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Common First-Time Home Buyer Mistakes

1. They don t ask enough questions of their lender and end up missing out on the best deal.

2. They don t act quickly enough to make a decision and someone else buys the house.

3. They don t find the right agent who s willing to help them through the home buying process.

4. They don t do enough to make their offer look appealing to a seller.

5. They don t think about resale before they buy. The average first-time buyer only stays in a home for four years.

Source: Real Estate Checklists and Systems, www.realestatechecklists.com.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Understand Real Estate Representation

By: G. M. Filisko

Whether you’re buying or selling, it’s important to choose representation that meets your needs in the transaction.

You have choices when selecting representation in a real estate transaction. Here are five tips for understanding which type of legal relationship with a real estate professional, called an agency relationship, will best protect you when you buy or sell a home.

1. Buyer’s agency
When you’re buying a home, you can hire an agent who represents only you, called an exclusive buyer’s representative or agent. A buyer’s agent works in your best interest and owes you a fiduciary duty. You can pay your buyer’s agent yourself, or ask the seller, or the seller’s agent, to pay your agent a share of their sales commission.

If you’re selling your home and hiring an agent to list it exclusively, you’ve hired a selling representative–an agent who owes fiduciary duties to you.

Typically, you pay a selling agent a commission at closing. Selling agents usually offer or agree to pay a portion of their sales commission to the buyer’s agent. If your seller’s agent brings in a buyer, your agent keeps the entire commission.

2. Subagency
When you purchase a home, the agent you can opt to work with may not be your agent at all, but instead may be a subagent of the seller. In general, a subagent represents and acts in the best interest of the sellers and sellers’ agent.

If your agent is acting as a subagent, you can expect to be treated honestly, but the subagent owes loyalty to the sellers and their agent and can’t put your interests above those of the sellers. In a few states, agents aren’t permitted to act as subagents.

Never tell a subagent anything you don’t want the sellers to know. Maybe you offered $150,000 for a home but are willing to go up to $160,000. That’s the type of information subagents would be required to pass on to their clients, the sellers.

3. Disclosed dual agency
In many states, agents and companies can represent both parties in a home sale as long as that relationship is fully disclosed. It’s called disclosed dual agency.

Because dual agents represent both parties, they can’t be protective of and loyal to only you. Dual agents don’t owe all the traditional fiduciary duties to clients. Instead, they owe limited fiduciary duties to each party.

Why would you agree to dual agency Suppose you want to buy a house that’s listed for sale by the same real estate brokerage where your buyer’s agent works. In that case, the real estate brokerage would be representing both you and the seller and you’d both have to agree to that.

Because there’s a potential for conflicts of interest with dual agency, all parties must give their informed consent. In many states, that consent must be in writing.

4. Designated agency
A form of disclosed dual agency, “designated agency” allows two different agents within a single firm to represent the buyer and seller in the same transaction.

To avoid conflicts that can arise with dual agency, some managing brokers designate or appoint agents in their company to represent only sellers, or only buyers. But that isn’t required for designated agency. A designated, or appointed, agent will give you full representation and represent your best interests.

5. Nonagency relationship
In some states, you can choose not to be represented by an agent. That’s referred to as nonagency or working with a transaction broker or facilitator. In general, in nonagency representation, the real estate professional you work with owes you fewer duties than a traditional agency relationship. And those duties vary from state to state. Ask the person you’re working with to explain what he or she will and won’t do for you.

Other web resources
More on real estate agents’ roles (http://www.dllr.state.md.us/license/mrec/mrecrep.shtml)

G.M. Filisko is an attorney and award-winning writer who zealously protected her clients’ interests as a lawyer. A frequent contributor to many national publications, including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Forms You ll Need to Sell Your Home

1. Property disclosure form. This form requires you to reveal all known defects to your property. Check with your state government to see if there is a special form required in your state.

2. Purchasers access to premises agreement. This agreement sets conditions for permitting the buyer to enter your home for activities such as measuring for draperies before you move.

3. Sales contract. The agreement between you and the seller on terms and conditions of sale. Again, check with your state real estate department to see if there is a required form.

4. Sales contract contingency clauses. In addition to the contract, you may need to add one or more attachments to the contract to address special contingencies  such as the buyer s need to sell a home before purchasing yours.

5. Pre- and post-occupancy agreements. Unless you re planning on moving out and the buyer moving in on the day of closing, you ll need an agreement on the terms and costs of occupancy once the sale closes.

6. Lead-based paint disclosure pamphlet. If your home was built before 1978, you must provide the pamphlet to all sellers. You must also have buyers sign a statement indicating they received the pamphlet.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

What if They Accept the Offer?

Congratulations, your offer has been accepted!

Over the next 30 to 60 days, your purchase will be pending and you will begin the escrow process. Typically, an offer will have several contingencies. Contingencies are terms and conditions written into a contract by the buyer or the seller, which must be met within specified timelines in order for the sale to be completed. Know this, contingencies are a homebuyer s best friend. When contingencies are not met, the sale is cancelled and your deposit money may be refunded.

