(Stay on the Right Road to Your Dream Home) Use a Buyer’s Agent It’s important you choose an experienced agent who is there for you. Your agent should be actively finding you potential homes, keeping you informed of the entire process, negotiating furiously on your behalf, and answering all of your questions with competence and speed. First, find an agent who represents you and not the seller. This is beneficial during the negotiating process. If you are working with a buyer’s agent, he or she is required to have a fiduciary relationship of confidence and trust. Under this relationship, the agent will maintain care, obedience, accountability, loyalty and disclosure with all your legal instructions and all matters pertaining to your real estate endeavors. In addition, he or she is also focused on getting you the lowest asking price. Also, when you use a buyer’s agent, you will have more access to properties. Not only are they plugged into their Multiple Listing Service (MLS), but also they are actively finding homes that are listed as For Sale By Owner (FSBO), or homes that sellers are thinking about listing. Avoid Making any Major Credit Purchases
Don’t go on a spending spree using credit if you are planning on buying a home, or in the process of buying a home. Your mortgage pre-approval is subject to a final evaluation of your financial situation. Every $100 you pay per month on a credit payment could cost you about $10,000 in home eligibility. For example, a car payment of $300 per month could mean you qualify for $30,000 less in a mortgage. If you have accumulated enough savings, you should consider not making any large purchases until after closing on your home. The last thing you want is to know you could have purchased a new home had you curbed the urge to spend. Understand the difference between a listing and buyers agent
Traditionally, buyers would stop at a house for sale and be shown the property by an agent sitting there. The problem with this method is that the agent sitting there is usually the listing agent. In most cases, he or she represents the seller. Be careful about what you say to a listing agent. A listing agent’s role is to find a buyer, and to get as high a price and the best terms possible for the seller. He or she is required to inform the seller of any facts that may influence the seller’s decision about whether to accept an offer or not. For example, if you mention to the listing agent how much mortgage you are qualified for, don’t be surprised if the seller knows it as well. Always keep in mind that you want the lowest price and the best terms. If an agent is not directly working for you, they could very well be working against you. The “Dual” Agent
Some agents represent both buyers and sellers; they are called “Dual” agents. In many cases, the same agent will list the property and submit your offer. In fact, they are required by law to remain confidential with both clients. There is nothing legally or ethically wrong here, however, it can be difficult to understand how the agent can negotiate to the best of his or her ability on your behalf. Instead of becoming a negotiator, they often play the role of mediator. It is easy to assume that no agent can represent both buyers and sellers as well as an agent who declares for just one party of the other. Buyers and sellers opt to use “Dual” agents to get a savings in commission. An agent who represents both buyers and sellers doesn’t have to split the commission with other agents and may be willing to throw in some of the commission, which, in effect, will get you a reduced price. Getting Pre-Qualified with a reputable LOCAL Lender
It used to be that buyers could go house shopping and when they found their dream home, they would go get pre-approved. However, in today’s market, that has proven to be one of the least effective methods in landing the dream home. Most lenders can pre-qualify you for a mortgage over the phone. Based on general questions about your income, debt, assets, and credit history, lenders can estimate how much mortgage you qualify for. When you are pre-qualified, you and the seller know exactly how much house you can afford and it gives you credibility as an interested buyer who will be able to buy the seller’s property. Also, and probably most important, pre-qualifying allows your agent to narrow the search for your eligible properties, saving valuable time for you and your agent. Pre-approval means you have applied for a mortgage, filled out the mortgage application, received your credit report, and verified your employment, assets, etc. When you are pre-approved, you know exactly what the maximum loan amount will be. In addition to being pre-approved, it’s important to be pre-approved with a legitimate, professional lender. Legitimate lenders include banks, mortgage bankers, credit unions, savings and loan associations, mortgage brokers and online lenders. Some lenders to avoid: those who lose a form or misplace a file, those who gather information from you in an unorganized manner, those who are not informed about interests rates, points or costs, and those who cannot provide you with the right information. Build a Plan of Action and Get Ready
