With home prices at a peak and credit restrictions easing, still record low rates are putting home buyers and sellers on a more even playing field in the upcoming 2015 housing market and beyond. These factors will most definitely make the coming year a great time to buy or sell a home. If you are looking to purchase or sell a home there are a few things that you may want to be prepared for whether youre a buyer or a seller in the coming real estate market.
If you are a buyer, the first thing you want to consider is shopping around for a great mortgage lender or credit union to get pre-approved for a mortgage. Make sure you actually sit with the lender and have all of your paperwork (tax returns, employment letter and a breakdown of all of your current credit obligations to name a few). There is a difference between pre-approved and a pre-approval that could mean the difference between acting quickly on the house of your dreams or losing that home because the mortgage lender did not sit with you to determine if you were actually qualified and simply issued you a pre-approval letter based on a phone conversation and a credit score. Make sure the mortgage lender sits down with you and collects all your information in person to assure you are eligible based on the facts you provide. Nothing is more frustrating than finding the perfect home and losing it due to not having been actually pre-approved, especially in this market of high competition and low inventory.
When Shopping for a Mortgage Lender, What are They Looking for in You?
Mortgage Lenders Double Check The Self Employed
In times past, mortgage lenders would accept copies of tax returns to back up income that a borrower stated on their loan applications. Now they contact the IRS directly to compare income claimed on the application.
Mortgage Lenders Try to Predict Credit Issues
Many mortgages added a follow-up credit check on borrowers even after they have closed on their mortgage loan, very similar to the credit scoring used when the loan was originated. The default-risk scoring can evaluate a borrowers likelihood of defaulting on a loan. The lender can then decide what action to take if and when the payments fall behind.
Mortgage Lenders Can Help
Most mortgage lenders can intervene at an early stage to provide credit counseling or payment modification (short term) to prevent any foreclosure, but may opt to give high-risk borrowers less leeway in times of financial crises.
Choosing the Right Realtor
Once you have been pre-approved by your mortgage lender and know exactly what you can afford, then it is time to choose a Realtor to help and guide you through the rest of the buying process and to actually listen to your needs and wants. Sometimes these needs, as opposed to the wants, can be the difference between finding the perfect home or settling for something less then what youre looking for and not functional for your family. A great Realtor will listen to your needs and your wants and will act accordingly to gather that information to start the process of helping you find the perfect home for you and your family. Remember, not every home will have all of your wants, but most will have all of your needs, so be realistic and open with your agent as they will be working with you on the most important financial decision you can make in your life.
Ask the Prospective Realtor Questions
Questions can include:
- Do you represent the buyer or the seller?
- Do you have fees beyond the commission that the seller pays?
- How much time will you have to commit to my home search?
- What are your fiduciary duties to me as a buyers agent?
- Will you communicate with me? If so, how often?
- Do you have access to all properties including foreclosures and short sales?
- How long have you been in the profession and is this your full time job?
- How well do you know the areas I want to look in?
- Can you perform a Market Analysis on the property I may choose?
- What makes you stand out from other Realtors in your area?
Why Use a Realtor?
Many potential home buyers and sellers may ask themselves why they need a Realtor in the first place. The answer is quite simple: as Licensed Professionals, we specialize in every real estate transaction, from helping you find financing and negotiating the contract to scheduling home inspections and closings. We also listen to you and your needs and make it as seamless as possible so that you can focus on finding a place of your dreams. Although we do much of the work in the background, we make sure you understand the terms and conditions of a contract when you are ready to buy, including contingencies, deadlines, easements, counter offers and so on. As Realtors, we subscribe to a strict code of ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate.
Examples of different kinds of agent representations are:
The buyer's agent is the individual that represents buyers when they purchase a home. This agent negotiates with the seller's agent (the listing agent) to come to a final price agreed upon by the buyer and seller. The buyer's agents fiduciary duties are to the buyer only.
Sellers Agent/Listing Agent
The sellers/listing agent represents the homeowner when they sell their home for the best price possible. Not to be confused with a buyers agent that represents the buyers, the sellers/listing agent negotiates with the buyers agent to come to a price and terms agreed upon by both the buyer and seller, and works with escrow or an attorney handling the closing.
Dual agency can occur when a selling/listing agent selling a home also serves as the buyers agent. In most cases, it is not ideal for one agent to represent both parties in a real estate transaction. The seller/listing agents job is to get the best price for the seller, while the buyers agent aims to get the buyer the home at the lowest price and on the best terms possible. In this scenario, the agent and the clients interests are not aligned. There are some buyers that believe that dual agents will be more motivated to write an offer on their own listing since they will receive double the commission from both ends of the deal. And sellers may feel they will be getting preference over other offers. In reality, more often than not, the buyer will not be getting the home for the best price when working with an agent that also represents the seller.
This happens when a real estate brokerage represents both the buyer and the seller. Each party will have a separate agent from the same firm that owe both the buyer and the seller confidentiality and representation, and can do nothing to hinder either client.
Ready, Set, Go!
Now that you are ready to start looking for a new home, keep in mind that its Location, Location, and Location! Make sure the new home is situated and accessible to schools, churches, grocery stores, medical care, public transportation, shopping malls and emergency services. Check the neighborhood during rush hours and quiet times to get a feel of the commute to work and back. Speak to neighbors and ask questions. Dig below the surface to get a feel of the area.
Another great idea is to make sure you purchase in an area that is great for re-sale if you plan on a shorter time living there and moving out at a later date. Make a list of negatives and positives of each property as you look, and keep track of the ones you like. As your Realtor goes, communicate with him or her constantly on your likes and dislikes as this will help narrow down the right homes to look at. Most of all, have fun and enjoy the home search. Keep the goal in sight and focus on how wonderful and proud you will be when you are a homeowner.