What Is a Real Estate Agent’s Commission?
Ever wonder what exactly a Real Estate Agent does? Are they worth the commission? Ever wonder if you’re paying too much for commission? Even consider going it your own via FSBO?
You may have a great Agent and they don’t communicate with you all they’re doing. Or, you may also have a rock star agent and who’s doing so much it hasn’t even occurred to you all the fine details going into your home sale.
Here are a few facts that might help you sleep at night and have some peace about residential real estate commissions:
1. Real estate agents are sole proprietors
That means that even if they are a part of an agency, they are small business owners and cover all their own costs and carry all the risk. Do you own or have you ever owned your own small business? Then you know you wear ALL the hats and all the responsibility falls to you. Not to mention, your rather high tax rate!
They invest in you and your home. If they take on a listing, that means they’ve calculated the cost of marketing, photos, and time – lots and lots of time. High quality marketing – online and offline – and maybe even virtual tours. All that cost money. There’s considerable overhead if you are active in the field.
They have no salary and no real predictability in income. One deal may have to last them many months or maybe even longer.
2. The sale of your home may be covering for the loss of another
Deals fall through ALL. THE. TIME. Your particular sale may go pretty smoothly – great! I guarantee you it has ended up covering for a major loss on another deal. It’s the nature of business.
3. The real work begins once a contract is accepted
It may feel like all an agent does is show up sometimes for an open house here and there and put a sign in the yard. Or every time they come over, they’re telling you things you need to spend money on. But the real work is done behind the scenes and is intensified once an offer is accepted. Getting to the closing table is more and more challenging.
Pat Vredevoogd-Combs, a former president of the National Association of REALTORS, testified before the House Financial Services Committee on Housing to stark federal complaints about residential real estate industry pricing.
She submitted a list of 184 things that Listing Agents do in every real estate transaction as a part of her testimony to the committee. She stated, “By all accounts the general public is not aware of all the services that agents provide to sellers and buyers during the course of the transaction, probably because most of the important services are performed behind the scenes.”
Here is the list of (just) 184 things residential real estate agents do:
