Nine Good Reasons for Buyers to Hire a Real Estate Professional
A real estate professional can help the homebuyer:
1. Refine Goals
Licensees can work with you to refine your goals if you feel that help is needed or wanted.
2. Understand Variables Affecting a Property Purchase or Sale
They can explain their views on the variables affecting a property purchase including timing of the sale, interest rates, regional economy's effect on buyer's and seller's markets, and applicable tax rules.
3. Understand Types of Housing Available
Licensees can explain the types of housing including cooperative apartments, condominiums and condo conversions, as well as single-family homes and new homes.
4. Assists with Financial Preliminaries
In order to know what you can afford, licensees can work with the mortgage broker on the financial preliminaries.
- Calculate your income and expenses. They can assist you in calculating your income and expenses to help determine the amount of a loan for which you will be able to qualify.
- Handle credit rating. Licensees can assist you in handling your credit rating including examining your credit rating, resolving some items, and explaining to you how to handle other items, which may create financing problems.
- Estimate home purchase and ownership costs. They can estimate applicable home purchase costs including down payment, professional services, inspections, closing costs, and moving. They can also estimate home ownership costs, which include house payment, homeowner's and mortgage insurance, property taxes, utilities, maintenance, homeowner's association dues and items for new residence.
- Calculate the maximum amounts for payments and loans. Licensees can calculate the maximum amounts for house payment, PITI (principal, interest, taxes, and insurance), the amount you can borrow, and the type(s) home loan you can obtain.
5. Aids in Choosing Consultants
Licensees may recommend consultants including accountants, attorneys, closing agents/escrow holders, home inspectors, lenders, and title companies.
6. Assists with Loan
Understanding and getting the loan can be a complicated process.
- Understand loan considerations. Licensees may explain loan considerations including the source of down payments, the effect of different amounts of down payment, income, type and condition of the property, and amount of time before scheduled closing.
- Understand loan terms. Licensees can explain loan terms including mortgage, trust deed, principal, interest, equity, equity buildup, amortization, interest rate, term, biweekly, cosigner, seniority of loans, note of personal liability, buy down, and down payment.
- Understand details associated with obtaining loans. They can explain details for all loans items including points, prepayment penalties, and due-on-sale clauses. For fixed-rate loans they can explain interest rate and term. For adjustable rate loans (variable rate), items they can explain initial interest rate, adjustment interval, index, margin, caps on interest rates and payments, convertibility, floors, and negative amortization.
- Understand financial arrangements. Licensees can explain financial arrangements including all cash offers and no cash offers (nothing down); taking over the seller’s loan (including assumable and subject-to loans); obtaining new financing (including conventional, FHA, VA, and FmHA loans). They can also explain graduated payment, rollover, balloon, growing equity, reverse annuity, zero rate, deferred interest, flexible payment, easy qualifier, price level adjustable, shared equity, and bridge loans as well as renting with an option to buy and pledging other assets.
- In addition, they can explain seller's participation in buyers financing including seller buy down, seller carry back, seller guaranteed, and wraparound loans as well as land sale contracts, equity sharing with seller and lease options.
- Understand and handle prequalifying. Licensees can explain prequalification items and help handle the prequalification process including lenders check of credit rating, income, employment history, and debt management.
- Understand types of lenders. They can explain information about the types of lenders including conventional lenders (savings and loans, banks, credit unions); mortgage brokers and bankers (insurance companies, real estate investment trusts, pension funds, endowments); government programs (FHA, VA, and FmHA); and private lenders (builders and developers, seller, and others).
Handle loan applications. They can help you understand loan applications including the amount financed, annual percentage rate, finance charge, prepaid charges, deposit, payment amounts and dates, late charges, prepayment penalties, cancellation and acceleration policies, assumability, and fees.
7. Understand Choice Considerations
Licensees can explain to you the items to consider when choosing a property.
- Community choice considerations. Licensees are a good source of information on community choice considerations including accessibility, climate, community plan, crime level, employment opportunities, services available, tax base, schools, recreation, cultural opportunities, shopping.
- Neighborhood choice considerations. They are knowledgeable on neighborhood choice factors including assessments and bonds, childcare availability, crime level, possible hazards, neighborhood plan, neighborhood improvements, parking, religious organizations, schools, shopping, topography, traffic, transportation, and zoning.
- Property choice considerations. Licensees can help you understand property choice considerations such as both new and existing housing, housing in good repair and fixer-uppers, style, location within the neighborhood, position on the lot, construction materials, view, landscaping, as well as the types and number of rooms in the home, and included amenities.
