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Buyer's Tips

Buyer's Tips

Buyer’s Tips


Top 10 Signs That You Are Ready to Buy a Home

10. You’re ready to stop paying your landlord’s mortgage payment, and start building wealth of your own.

9. You could use the property tax and mortgage interest deductions.

8. You want a vested interest in your community.

7. It’s mid-August and you can no longer tolerate waiting for your landlord to send someone to fix your air conditioner.

6. You are working at a job where you won’t leave the country every other year.

5. You want to provide your family with a sense of stability and plant roots.

4. There are more than twice as many people as bedrooms in your current residence.

3. You want to paint the walls of your bedroom any color you please.

2. You are tired of saving all your quarters for the laundromat.

1. When you say you are “going home,” you want to really mean it!


10 Steps to Buying a Home

STEP 1 – DEFINE NEEDS FOR YOUR NEW HOME

Congratulations on your decision to purchase a new home! Your firststep toward buying your new home will be to analyze your needs. Yourreal estate agent can help you determine exactly what you want your newhome to look like and how it should function for you and your family.

First, write down why you are looking for a new home. For example,are you currently renting and would like to begin building equity? Maybeyou recently married and have outgrown your current residence. Or,maybe you received promotion that requires you to move to a new city.These factors will all have a bearing on how you approach your homesearch.

Second, establish a time frame for buying your home. Depending onyour reasons for wanting a new property and the current state of themarket in the area you are looking to buy, you should be able to come upwith a rough guideline.

Finally, you probably have a mental picture of what your dream houselooks like. Turn these ideas into two lists: one should describe yourdream home and the other should list features that are absolute musthaves. In a perfect world, your new home would fulfill both lists 100percent, but it is more likely the two lists will turn into a list ofpriorities, as you get clearer about what you want and what isavailable.

STEP 2 – PRE-APPROVAL VS. PRE-QUALIFICATION

Now that you know what you want in a home, you need to find out whatyou can afford. There are two ways to go about this: prequalification orpre-approval for a loan. Either way, you can contact your agent aboutchoosing a mortgage company. Prequalification is the simpler of the twoprocesses. It can even be done online or over the phone. When youcontact a mortgage company, they will ask you for some basic informationabout your finances ? how much money you earn, your debt load, etc.They will take this information and give you a rough estimate of howmuch of a loan you might qualify for.

Pre-approval is more a more in-depth process. The lender will performan extensive check of your finances including your credit rating,whether or not you’re a first-time buyer, what your debt load is, howmuch money you have to put as a down payment, etc. This figure will be amuch more reliable estimate of what you can afford.

In most markets, pre-approved buyers are preferred over those thatare merely pre-qualified. Being pre-approved lets the seller know youhave gone through an extensive financial background check and thereshould be no unexpected obstacles to you buying their home.

STEP 3 – NEIGHBORHOOD INFORMATION

Now that you have your list of needs and wants and know how much youcan afford to spend, it’s time to look at some houses, right?! Well,don’t forget, people don’t just buy a house; they buy the neighborhoodthe house is in. Think about that…if you found the perfect house but itwas in a neighborhood that was not to your liking, would you make anoffer on it?

You will need to make another list for the type of area you want toinvest in. Consider things like drive time to work and majordestinations, amenities such as swimming pools, tennis courts, parking,etc., area schools and the demographics of the surrounding area.

STEP 4 – HOME SEARCH

At this point you will have a good idea of what you can afford andthe type of area you will want to invest in. Taking that informationinto consideration, you are ready to embark on your home search. If youdon’t know much about the city to which you are moving, you will want tostart by finding areas that meet your criteria and then narrowing yoursearch to particular properties in those areas.

There are a few ways to go about this. Possibly the most efficientway to find homes is to allow your real estate agent to keep youup-to-date on available properties that meet your criteria, and thenallow your agent to screen them for you. When your agent presents youwith a home that interests you, he or she can arrange for you to tour itat your convenience.

You can find available homes by reading local real estatepublications, contacting local Neighborhood Associations, visiting thelocal Chamber of Commerce, looking on the Internet, or driving throughneighborhoods that meet your needs. Driving around a particular arealooking for a home that is for sale is good because you can actually seethe house, but it can be very time consuming and very “hit or miss.”

