Real Estate Tips
Starting the Process
Buying A Home:
Purchasing a home is one of the biggest decisions most people will make in their life. It involves a long-term commitment financially and emotionally, but it can also be a very exciting and rewarding experience.
When buying a new home, there are a few things to consider:
· What monthly payment can I afford?
· What am I looking for in a home?
· Should I work with a REALTOR®?
· Once I find a home to purchase, what do I need to do next?
· How much cash do I need at closing?
· How do I obtain a mortgage loan?
Before You Begin Your Search:
Before you actually begin the process of looking at homes, you should complete the following:
Unless you are able to pay cash for your home, most buyers will need to go through the process of applying for a mortgage. By contacting a mortgage loan specialist before you begin your search, you are able to determine the amount of loan for which you qualify. Typically, a borrower is pre-qualified for a loan that amounts to 28%, or less, of their gross monthly income. In addition, if you know the amount of the monthly payment you would be comfortable paying, a mortgage specialist can calculate the price range for your home search. Getting pre-qualified for a loan also increases your chances of your offer being accepted. A seller is more likely to accept an offer from a buyer who already has funding versus one who still needs to get a loan.
Prior to getting pre-qualified, you should obtain a copy of your credit report so that there are not any negative surprises when you are ready to apply for your loan. Correct any errors that you may discover on your credit report. Also, you will want to reduce your consumer debt as much as possible by paying down credit card balances.
By going through the pre-qualification process, your mortgage specialist can provide you with an estimate of how much cash you will need for the sales transaction. Cash is needed for the down payment, earnest money, and closing costs of the transaction.
Items that you will need for your loan application include:
· W-2s and/or tax returns from the past 2 years.
· Proof of gross monthly income for the past 30 days.
· Proof of investment income, including rental incomes.
· A list of creditors, including account numbers, balances, and monthly payments.
· Two months worth of banking statements.
Starting the Process:
Once you have decided on the price range and the features you are interested in, your next step will be to decide whether you will search on your own or use the services of a real estate agent. If you choose to use an agent, make sure you enter into a Buyer's Agency Agreement. This ensures that the agent will represent you, as the buyer, in the selling process, and not represent the interests of the sellers. Talk to friends and family for their referrals of agents they have worked with. Once you have some names, interview several agents before making a final decision. Select a REALTOR® that you trust and with whom you feel comfortable working. Remember, there are no out-of-pocket fees that you pay to the buyer's agent. These costs are incurred by the seller. Your agent will research property listings for potential matches to your criteria and schedule showings for you at a convenient time. In addition, they will provide guidance to you during the contract negotiation phase of the selling process. Many times, they will also coordinate and schedule the home inspection, appraisal, and closing for you, as well as provide you with referrals for mortgage lenders.
Choosing an Agent:
Once you have made the decision to purchase or sell a home, the next step is to find a real estate agent who will best represent you and your housing needs. These are two types of real estate agencies: the Buyer's Agent, the Seller's Agent. These are the two typical Agent/Client relationships that mostly occur. The terms of these relationships may vary from state to state, so please verify the terms of these Agency Agreements in your local area before signing any agreements.
The Buyer's Agent:
Many prospective home buyers do not feel it is necessary to contract the services of a real estate agent. They feel that the listing agent will represent them fairly during the buying process. However, what many buyers do not know is that the listing agent, or Seller's Agency, works solely on behalf of, and in the best interest of the home seller. Therefore, it is essential that the buyer seek out and find a Buyer's Agent that will best meet their needs.
A Buyer's Agency works solely on behalf of the buyer. The buyer's agent will assist their client in the negotiation of the terms of a contract. In addition, they will gather information on zoning issues, past tax data, schools and community services, and any other information deemed necessary by the buyer before making the decision to extend an offer on a home.
Many prospective home buyers have the misconception that once they begin working with an agent, he/she represents the buyer. However, this is not always the case. Unless there is a signed Buyer's Agency Agreement, the agent that is working with the buyer still represents the seller's interests in the transaction. Without the agreement, there is certain information that the agent cannot disclose to the prospective buyer:
· The reason that the owner is selling the property.
· Any concessions that the seller is willing to negotiate.
· Any conversations between the seller and the agent.