- Non-traditional housing supply. They can explain the non-traditional housing supply including foreclosures, REOs (real estate owned), and VA and FHA repossessions.
- Property problems. Licensees understand, can explain to you, and can check for problems, which you may not normally be aware of when viewing a property.
- Property disclosure. They can obtain the disclosure of information for you regarding a property you may be interested in buying including:
- Defects and malfunctions in the interior walls, ceilings, floors, exterior walls, insulation, roof(s), foundations, slabs, driveways, sidewalks, walls and fences, electrical system, and plumbing/sewer/septic system;
- Complications associated with the property including environmental hazards; shared property; encroachments and easements; alterations made without permits; alterations not in compliance with building codes; landfill; soil problems; flooding, drainage, or grading problems; major damage to property; violations of zoning, use, or setback regulations; neighborhood nuisances; CC&Rs (conditions, covenants, and restrictions); homeowners' associations; common areas; notices of abatement or citations; and lawsuits.
8. Understand and handle contract preparation. Licensees can work with you and your advisors in handling the contracts to your best advantage.
- Specific negotiating goals. Licensees can work with you to prepare specific goals for the negotiation to be included in the contract such as price, terms, down payment amount, type of financing, date of closing, date of possession, inclusion of personal property, and buyer to name service providers.
- Costs. They can explain the various costs including the appraisal fee, assessments, assumption fee, attorney fee, beneficiary statement, credit report, delinquent payments, document preparation, drawing deed, escrow/closing fees, homeowner's insurance, homeowner's association fees, home warranty, impounds, interest, loan origination fee, loan tie-in fee, notary fee, pest control inspection fee, pest control repair charge, physical inspection fee, points, prepayment penalty, property taxes, reconveyance fee, recording fee, satisfaction of mortgage, sub-escrow fee, survey fee, title insurance, title search fee, and transfer tax.
- Contingencies. Licensees can understand, explain, and use many types of contingencies effectively in your best interest.
- Purchase contract. Licensees can explain and show you the most advantageous way to handle the purchase contract sections including contract preliminaries, financing terms and loan provisions, loan approval, existing loans, due-on-sale clause, credit approval, balloon payment, prorations, property tax reassessment, FHA financing, VA financing, definitions, time is of the essence, conditions satisfied, insurance, destruction of improvements, notice of violations, title examination, bonds and assessments, closing, evidence of title, vested title, physical possession, fixtures, personal property, and maintenance.
- Special purchase contracts items. They can understand, explain, and use effectively special items in purchase contracts include financial disclosure laws, notice of delinquency, smoke detectors, real property disclosure, liquidated damages, dispute mediation, arbitration of disputes, summary of attachments, counterparts, provisions to be initiated, and walk-through inspections.
- Special contracts. Licensees can understand, explain, and effectively use special contracts including lease purchase, sale-leaseback, lease option, and purchase option agreements.
- Backup offers. They can understand, explain, and use backup offers effectively.
9. Understands and Handles Negotiation
They can effectively present the offer and negotiate well to get the property you desire at the best price and terms.
- Offer logistics. Licensees can understand and explain the process of sellers accepting your offer as well as the process and implications of you revoking an offer.
- Counteroffers. They can understand, explain, and use, as necessary, writing a counter offer, revoking a counter offer, sellers accepting another purchase contract, you accepting seller counter offer, and timing.
Licensees can explain the advantages and functions of escrow, actions prohibited for escrow holders, requirements for a valid escrow, selection of the escrow holder and timing of the selection.
- Establishing an escrow. They can understand, explain, and assist with opening an escrow, providing take sheet information, and approving the escrow instructions.
- Escrow responsibilities. Licensees can understand and explain buyer's loan duties including applying for a loan, consumer-lending laws, and handling tax duties.
- Contingencies. They can understand and explain the consequences of unmet contingencies. They work to remove contingencies to prevent cancellation. They can understand, explain and use as appropriate the use of contingency releases, contingency removal requests, and contingency removal notices.
- Other complications. Licensees can understand, explain, and handle other complications including revocation, breach of contract, death or incapacity, assignment by seller, mutual consent and cancellation (including the implications and contract release), and disputes.
- Walk-through inspection. They can explain the walk-through inspection to you and accompany you on the walk-through inspection.
- Closing escrow. Licensees can explain closing escrow and closing costs. They can explain and help you reconcile the closing statement.
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