STEP 5 – MAKE AN OFFER

Now that you’ve found your dream home, it’s time to make an offer.Your real estate agent will help you determine the offer price byreviewing recent sales of homes that are similar in size, quality, andconveniences and amenities. Your real estate agent will advise you onhow to create an offer that will have the best chance of being accepted.

After consultation with you, your agent will create a writtencontract with your offer that meets all the local and national legalrequirements. This document details what needs to be done by bothparties to execute the transaction. It should protect the interests ofboth parties and will ensure your financial position as the buyer.

The contract should include, but is not limited to, the following:

Legal description of the home
Offer price
Down payment
Financial arrangements
List of fees and who will pay them
Amount of the deposit
Inspection rights and possible repair allowances
Appliances and furnishings that will stay with the property
Settlement date
Contingencies

Remember the legalities of this phase are very important. If you haveany questions or concerns, be certain to address them with your realestate agent right away.

STEP 6 – NEGOTIATING TO BUY

Once your offer is made you may need to negotiate with the seller toreach an agreement. Keep in mind almost everything is negotiable whenyou are buying a house. This can give you a great deal of leverage inthe buying process, that is, if you have adequate information and youuse it in an appropriate manner.

Some things you may negotiate:
* Price
* Financing
* Closing costs
* Repairs
* Appliances and fixtures
* Landscaping
* Painting
* Occupancy time frame

Counter offers happen frequently. Remain in close contact with yourreal estate agent so you can quickly review any changes from the seller.Remember…bargaining is not a winner-take-all deal. It is a businessprocess that involves compromise and mutual respect.

STEP 7 – SERVICE PROVIDER COORDINATION

After your offer is accepted, your agent will help you coordinate theactivities of service providers and serve as your advocate when workingwith them. Your agent will make sure these vendors have access to theproperty to perform their procedures and will oversee the execution ofthose procedures on your behalf.

One service you may need is a home examination. An inspection of theproperty, the foundation, and the surrounding environmental may beneeded to make sure the property meets the standards set forth in yourwritten agreement. If there are issues or inconsistencies brought tolight during this time, it may delay or even nullify the contract.

Insurance is another item that will need to be taken care of. Expertsrecommend you obtain title insurance equal to the full replacementvalue of the home. This kind of insurance is purchased at closing andprotects the buyers in the unlikely event that the title to the propertybecomes invalid. Homeowners insurance protects against theft, fire andliabilities. It often includes things such as bicycles, furniture andjewelry. Flood insurance is generally only necessary for flood-proneareas. The federal government issues this kind of insurance.

In addition to aforementioned types of insurance, you may wantadditional assurance for your new home. Home warranties are one way toprotect yourself after you buy. Warranties for new homes protect againstplumbing, wiring and structural defects. Existing home warranties coverthings like major appliances and structural problems.

Having these procedures done in a timely and professional manner is amust. Investigate each service provider to make sure they are reputableand have a clean operational history. Your agent’s experience in thisarea will be invaluable.

STEP 8 – BEFORE YOU CLOSE

As the closing date (otherwise known as settlement or escrow) drawsnear you will need to be in contact with the escrow company or closingattorney and your lender to make sure all necessary documents are beingprepared and will be delivered to the correct location on theappropriate date. Find out what form of payment you will need to bringto the closing for any unpaid fees. Make sure that your payment is madeout to the appropriate party.

These days, buyers and sellers don’t even have to be in the same roomto close a deal. Thanks to computer automation, signed paperwork can bedelivered overnight to both parties.

STEP 9 – CLOSING ON A HOME

Closing is where ownership of the home is legally transferred fromthe seller to the buyer. It is a formal meeting that most partiesinvolved in the process will attend. Closing procedures are usually heldat the title company’s or lawyer’s office. Your closing officercoordinates the document signing and the collection and disbursement offunds.