Some common contingencies include proper financing being in place and conducting a home inspection. Without proper financing in place, you ll have a tough time paying for your new house! In addition, conducting a home inspection can re-open negotiations to pay for hidden problems the house may have  or terminate the sale entirely if truly serious problems are found.

There are many other contingencies that can be attached to the sale of a particular piece of property depending on the different needs of buyers and sellers. Again, a good real estate agent will suggest the contingencies that you should make as part of the offer.

During the sale pending period, you will also be provided with a number of disclosures relative to the sale of your new home. These disclosures run the gamut from information about the business relationships between your real estate agent and your lender, to natural hazards that may exist in and around your new home.

Two of the most important disclosures you will receive include:
Real Property Transfer Disclosure Statement This disclosure is completed by the seller. It tells you the physical condition of the property and potential hazards or defects that may be associated with it. While the seller is principally responsible for the disclosures presented in this document, the agent is also responsible for conducting a visual inspection of the property and disclosing any readily observable defects detected in the process. This document also discloses any special taxes, assessments and other factors that may have a material effect on the value or desirability of the property.

Agency Relationship Disclosure Your real estate agent is required to provide you with a written disclosure stating whom he or she represents in the transaction. The agent may represent you as the buyer exclusively, or the seller exclusively, or be a dual agent representing both you and the seller. You should carefully review and understand this disclosure as it has a material effect on the level of responsibilities that your agent owes to you.

Attaching excessive contingencies to an offer or sale in a hot real estate market can easily kill a deal. There may be several other buyers waiting in line with a shorter list of needs.

Home Buyer Hint
Depending on the location, age and other factors involved with the residential property that you are purchasing, additional disclosures may be required. If you have questions about disclosures, ask your real estate agent.

What is Escrow Anyway

Once an offer has been accepted by a seller and both parties have signed all of the pertinent dotted lines on the offer this document becomes the sales contract (or agreement). Next, the contract and all necessary paperwork and/or funds are collected and delivered to a neutral third party called an escrow holder.

During the escrow process, this neutral third party will carry out the provisions of the agreement between buyer and seller. An escrow holder is typically an escrow firm or title company. As with the other parts of your transaction, a good real estate agent can help you find an escrow holder in your area. Check the fees charged by the various escrow holders in the area. These fees may be negotiable.

The escrow officer carries out instructions from the buyer and seller, and ensures that ownership of the property is transferred from the seller to the buyer.

The escrow officer will also collect all of the odds and ends in the purchase process.

This includes proof of insurance, the preliminary title report, inspection reports, loan information and the like. The escrow officer will also prepare the final closing statement. The final closing statement is much like a bank statement, in that it lists all of the credits and debits associated with the purchase of the home. Compare the closing costs to those listed on the Good Faith Estimate received from your broker/lender.

You will typically meet with the escrow officer to sign a lot of documents. READ EVERYTHING! Take your time and ask questions about things you don t understand.

Hints on Closing

  • Keep in close communication with your lender. Are there any problems with documentation on the loan Has everything been verified
  • Keep in close communication with your real estate agent. Are there any problems with the home inspection Pest report
  • Always be available for any questions from your real estate agent, escrow officer, loan officer, or anyone else involved in the buying process. Make sure you re  in the loop with any issues that may arise.
  • When it comes time to close escrow — that is, take possession of the house — clear some time. Figure out WHEN you d like to close, and then look at when you HAVE TO close. Are you moving at the end of the month from a rental to your new place Don t let delays leave you out in the street!

Ask your escrow officer for an estimate of closing costs. You won t know exactly how much you ll pay until escrow closes, but it is good to know these figures ahead of time.

8 Tips to Guide for Your Home Search

1. Research before you look. Decide what features you most want to have in a home, what neighborhoods you prefer, and how much you d be willing to spend each month for housing.

2. Be realistic. It s OK to be picky, but don t be unrealistic with your expectations. There s no such thing as a perfect home. Use your list of priorities as a guide to evaluate each property.

3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and closing costs. Then, talk to a lender and get prequalified for a mortgage. This will save you the heartache later of falling in love with a house you can t afford.

4. Don t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion, but be ready to make the final decision on your own.

5. Decide your moving timeline. When is your lease up Are you allowed to sublet How tight is the rental market in your area All of these factors will help you determine when you should move.

6. Think long term. Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in this home for a longer period This decision may dictate what type of home you ll buy as well as the type of mortgage terms that will best suit you.

7. Insist on a home inspection. If possible, get a warranty from the seller to cover defects for one year.

8. Get help from a REALTOR . Hire a real estate professional who specializes in buyer representation. Unlike a listing agent, whose first duty is to the seller, a buyer s representative is working only for you. Buyer s reps are usually paid out of the seller s commission payment.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

How High Tech Home is Your Home

If the latest technology or entertainment options are important in your new home, add the following questions to your buyer s checklist.