· Any disclosed information that would harm the seller and/or give the buyer an advantage in the contract negotiations.
Normally, there are no extra costs associated with signing a Buyer's Agency Agreement. Any commissions paid to agents in a sales transaction are usually paid at closing by the seller.
The Seller's Agent:
This agent solely represents the seller. If there is an agent involved in a sales transaction, by default, that agent will represent the home seller unless there is a signed Buyer's Agency Agreement with the buyer.
When looking for an agent to work with, it is best to interview a minimum of 2 to 3 real estate agents before making your final decision. Ask friends and relatives for names that they would recommend.
Below is a list of questions that may help you in deciding on which agent will best meet your needs:
· How long have you been in the Real Estate Business?
· How familiar are you with the area? How long have you lived in the area?
- How long have you sold houses in this area?
· How many clients are you currently working with?
· Do you work with more sellers or buyers?
· What is your typical commission?
· How do you plan on marketing or promoting my home?
· Can you provide me with names and phone numbers of some of your most recent clients who would be willing to give me a reference (if this agent has not already been referred to you by a friend or family member)?
When selecting a real estate agent to represent your interests, it is important to find an agent that you trust and feel comfortable with. Remember, this is probably the biggest sales transaction you will have in your life, so it is important to work with someone that you are sure will get you the best offer!
What to Look for in an Agent:
In addition to finding a real estate agent that you feel comfortable with and whom you trust, make sure that he/she is a dedicated professional who will work with you until your goals have been met. They should be familiar with the area. Not only should they be familiar with the housing market, but also with area churches, schools, clubs, and parks. Also, look for an agent that is a licensed REALTOR®. REALTORS® are individuals who are members of the National Association of REALTORS® (NAR), and must adhere to its strict code of ethics.
Tips for Selling Your Home:
The process of selling your home can be an emotional and exhausting process. There are many things you will need to do in preparation of placing your home on the selling market. By following some simple guidelines, selling your home can be a more enjoyable and smoother process.
If you are planning on purchasing a new home in the near future, it is a good idea to place your home on the market as far in advance as possible. If you wait to place your home on the market until after you have found a new one, you may end up paying two mortgages until you find a buyer for your home.
Also, consider the fact that closing and moving dates will need to be coordinated. More than likely, the buyer of your property is selling their current home as well. Make sure that all parties involved commit to a specific time period for the closing dates. Put your closing date agreement in writing and negotiate monetary penalties for failure to comply.
As you begin to think about looking for a new home to purchase, you may also want to start preparing your current residence to be placed on the market. Start cleaning out attics and basements of any unwanted or unused items. By doing this early on, it will save you time when beginning to pack for your big move.
Setting a Price for Your Home:
Once you have decided to sell, the next big step is to determine what the fair asking price should be for your home. Try to avoid overpricing your property; this may cause your home to remain on the market for an extended period of time. Instead, you should price your home so that you get a fair return on your investment and in a reasonable time period.
If you have chosen to use a real estate agent to represent your interests, he/she can guide you in setting the price at just the right amount. The agent, or a licensed appraiser, is able to complete a Comparative Market Analysis on your home. A CMA compares your home with similar properties that have sold within a specified period of time. This will enable you to set a comparable price to others that have been on the market.
Preparing Your Home to Sell:
There are many minor things you can do to your home to enhance its marketability. Remember, you want your home to make a great first impression to a potential buyer. Spend some time prior to placing your home on the market cleaning out storage spaces, closets, and cabinets. Remove any excess clutter from your home as well. You want the prospective buyer to remember the architectural features of the house and not the furnishings you have in it. The potential buyer needs to be able to envision their furnishings in your home.
Consider Curb Appeal:
It is estimated that more than 50% of homes are sold before the buyers even get out of their cars. Stand across the street from your house and review the curb appeal.
· Keep the lawn mowed and raked, shrubs trimmed, and the sidewalk swept.
· Plant shrubs or install fencing to block unpleasant views.
· Clean the exterior of your home. Clean oil stains from the driveway and garage.
· Repair and/or paint exterior siding, trim, gutters, shutters, glazing, and window frames.
· Repair or replace the street numbers on the house.
· Make sure all exterior lighting is working.
Garages, Carports, and Sheds:
· Replace burned out lights.
· Clear away cobwebs.