In order for the closing to go smoothly, each party involved shouldbring the necessary documentation and be prepared to pay any relatedfees (closing costs). There may be more than one form of acceptablepayment for your closing costs so ask the closing officer which form ofpayment will be required and to whom it should be paid.

Sellers sometimes pay for a portion or all of the closing costs,depending on local market conditions, terms of the purchase contract,and the seller’s cash and timing considerations. Any such concessionsshould be acknowledged in writing. Most lenders will allow a credit fromthe seller to the buyer for the non-recurring closing costs. However,they usually won’t allow a credit that reduces the amount of the buyer’sdown payment or any of the buyer’s recurring costs, such as expensesfor fire insurance premiums, private mortgage insurance (PMI) orproperty taxes.

STEP 10 – POST-CLOSING

Congratulations on the purchase of your new home!

Now that you have taken ownership of it you will need to have yourelectricity, cable and phone set up. Also be aware of typical homeownerexpenses such as Neighborhood Association fees, landscaping costs, andannual taxes and budget for them accordingly.


Questions to Ask Your REALTOR®

1. Are you a full-time professional Realtor®? How long have youworked full time in real estate? How long have you been representingbuyers? What professional designations do you have?
Knowing whether or not your agent practices full time can help youdetermine potential scheduling conflicts and his or her commitment toyour transaction. As with any profession, the number of years a personhas been in the business does not necessarily reflect the level ofservice you can expect, but it is a good starting point for yourdiscussion. The same issue can apply to professional designations.

2. Do you have a personal assistant, team or staff to handledifferent parts of the purchase? What are their names and how will eachof them help me in my transaction? How do I communicate with them?
It is not uncommon for agents who sell a lot of houses to hire people towork with them. They typically work on a referral basis, and, as theirbusinesses grow, they must be able to deliver the same or higher qualityservice to more people.

You may want to know who on the team will take part in yourtransaction, and what role each person will play. You may even want tomeet the other team members before you decide to work with the team. Ifyou have a question about fees on your closing statement, who wouldhandle that? Who will show up to your closing?

3. Do you have a Website that will provide me with usefulinformation? Can I have your URL address? Who responds to emails and howquickly? What’s your email address?
Many homebuyers prefer to search online for homes because it’s available24 hours a day and you can do it in the privacy of your own home. Bysearching your real estate agent’s Website you will get a clear pictureof how much work you would be able to accomplish online.

4. Will you show me properties from other companies’ listings?
Some real estate companies do offer their buyers’ agents a highercommission if they are able to sell “in-house” listings. In suchcircumstances, there can be added incentive to limit the range of homesyou are shown. This may impact your home search and how much your buyeragent’s fee will be.

5. Will you represent me or will you represent the seller? May I havethat in writing? How will you represent me, and what is the directbenefit of having you represent me?
The goal here is to ascertain to whom the real estate agent has legalfiduciary obligation, which may vary from state to state or even localeto locale. In the past, agents always worked for sellers. Then thelisting broker was responsible for paying the agent or sub-agent thatbrought a suitable buyer for the home. And even though the buyer worked‘with’ an agent, the agent still represented and owed their fiduciaryduty to the seller.

Although seller agencies still exists in certain areas, agents todayalmost always have a sense of moral obligation to buyers. Find out whatis common in your area and understand what kind of agent you have beforeyou begin to work with them.

6. How will you get paid? How are your fees structured? May I have that in writing?
In many areas, the seller pays all agent commissions. Sometimes, agentswill have other small fees, such as administrative or special servicefees, that are charged to clients, regardless of whether they are buyingor selling. Be aware of the big picture before you sign any agreements.Ask for an estimate of buyer costs from any agent you contemplateemploying.

7. What distinguishes you from other real estate agents? What is yournegotiating style and how does it differ from others? What geographicareas do you specialize in?
Each agent has unique methods of overcoming obstacles and negotiatingdeals. The most important thing is to make sure your agent is aneffective advocate for you.

8. Will you give me names of past clients?
Interviewing an agent can be similar to interviewing someone to work inyour office. Contacting references can be a reliable way for you tounderstand how he or she works, and whether or not this style iscompatible with your own.

