rate hikes. 

    While some experts predict that rates could stabilize or slightly decrease if inflation continues to cool, significant drops in mortgage rates are not expected in the immediate future. The Federal Reserve has signaled that it may maintain higher interest rates for an extended period to ensure inflation is controlled, which will likely keep mortgage rates elevated in the near term. However, potential economic slowdowns or shifts in Fed policy could eventually create conditions for lower rates, but this may take time.

    What will cause interest rates to drop?

    With skyrocketing prices over the past few years spurred on by low supply of homes and record-low mortgage rates, many home buyers are wondering what signs to look for when entering the market.

    The obvious answer is an announced decrease in interest rates, but there are other signs to look for, including declining home sales, a weakening job market, and cooling inflation. When inflation is high, the Federal Reserve will raise interest rates to combat it. Conversely, the decline of inflation will often result in the Fed easing up on rate hikes and reducing rates.    

    real-estate-agent-negotiation

    Should I lock in the mortgage rate today?

    Deciding whether to lock in today’s mortgage rate depends on several factors, including your financial situation, risk tolerance, and the current market outlook. If you are comfortable with the current rate and your budget can accommodate it, locking in now can provide certainty and protect you from potential future rate increases, especially since rates remain volatile and could rise further. 

    However, if you anticipate that rates might drop soon based on economic forecasts or if you’re willing to take on some risk, you could choose to float the rate instead. Consulting with a mortgage advisor who understands your specific needs can also provide personalized guidance tailored to your situation.

    At what point does it make sense to refinance?

    While rates are unlikely to drop enough in the near future to make refinancing a home loan worth it, it’s smart to know what to look out for if you’re worried you’ll miss out. To determine if it’s a good time to refinance your home loan, consider refinancing when current rates are significantly lower than your existing rate, typically by at least 0.5% to 1%, as this can lead to substantial savings. 

    Improving your credit score, increasing home equity, or switching from an adjustable-rate to a fixed-rate mortgage can also make refinancing appealing. Additionally, calculating your break-even point — when the savings outweigh the costs of refinancing — will help you decide if it’s worth it, especially if you plan to stay in your home long enough to benefit from the lower rate.

    Refinancing is something to be considered when wanting to lower costs.

    Final thoughts

    If you’re in a financial situation where you can purchase a home, now is the right time before competition catches up. Although interest rates may continue to drop, lower mortgage rates means more competition in the market which could result in higher prices.

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    Jeremy Steckler

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  • Who Pays the Real Estate Agent Commission?

    Who Pays the Real Estate Agent Commission?

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    Are you buying or selling a home? Then you might be wondering: “Who pays the real estate agent?” Traditionally, this cost has been shouldered by the seller, but recent changes have brought new dynamics into play. 

    The National Association of Realtors (NAR) and Multiple Listing Service (MLS) have implemented new rules about how real estate agents communicate about real estate fees. These changes went into effect on August 17th, 2024, and are intended to provide greater transparency and competition around fees. 

    In this Redfin article, you’ll learn everything you need to know about who pays the real estate agent, agent commissions, and the recent changes affecting them. 

    What is a real estate commission?

    A real estate commission is a payment the homebuyer or seller makes to their agent(s) for their services in helping them purchase or sell a home. The commission is often a percentage of the final home sale price and is exchanged during the final transaction at closing. 

    Who pays the real estate agent?

    Sellers have historically paid both the buyer and seller’s agent fees from the proceeds of the sale. But as of August 17, 2024, buyers will now agree to their agent’s fee in writing before touring. Buyers can still ask the seller to cover the buyer’s agent fee when they make an offer. 

    Because of this change, the amount the seller has to pay a buyer’s agent varies from buyer to buyer. Redfin expects that sellers will continue to cover the buyer’s agent commission fee in many transactions, but increasingly, these fees will be negotiated as part of the offer. 

    Here are two options for how a seller might navigate the new commission process: 

    • The seller can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
    • Sellers can proactively offer a commission or a concession that the buyer could use to pay their agent as part of their home’s marketing strategy. They can still communicate this to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing.

