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9 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).
* Shop for a loan. Licensees can help compare lenders and the loans that the lenders
offer.
* 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, REO's (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.
They can also explain and tell you the most beneficial method to handle the seller
disclosure statement, pest control inspection information, inspections of the physical
condition of property, roof report to seller, city and county report, maintenance reserve,
home protection contract, contingent sales, owners association disclosure, Flood Hazard
Zone Disclosure, rental property, rent control ordinance, and smoke detector(s) default,
attorney fees, additional terms and conditions, addenda, agency relationship confirmation,
expiration of offer, entire agreement, commission, and FIRPTA (Foreign Investment in Real
Property Tax Act).
* 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
initialed, 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.
* Counter offers. 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.
Understands and Handles Escrow
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. |
