GENERAL QUESTIONS
What is the difference between a real estate agent and a real estate broker?
What is earnest money?
Who pays the typical fees attached to the home buying process?
BUYER QUESTIONS
I want to buy a house. I know the property. It is listed with a real estate agent. Do I need my own agent or can I negotiate a lower fee if I represent myself?
What is a realistic number of homes you should view prior to buying?
Should I get a home inspection?
SELLER QUESTIONS
What is the best way to set a price on my home?
What should I do to my house to get it ready to sell?
Why not just go with one of those discount real estate brokers?
What is the difference between a real estate agent and a real estate broker?
Most states require real estate sales professionals to be licensed by the state so that they can control education and experience requirements and have a central authority to resolve consumer problems.
The terminology used to identify real estate professionals varies a little from state to state. Brokers are generally required to have more education and experience than real estate salespersons or agents.
The person you normally deal with is a real estate agent or salesperson. The salesperson is licensed by the state, but must work for a broker. All listings are placed in the broker's name (the company), not the salesperson's.
A broker can deal directly with home buyers and sellers, or can have a staff of salespersons or agents working for him or her.
In some instances, like mine for example; a person can have an Associate Broker’s license. This means that the person has met all of the state’s requirements to have his/her own real estate company but chooses no to do so.
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What is earnest money?
The book definition of earnest money is: "a sum of money given to bind an agreement, such as the sale of real estate, the advance of a loan or some other transaction requiring a deposit. Earnest money is forfeited by the donor if he or she fails to carry out the terms of the contract or agreement."
In other words, earnest money is money applied "up front" from a buyer to show a seller the buyer is serious about the purchase. The money is deposited in an escrow account and held by the Broker of which all parties agree hold the earnest monies. Usually the earnest money is applied toward the buyer's loan at closing. Earnest money is NOT the down payment.
We are frequently asked, "How much earnest money do I need?” This is a difficult question to answer. Earnest money is not required, though the vast majority of sellers expect it, and an offer without any earnest money attached will usually not be taken seriously. Earnest money is exactly what it sounds like. How earnest are you about purchasing this home?
There is no "standard amount" for earnest money. The bottom line is the amount required is whatever it takes to convince the seller you're serious about making the purchase.
Earnest money is released to the seller if the buyer defaults on the contract after it's accepted. If the contract fails due to no fault of the buyer, then earnest money is typically returned in full to the buyer. The specifics are thoroughly explained in the contract. Make sure that your agent goes over this in great detail with you. The last thing you want to do is lose a few thousand dollars due to lack of attention to detail.
Earnest money, like virtually any part of a real estate transaction, is a negotiable item.
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Who pays the typical fees attached to the home buying process?
Buyer typically pays for:
Appraisal
Credit Report
Discount Points
Escrow Payments
Homeowner’s Association Fees
Homeowner’s Insurance
Buyer’s portion of pro-rated interest
Mortgage insurance (if required by lender)
Origination Fees
Recording Fees
Title Insurance
Any fees associated with FHA or VA loans
Seller typically pays for:
Seller’s portion of pro-rated interest
Pest Inspection
Real Estate Commission
Transfer Tax
REMEMBER-WHO PAYS CLOSING COST IS NEGOTIABLE!
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I want to buy a house. I know the property. It is listed with a real estate agent. Do I need my own agent or can I negotiate a lower fee if I represent myself?
A lot of consumers think that if they call the agent on the sign and work directly with that agent that they can somehow save money (possibly by saving half of the commission and taking it off of the sales price of the home). This doesn’t happen. The commission is set when the property is listed. The agent on the sign get’s the entire commission if you deal directly with her.
The seller pays the real estate commission, not the buyer, and real estate commissions are already determined and stated in the listing contract. It doesn't cost you anything extra to have your own agent represent you because the seller is already paying for it. BUYER’S REPRESENTATION IS FREE!!! The only time that I can think that a buyer would have to pay his agent a commission is if the buyer chose to purchase a “FSBO” and the seller would not pay the buyer’s agent a commission. Most of the time, even in this case, the seller would happily pay a commission to the agent for bringing a buyer and facilitating the sale of the property.