    Why would a seller pay the buyer’s agent commission?

    Whether to offer any buyer agent commission, or how much, is part of an overall marketing strategy geared towards attracting buyers and achieving the sellers’ goals. 

    Instead of authorizing their agent to advertise a selling office commission (which must now be off the MLS in most markets), a seller may choose to offer the buyer a concession that the buyer can choose to use as they see fit. Or, they could instruct their agent to tell the buyer that they’re open to offers. That then puts the ball in the buyer’s court to decide if they want to request any concessions from the seller, or if they want to pay their agent directly.

    How did the NAR settlement affect agent commissions?

    Prior to the NAR settlement, the commission amount that the seller was willing to provide was advertised in the MLS, so that buyer agents would know in advance what a seller was offering to them if they brought a buyer for that listing. Some MLSs required that the listing make an offer of commission to buyers’ agents. Commissions were always negotiable, but were rarely negotiated in practice. Following the settlement, we’re seeing an increase in how often commissions are negotiated. 

    The NAR settlement also established rules designed to help make real estate fees more transparent and competitive. For example, agents must now provide a written agreement to homebuyers that explains their fees before touring. These agreements must also include a statement that all commissions are fully negotiable. 

    Some brokerages now require a full buyer agency agreement that requires the customer to commit to that agent exclusively before touring. Redfin does not. Redfin believes that we should earn a customer’s business. This is why Redfin discloses our fee upfront, but does not require a customer to exclusively commit to us in order to tour a home. 

    Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home. 

    Can you negotiate real estate agent commissions?

    Yes, you can negotiate real estate agent commissions. Commissions are not set by law and are fully negotiable. The commission rates many brokerages charge often vary from area to area, and there are no laws or industry rules that set commission rates.

    How is Redfin different when it comes to commissions? 

    At Redfin, we’ve always believed that consumers should get the best deal. That’s why we charge sellers a listing fee as low as 1%.* 

    Our fees when serving buyers vary by market, but are competitive because we know they could make the difference in your winning or losing an offer. All things equal, a seller will prioritize the offer that is asking them to pay a lower buyer agent fee. 

    We also offer additional savings for buyers who make a commitment to hire us after the first tour. With our Sign & Save program, if you commit to hiring your Redfin agent before the second tour, we’ll reduce our fee by 0.25%. We earn customers’ business by providing the best service and value.

    Final thoughts

    The real estate commission landscape has shifted, offering more transparency and flexibility for buyers and sellers – goals that Redfin has always supported. Whether you’re searching for your dream home or looking to relocate, understanding these new rules can help you make smarter decisions and potentially save money in the process. 

    You can learn more about the NAR settlement here, and how Redfin has embraced this change and always championed better deals for the customer here. You can also connect with a Redfin agent to learn everything you need to know – regardless if you’re buying or selling. 

    The NAR settlement primarily applies to listings on an MLS, and MLS rules may vary. Rules regarding listings not on an MLS also vary widely from state to state. Talk to your agent to learn more. 

    *Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.

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    Jamie Forbes

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  • Real Estate Commission Changes: What You Need to Know

    Real Estate Commission Changes: What You Need to Know

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    There are important changes happening in the real estate industry this month. The National Association of Realtors and multiple listing service (MLS) have implemented new rules about how real estate agents communicate about real estate fees. The changes provide greater transparency and competition around fees—goals that Redfin has always supported. 

    We know this can be confusing, but Redfin agents are prepared to answer any questions you have and expertly guide you through your buying and selling journey. 

    So, what is changing exactly?

    It has been customary in most transactions for the home seller to pay a commission to both their agent (the listing agent) and the agent who represents the buyer (the buyer’s agent). While it has always been the seller’s choice to decide whether and how much compensation to offer the buyer’s agent, the process around it has changed in two main ways:

    1. Disclosure of buyer’s agent fees: A buyer will now need to agree to their agent’s fees before touring homes. This sets the maximum amount that your buyer agent will be paid when you purchase a home. 
    2. Advertising of buyer’s agent fee: Offers of buyer agent compensation are being removed from many MLSs, the databases agents use to share and market listings. A seller can still pay the buyer’s agent, but they cannot advertise any offers of compensation in the MLS unless expressly allowed by local rules.  As a result, buyer’s agent fees will increasingly be negotiated as part of the offer.