· Keep areas clean and uncluttered. Organize and put away tools.
· Lubricate, adjust, or repair garage door.
On the inside, remove as much clutter as possible. Hire professionals to do a deep cleaning. Cleanliness is a sign to buyers that the home has been well cared for.
· Clean and vacuum carpets. Replace worn carpet and use area rugs as needed.
· Apply a fresh coat of paint.
· Wash curtains and draperies.
· Clean ceiling fans and light fixtures. Check for cobwebs in all corners.
· Clean and organize all closets and cabinets.
· Lubricate window slides; make sure doors close smoothly.
Create a Pleasant Atmosphere:
Overall, make sure your home exudes an inviting atmosphere. You want the potential buyer to have a pleasant experience visiting your home so that they remember the positive attributes that your home possesses.
· Turn on all lights. Open drapes to allow natural light as well.
· Light candles and put out fresh flowers.
· Play quiet background music.
· Turn on the air conditioner or heater so that your home is at a pleasant temperature.
· Be absent during showings and keep pets outside.
Beginning Your Search:
Once you have selected an agent and determined what you are looking for in a home, it is time to begin your active search for homes that interest you. Based on your criteria that you provide your REALTOR®, he/she will be able to search their listing database for homes that meet your needs.
While visiting properties that are on the market, compare homes. Every home is unique! Even if every home you visit has all of the main criteria you are looking for, each will have different characteristics. Bring your Amenities Checklist with you to all homes that you visit. Check off which features each house has. Make notes on each home of what you like and dislike.
Additional things to consider when touring homes:
· Cost of upkeep and utilities
· Amount of maintenance required
· Cost of updating or decorating
· Homeowner's dues
· Traffic patterns in the neighborhood
Taking notes and using your checklist will help you later when you can sit down and compare properties. By comparing notes, this will help to prevent you from making an emotional and impulsive decision.
Making an Offer:
Once you have found your dream home, it is time to prepare an offer to purchase. Your buyer's agent can provide guidance to you on the price you should offer to pay for the property. Have your agent compare prices for similar homes that have sold in the area recently. This will help you to determine a reasonable price to offer.
In addition to the selling price, the other items to include in the terms of the Offer to Purchase include:
· The amount of earnest money (deposit) to offer.
· Concessions that you want the seller to make, such as a carpet or paint allowance, or payment towards the closing costs.
· Home inspection contingencies.
· Financing contingencies.
· A clear definition as to what is to be included with the home, such as appliances or window treatments.
· A closing date.
Don't be surprised if your initial offer is not accepted. Your REALTOR® will represent you in all contract negotiations until an agreement is reached between the seller and you.
Closing the Deal:
Once your offer has been accepted, it is time to work on the final details of purchasing your home. There are several tasks that will need to be accomplished during this phase of the sales transaction:
Arrange to have a professional come out to inspect your home. They are able to spot electrical, plumbing, and structural problems that may not be noticeable to you at first glance. The home inspection is not required, but it is in your best interest to have one done on the home so that you do not receive any surprises once you move in. This is an expense incurred by the buyer and is included in your closing costs.
You may also need to get a pest inspection on the property to make sure there is no structural damage to the property caused by termites. Your REALTOR® can usually make a recommendation of a reputable inspector.
The Final Walkthrough:
Prior to closing, you should be given access to the house so that you can walk through and give it a final inspection. This should be done as close to the closing date as possible, preferably on the morning of the closing proceedings. When you go to do your final walkthrough, your home inspector will not be with you. It is your responsibility to inspect the home and ensure that everything meets your approval.
Usually at the time an offer is accepted, or after you have a commitment from your lender, a date and time will be arranged for your closing. The closing procedures will be handled by an attorney of your choosing. The day before, you will be told the total dollar amount you will need to bring to closing by the closing attorney. They will also provide you with any additional information you may need to prepare yourself for the proceedings.
On the day of closing, remember to bring:
· A certified check for the total amount of your closing costs.
· A picture ID, such as a driver's license.
· Your personal checkbook.
· Evidence of mortgage insurance (if this information has not already been requested).
During the closing, details of the sales contract will be explained to you. If everything meets your approval, you will sign the contracts to finalize the deal. Congratulations! You are now a new homeowner!!!!!!