1. Are there enough jacks in every room for cable TV and high-speed Internet hookups

2. Are there ample telephone extensions or jacks

3. Is the home pre-wired for home theater or multi room audio and video Does it have in-wall speakers

4. Does the home have a local area network (LAN) for linking computers

5. Does the home already have wiring for DSL or another high-speed Internet connection

6. Does the home have multi zoning heating and cooling controls with programmable thermostats

7. Does the home have multi room lighting controls, window-covering controls, or other home automation features

8. Is the home wired with multipurpose in-wall wiring that allows for reconfigurations to update services as technology changes

To rate the home on its technological sophistication, fill out the Consumer Electronics Association s TechHome checklist at www.ce.org/techhomerating.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Tips for Buying in a Tight Market

Increase your chances of getting your dream house in a competitive housing market, and lower your chances of losing out to another buyer.

1. Get pre-qualified for a mortgage. You ll be able to make a firm commitment to buy and your offer will be more desirable to the seller.

2. Stay in close contact with your real estate agent to find out about the newest listings. Be ready to see a house as soon as it goes on the market  if it s a great home, it will go fast.

3. Scout out new listings yourself. Look at Web sites such as REALTOR.com, browse your local newspaper s real estate section, and drive through the neighborhood to spot For Sale signs. If you see a home you like, write down the address and the name of the listing agent. Your real estate agent will schedule a showing.

4. Be ready to make a decision. Spend a lot of time in advance deciding what you must have in a home so you won t be unsure when you have the chance to make an offer.

5. Bid competitively. You may not want to start out offering the absolute highest price you can afford, but don t go too low to get a deal. In a tight market, you ll lose out.

6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period.

7. Don t get caught in a buying frenzy. Just because there s competition doesn t mean you should just buy it. And even though you want to make your offer attractive, don t neglect inspections that help ensure that your house is sound.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

How to Get an Offer on Your Home

1. Price it right. Set a price at the lower end of your property s realistic price range.

2. Prepare for visitors. Get your house market ready at least two weeks before you begin showing it.

3. Be flexible about showings. It s often disruptive to have a house ready to show at the spur of the moment. But the more amenable you can be about letting people see your home, the sooner you ll find a buyer.

4. Anticipate the offers. Decide in advance what price and terms you ll find acceptable.

5. Don t refuse to drop the price. If your home has been on the market for more than 30 days without an offer, you should be prepared to at least consider lowering your asking price.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

6 Reasons to Reduce Your Home Price

By: G. M. Filisko

While you’d like to get the best price for your home, consider our six reasons to reduce your home price.

Home not selling That could happen for a number of reasons you can’t control, like a unique home layout or having one of the few homes in the neighborhood without a garage. There is one factor you can control: your home price.

These six signs may be telling you it’s time to lower your price.

1. You’re drawing few lookers
You get the most interest in your home right after you put it on the market because buyers want to catch a great new home before anybody else takes it. If your real estate agent reports there have been fewer buyers calling about and asking to tour your home than there have been for other homes in your area, that may be a sign buyers think it’s overpriced and are waiting for the price to fall before viewing it.

2. You’re drawing lots of lookers but have no offers
If you’ve had 30 sets of potential buyers come through your home and not a single one has made an offer, something is off. What are other agents telling your agent about your home An overly high price may be discouraging buyers from making an offer.

3. Your home’s been on the market longer than similar homes
Ask your real estate agent about the average number of days it takes to sell a home in your market. If the answer is 30 and you’re pushing 45, your price may be affecting buyer interest. When a home sits on the market, buyers can begin to wonder if there’s something wrong with it, which can delay a sale even further. At least consider lowering your asking price.

4. You have a deadline
If you’ve got to sell soon because of a job transfer or you’ve already purchased another home, it may be necessary to generate buyer interest by dropping your price so your home is a little lower priced than comparable homes in your area. Remember: It’s not how much money you need that determines the sale price of your home, it’s how much money a buyer is willing to spend.

5. You can’t make upgrades
Maybe you’re plum out of cash and don’t have the funds to put fresh paint on the walls, clean the carpets, and add curb appeal. But the feedback your agent is reporting from buyers is that your home isn’t as well-appointed as similarly priced homes. When your home has been on the market longer than comparable homes in better condition, it’s time to accept that buyers expect to pay less for a home that doesn’t show as well as others.

6. The competition has changed
If weeks go by with no offers, continue to check out the competition. What have comparable homes sold for and what’s still on the market What new listings have been added since you listed your home for sale If comparable home sales or new listings show your price is too steep, consider a price reduction.

More from HouseLogic
How to ready your home for sale at little cost (http://buyandsell.houselogic.com/articles/5-tips-prepare-your-home-sale/)

How to review offers on your home (http://buyandsell.houselogic.com/articles/6-tips-choosing-best-offer-your-home/)

Other web resources
Setting the right price

More on setting the right price (http://public.findlaw.com/abaflg/flg-4-4a-1.html)

G.M. Filisko is an attorney and award-winning writer who made strategic price reductions that led to the sale of a Wisconsin property. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

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