    What does this mean for sellers?

    Sellers will still have conversations with their listing agents about any compensation they would like to offer to the buyer’s agent. We expect that in many cases, buyers will continue to ask sellers to help cover the buyer’s agent fee as part of their offer. Sellers will evaluate offers and negotiate, like they would with any other terms. 

    What does this mean for buyers?

    As a buyer, you will have an upfront conversation to learn what your agent will charge. Your agent will ask you to sign an agreement about their fee before touring homes.  You can still ask the seller to cover your agent’s fee as part of your offer. Depending on how you structure your offer, the seller could agree to compensate your agent directly or could offer closing concessions that you could allocate to pay your agent at closing. 

    As a buyer, why do I need to sign an agreement so early in the process? I just want to tour a home and I’m not ready to commit to paying an agent.

    The new industry-wide rules require a written agreement that explains the agent’s fees before touring. Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home. Different brokerages have different approaches and policies. Redfin’s approach is transparent and gives buyers flexibility. 

    Is Redfin requiring a buyer agency agreement to tour?

    Unless your state has other requirements, Redfin is adding a simple fee agreement for the buyer to sign when you request a tour with a Redfin agent that discloses the fee we would expect to collect at closing. Many sellers will cover this fee for you at closing. 

    This fee agreement does not lock you in to working with a Redfin agent. Once you’ve had a chance to meet your agent in person, your agent will ask you to commit to working with Redfin. Buyers who commit to working with Redfin before the second tour will get a discount of 0.25% off our fee. 

    What are Redfin’s fees for buyer services?

    Redfin’s buyer fees vary by market. We’ve set our pricing to give our buyers a competitive edge, offering a discount of 0.25% off our fee if you commit to Redfin before the second tour. By reducing our fee by 0.25%, we can make your offer more attractive to a seller. Just like the offer price and contingencies, a seller will compare how much in buyer agent fees each offer is requesting and factor that into their decision. 

    What if the seller doesn’t agree to pay my agent? Am I responsible for paying my agent out of pocket?

    Many buyers are using all of their financial resources for their downpayment and don’t have extra cash to pay agent fees. So far, most sellers understand this and are often willing to cover the buyer’s agent fee from the proceeds of their sale. If the seller doesn’t agree to pay your agent or only agrees to pay a portion of the buyer’s agent fee, you can amend your offer, agree to pay your agent directly at closing, or walk away. In any case, before signing a contract to purchase a home, you’ll be aware of the associated costs so that you can make an informed decision. 

    It’s important to have a good relationship with your mortgage lender, who can help you structure your offer in a way that fits your financial situation. Redfin’s mortgage partner, Bay Equity, has loan officers at the ready to guide you through this process.*

    When I sell my home, do I have to pay a buyer agent commission? Should I offer one?

    A seller has always had the ability to decide how much, if any, compensation to pay the buyer’s agent. As a seller, you have options: 

    • You can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
    • Or, you can proactively offer a commission or a concession that the buyer could use to pay their agent as part of your home’s marketing strategy. This can still be communicated to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing. Whether or not to offer a commission, and how much, can be dependent on various factors your Redfin agent can help you with.

    How do I know what is a fair price for a buyer’s agent?

    Buying a home is a huge commitment; you should focus on finding the best agent at the best rate. Redfin agents have significant experience and we publish their sales and customer reviews online so you can see for yourself. The average Redfin agent sold more than three times the number of homes as the typical agent at other major brokerages. And we’ve set our prices to be as competitive as possible. Connect with an agent to learn more.

    *Bay Equity Home Loans is affiliated with Redfin. You don’t have to work with a Redfin Agent to use Bay Equity’s services. For additional information, please read our Affiliated Business Disclosure.

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    Jamie Forbes

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