When a seller signs the listing agreement to list the property, the agent he signs with promises to represent the seller ONLY. So, if you go into an agreement to purchase a home and you’ve called the agent on the sign to do so, know that you are NOT BEING REPRESENTED. You need someone on your side; someone with your best interests in mind. How could the listing agent possibly try to get you the lowest price on a property while, at the same time trying to get his seller the highest price??
This is what is called “Buyer’s Agency” or “Buyer’s Agent”.
No matter how it is set up, the buyer still walks away with the house and the seller still walks away with 94% of the purchase price."
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What is a realistic number of homes you should view prior to buying?
This is an interesting question and one that is very difficult to answer...
The short answer is "as many as it takes to find a home for you".
The long answer is complicated and will likely change depending on your circumstances.
Purchasing a home will most likely be the single largest investment someone ever makes. Because of this, it is important to make sure you find a home that meets your current and future,needs.
I tell my buyers to list home qualities and features into three categories:
1) Must Haves -- things you simply can not live without.
2) Nice to Haves -- things that would be nice, but you could do without
3) Can't Haves -- things you simply can not live with.
Armed with a detailed list of these three items, a good agent can include and exclude many homes from your potential search. As more homes are visited, it becomes easier (most of the time) to refine the potential homes that may work for you. Be prepared, sometimes you may find things actually move around in your three categories!
Everyone is different. I’ve helped people who bought a home after looking at 3 houses and have had other people I've shown over 30 homes to. It is important not to get into "analysis paralysis" and second-guess everything. It's also important not to pass up on a home you love "just in case" something better is out there. But by taking a systematic approach to looking at homes, keeping your priorities in order and working closely with your agent, you can find the home that is perfect for you.
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Should I get a home inspection?
Absolutely.
Home inspections are not required before purchase. However, I always recommend that every home should have a professional home inspection during the buyer due diligence period. The cost varies by inspector, but it's probably the best $300 - $600 you'll ever spend.
A good home inspector will be able to tell you many things about the home you are considering purchasing. You'll get maintenance tips, you'll get peace of mind, and you’ll get a great sense of the condition of the home. A good inspector can find structural problems, ensure the wiring and plumbing "meet code" and evaluate the condition of all the appliances included in the sale. They will check out the home from top to bottom and you'll walk away with a detailed report on just about everything in your home.
Getting a professional home inspection is one of the most important steps in the purchase of a home, whether it was built 100 years ago or yesterday.
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What is the best way to set a price on my home?
There are two main ways to establish a home listing price:
1) Get a full blown appraisal: A real property appraiser will give you an estimated market price for about $350. I am an appraiser and I offer this on my menu of services to my seller clients with a couple of stipulations.
2) Get a "CMA" (Compartive Market Analysis): A CMA can be provided by a real estate agent. The agent will look at recent sale "comparables" and determine the market price for your home. A comparable is a house similar in size, age and condition that is physically located near your home and has sold recently. Comparable sales are the best indicator for what your house could sell for. The advantage of a CMA over an appraisal is cost--A CMA is free. Appraisals are much more detailed and appraiser’s are licensed and trained to arrive at a more precise market value.
Ultimately the market decides what your home is worth. The true definition of "market price" is what an able and ready buyer is willing to pay.
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What should I do to my house to get it ready to sell?
This is something that should be seriously considered before listing.
Your home should be removed of ALL clutter. It should be clean. You should make sure that the walls are in good condition (fairly good paint) and that the carpet is clean. Also, always remember, first impressions are priceless. Make sure that your lawn is inviting and that your grass is always manicured.
These are just a few standard suggestions. Each home is unique and should be discussed at your listing appointment with the agent that you’re interviewing.
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Why not just go with one of those discount real estate brokers?
BECAUSE YOU GET WHAT YOU PAY FOR!!! I could go on and on but that is the absolute bottom line!
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If you have a particular question, please go to my blog, post it and I’ll get you an answer as soon as I can!