9. Do you have a performance guarantee? If I am not satisfied with your performance, can I terminate our Buyer Agency Agreement?
In the heavily regulated world of real estate, it can be difficult foran agent to offer a performance guarantee. If your agent does not have aguarantee, it does not mean they are not committed to high standards.Typically, he or she will verbally outline what you can expect fromtheir performance. New Era Realty understands the importance of win-winbusiness relationships: the agent does not benefit if the client doesnot also benefit.

10. How will you keep in contact with me during the buying process?
Some agents may email, fax or call you daily to tell you aboutproperties that meet your criteria, while others will keep in touchweekly. Asking this question can help you to reconcile your needs withyour agent’s systems.


Should You Work With a Buyer’s Agent?…A Seller’s Agent?

In the past, real estate agents always represented the seller,whether the agent helped a seller to market and sell a home or helped abuyer find and purchase a home. In other words, agents were at one timelegally bound to represent the seller in a residential real estatetransaction. In that scenario, the seller paid both the listing agentand the agent who brought the buyer.

Today, agents either represent the buyer, or the seller. If you wantto sell your home, you can work with a “seller’s agent.” If you want tobuy a home, you can work with a “buyer’s agent.” Most states requirereal estate agents to disclose to consumers who they represent.Sometimes an agent will represent the buyer and the seller. A buyer whoelects this situation should receive full disclosure on representation.The real estate agent you choose should fully disclose how they workwith individuals and the options available to you.

Keep in mind that real estate laws differ from state to state andeven from locale to locale. For more in-depth answers, talk with aknowledgeable real estate professional and ask about local practices. Besure you understand and are comfortable with the services of the realestate agent you engage.


How to Make Your Move Easier on Your Family

People generally have two kinds of needs during a home purchase.First are the transactional needs, such as searching for a home,obtaining financing, negotiating the terms of purchase, completingpaperwork and legal documents, and arranging the move. The second areemotional needs, which can be more stressful than the financial ones.The following are some tips to help ease the stress.

PREPARE YOUR CHILDREN

Although you may have lived in your current home for just a fewyears, four years is half the lifetime of an eight-year-old. Your homemay be the only home your children remember. It’s where they feel safeand it’s probably the center of your son or daughter’s world.

Be sure to announce the move in a completely upbeat way. You mighttalk about how beautiful the new neighborhood is and how good theschools are. Bring your children to the new house, if that’s possible orpositively describe it to them. Find out what your children’s favoritethings are in your current home, and then try to re-create them in thenew house. Keep your children actively involved. For instance, take themshopping for paint, bedspreads, carpets, and other items for their newroom.

Your children are bound to have worries during the move. Help lessenthese anxieties by finding ways to make parting pleasant. For example,plan a going-away party or create a photo album with pictures ofneighbors, their house and the neighborhood.

GAIN KNOWLEDGE

As you begin the process, you may start to feel out of control, asthough other parties to the purchase transaction are running the show.Your mortgage company, the appraiser, the inspector, and the seller allhave certain powers to approve or disapprove of your overall plan topurchase this home and move successfully. To alleviate your feelings ofhelplessness, one of the best things you can do is to understand as muchof the purchase process as possible. Work with your real estate agentto prepare yourself for the unknown and tie down loose ends.

TRUST THE PROCESS

There can be so much to do that it’s easy to panic. Buying a home mayfeel risky, but the truth is it’s an opportunity for you and yourfamily. Even though you can’t predict what will happen every step of theway, your real estate agent helps people buy and sell homes as aprofession! Your agent has been there before and understands that thisis a major upheaval in your life. Trust that your agent is looking outfor you on your way to a successful closing and move.

BE FLEXIBLE

Although your agent will do everything possible to prepare you foryour home purchase, there is no such thing as a perfect world. Theproperty inspection may reveal areas of concern, or closing may bedelayed for some reason. Try to take a deep breath and be flexible inyour thinking.

SEEK ENTERTAINMENT

Whenever you feel things are spinning out of control, find adiversion! Take a walk around your new neighborhood; go out of town orto a movie with your family. Whatever outlet works best for you, this isa good time to engage in it! Remember to take one “move” at a time.

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