Buying a home will probably rank as one of the biggest personal investment one can make. Being organized and in control will contribute significantly to getting the best home deal possible with the least amount of stress. It is important to anticipate the step required to successfully achieve your housing goal and to build a plan of action that gets you there. Before you can build a plan of action, take the time to lay the groundwork for your decision-making process. First, ask yourself how much can you afford to pay for a home. If you’re not sure on the price range, find a lender, get pre-qualified, and alleviate some of the anxieties that come with home buying. Once you are pre-qualified, you avoid the frustration of finding homes that you think are perfect, but are not in your price range. Second, ask yourself where you want to live and what is the best location for you and/or your family. Things to consider: Convenience for all family members Proximity to work, school Types of homes in neighborhood – condos, town homes, co-ops, newly constructed homes, etc. Quality of schools, crime rate of neighborhood Shopping areas, parks and recreation, local transportation
Hot, Normal and Cold Markets
Hot Market (Seller’s Market)
This is an extremely competitive market, one that is advantageous to the seller. Sometimes, home will sell as soon as they are listed or even before they are listed. Typically, during a hot market, multiple offers will be made on each home and more often than not, homes will sell for more than their asking price. It is even more crucial to be prepared and to be ready as a buyer when the market is hot. It can be easy to get caught up in the bid for a home, but if you are prepared (pre-qualified, solid in your price range, realistic about your needs), it is easier to remain focused on your housing needs and price range. Normal (Balanced) Market
In a normal market, there is a fairly large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer’s responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at a lower asking price and negotiate a price at least somewhat less than what the sellers are asking. Cold Market (Buyer’s Market)
In a cold market, houses may be listed for more than 6 months and the price of houses listed may drop considerably. This market is advantageous to the buyer. As a buyer, you have the time to make an offer that works to your best interest. It is not uncommon to low-ball and to find the sellers are accommodating to meet your needs. Keep in mind that even though this market is a great time for buyers, you do not want to lose your dream home by being unrealistic. Your goal is to get your dream home at the best possible price. Importance of Home Inspections
As a buyer, you are entitled to know exactly what you are getting. Don’t take for granted what you see and what the seller or the listing agent tells you. This does not mean they are not being honest with you; but rather, there may be some adverse conditions they don’t know about. A professional home inspection is something you should do and most lenders require it, whether you are buying an existing home or a new one. An inspection is an opportunity to have an expert look closely at the property you are considering purchasing and getting an oral and written opinion as to its condition. Beforehand, make sure the report will be done by a professional organization, such as a local trade organization or a national trade organization such as ASHI (American Society of Home Inspection). Not only should you never skip an inspection, you should also be present with the inspector during the inspection. This gives you a chance to ask questions about the property and get answers that are not biased. In addition, the oral comments are typically more revealing and detailed than what you will find on the written report. Once the inspection is complete, review the inspection report carefully. You have to request an inspection when you present your offer. It must be written in as a contingency, if you do not approve the inspection report, then you don’t have to buy. Most real estate contracts automatically provide an inspection contingency. Avoiding Financial Stress
By asking the right questions, and knowing exactly what your needs are, you can find the right loan for you. There are certain approaches that you can take wile mortgage shopping that can cost or save you money. It is still true that the better qualifications you have, the lower your interest rate will be. However, there are mortgages available for almost everyone; it’s the interest rates or the down payments that vary. Before speaking with a lender, know the monthly dollar amount you feel comfortable committing to. Then when you discuss mortgage pre-qualification with your lender, it is easier for you to determine the monthly amount and what value of home the monthly amount translates into. Do not put yourself in the position where you will be paying more each month than you intended, within reason, simply because the “dream” house requires it. Do your research on the types of mortgages available to you and find the one that best suits your needs. There are a number of considerations to be made in terms of finding the best mortgage for each individual: - What type of market are you in? Are the interest rates falling or rising?
Do you want a fixed mortgage rate, where you will always know what your payment is going to be? What are your long-term goals? Do you intend to resell the property? Do you only need the mortgage for a short time?
I'm available anytime to answer your questions. Don't hesitate to call or e-mail me for assistance.
I'm available anytime to answer your questions. Don't hesitate to call or e-mail me fo assistance.
Regards,
Tom Roskelly, Realtor
(443) 871-4903
E-mail: TWRoskelly@aol.com |