1. Make appointment with seller for listing presentation.
2. Send a written or e-mail confirmation of appointment and call to confirm.
3. Review appointment questions.
4. Research all comparable currently listed properties.
5. Research sales activity for past 18 months from MLS and public databases.
6. Research “average days on market” for properties similar in type, price and location.
7. Download and review property tax roll information.
8. Prepare “comparable market analysis” (CMA) to establish market value.
9. Obtain copy of subdivision plat/complex layout.
10. Research property’s ownership and deed type.
11. Research property’s public record information for lot size and dimensions.
12. Verify legal description.
13. Research property’s land use coding and deed restrictions.
14. Research property’s current use and zoning.
15. Verify legal names of owner(s) in county’s public property records.
16. Prepare listing presentation package with above materials.
17. Perform exterior “curb appeal assessment” of subject property.
18. Compile and assemble formal file on property.
19. Confirm current public schools and explain their impact on market value.
20. Review listing appointment checklist to ensure completion of all tasks.
Listing Appointment Presentation
21. Give seller an overview of current market conditions and projections.
22. Review agent and company credentials and accomplishments.
23. Present company’s profile and position or “niche” in the marketplace.
24. Present CMA results, including comparables, solds, current listings and expireds.
25. Offer professional pricing strategy based and interpretation of current market conditions.
26. Discuss goals to market effectively.
27. Explain market power and benefits of multiple listing service.
28. Explain market power of Web marketing, IDX and MLS.
29. Explain the work the broker and agent do “behind the scenes” and agent’s availability on weekends.
30. Explain agent’s role in screening qualified buyers to protect against curiosity seekers.
31. Present and discuss strategic master marketing plan.
32. Explain different agency relationships and determine seller’s preference.
33. Review all clauses in listing contract and obtain seller’s signature.
After Listing Agreement is Signed
34. Review current title information.
35. Measure overall and heated square footage.
36. Measure interior room sizes.
37. Confirm lot size via owner’s copy of certified survey, if available.
38. Note any and all unrecorded property lines, agreements, easements.
39. Obtain house plans, if applicable and available.
40. Review house plans, make copy.
41. Order plat map for retention in property’s listing file.
42. Prepare showing instructions for buyers’ agents and agree on showing time with seller.
43. Obtain current mortgage loan(s) information: companies and account numbers
44. Verify current loan information with lender(s).
45. Check assumability of loan(s) and any special requirements.
46. Discuss possible buyer financing alternatives and options with seller.
47. Review current appraisal if available.
48. Identify Home Owner Association manager is applicable.
49. Verify Home Owner Association fees with manager–mandatory or optional and current annual fee.
50. Order copy of Home Owner Association bylaws, if applicable.
51. Research electricity availability and supplier’s name and phone number.
52. Calculate average utility usage from last 12 months of bills.
53. Research and verify city sewer/septic tank system.
54. Calculate average water system fees or rates from last 12 months of bills.
55. Or confirm well status, depth and output from Well Report.
56. Research/verify natural gas availability, supplier’s name and phone number.
57. Verify security system, term of service and whether owned or leased.
58. Verify if seller has transferable Termite Bond.
59. Ascertain need for lead-based paint disclosure.
60. Prepare detailed list of property amenities and assess market impact.
61. Prepare detailed list of property’s “Inclusions & Conveyances with Sale.”
62. Complete list of completed repairs and maintenance items.
63. Send “Vacancy Checklist” to seller if property is vacant.
64. Explain benefits of Home Owner Warranty to seller.
65. Assist sellers with completion and submission of Home Owner Warranty application.
66. When received, place Home Owner Warranty in property file for conveyance at time of sale.
67. Have extra key made for lockbox.
68. Verify if property has rental units involved. And if so:
69. Make copies of all leases for retention in listing file.
70. Verify all rents and deposits.
71. Inform tenants of listing and discuss how showings will be handled.
72. Arrange for yard sign installation.
73. Assist seller with completion of Seller’s Disclosure form.
74. Complete “new listing checklist.”
75. Review results of Curb Appeal Assessment with seller and suggest improvements for salability.
76. Review results of Interior Decor Assessment and suggest changes to shorten time on market.
77. Load listing time into transaction management software.
Entering Property in MLS Database
78. Prepare MLS Profile Sheet–agent is responsible for “quality control” and accuracy of listing data.
79. Enter property data from Profile Sheet into MLS listing database.
80. Proofread MLS database listing for accuracy, including property placement in mapping function.
81. Add property to company’s Active Listings.
82. Provide seller with signed copies of Listing Agreement and MLS Profile Data Form within 48 hours.
83. Take more photos for upload into MLS and use in flyers. Discuss efficacy of panoramic photography.
Marketing the Listing
84. Create print and Internet ads with seller’s input.
85. Coordinate showings with owners, tenants and other agents. Return all calls–weekends included.
86. Install electronic lockbox. Program with agreed-upon showing time windows.
87. Prepare mailing and contact list.
88. Generate mail-merge letters to contact list.
89. Order “Just Listed” labels and reports.
90. Prepare flyers and feedback forms.
91. Review comparable MLS listings regularly to ensure property remains competitive in price, terms, conditions and availability.
92. Prepare property marketing brochure for seller’s review.
93. Arrange for printing or copying of supply of marketing brochures or flyers.
94. Place marketing brochures in all company agent mailboxes.
95. Upload listing to company and agent Internet sites.
RELATED: Your Custom Home Marketing Plan
96. Mail “Just Listed” notice to all neighborhood residents.
97. Advise Network Referral Program of listing.
98. Provide marketing data to buyers from international relocation networks.
99. Provide marketing data to buyers coming from referral network.
100. Provide “Special Feature” cards for marketing, if applicable/
101. Submit ads to company’s participating Internet real estate sites.
102. Convey price changes promptly to all Internet groups.
103. Reprint/supply brochures promptly as needed.
104. Review and update loan information in MLS as required.
105. Send feedback e-mails/faxes to buyers’ agents after showings.
106. Review weekly Market Study.
107. Discuss feedback from showing agents with seller to determine if changes will accelerate the sale.
108. Place regular weekly update calls to seller to discuss marketing and pricing.
109. Promptly enter price changes in MLS listings database.
The Offer and the Contract
110. Receive and review all Offer to Purchase contracts submitted by buyers or buyers’ agents. 111. Evaluate offer(s) and prepare “net sheet” on each for owner to compare.
112. Counsel seller on offers. Explain merits and weakness of each component of each offer. 113. Contact buyers’ agents to review buyer’s qualifications and discuss offer.
114. Fax/deliver Seller’s Disclosure to buyer’s agent or buyer upon request and prior to offer if possible.
115. Confirm buyer is pre-qualified by calling loan officer.
116. Obtain pre-qualification letter on buyer from loan officer.
117. Negotiate all offers on seller’s behalf, setting time limit for loan approval and closing date.
118. Prepare and convey any counteroffers, acceptance or amendments to buyer’s agent.
119. Fax copies of contract and all addendums to closing attorney or title company.
120. When Offer-to-Purchase contract is accepted and signed by seller, deliver to buyer’s agent.
121. Record and promptly deposit buyer’s money into escrow account.
122. Disseminate “Under-Contract Showing Restrictions” as seller requests.
123. Deliver copies of fully signed Offer to Purchase contract to sellers.
124. Fax/deliver copies of Offer to Purchase contract to selling agent.
125. Fax copies of Offer to Purchase contract to lender.
126. Provide copies of signed Offer to Purchase contract for office file.
127. Advise seller in handling additional offers to purchase submitted between contract and closing.
128. Change MLS status to “Sale Pending.”
129. Update transaction management program to show “Sale Pending.”
130. Review buyer’s credit report results–Advise seller of worst and best case scenarios.
131. Provide credit report information to seller if property is to be seller financed.
132. Assist buyer with obtaining financing and follow up as necessary.
133. Coordinate with lender on discount points being locked in with dates.
134. Deliver unrecorded property information to buyer.
135. Order septic inspection, if applicable.
136. Receive and review septic system report and access any impact on sale.
137. Deliver copy of septic system inspection report to lender and buyer.
138. Deliver well flow test report copies to lender, buyer and listing file.
139. Verify termite inspection ordered.
140. Verify mold inspection ordered, if required.
Tracking the Loan Process
141. Confirm return of verifications of deposit and buyer’s employment.
142. Follow loan processing through to the underwriter.
143. Add lender and other vendors to transaction management program so agents, buyer and seller can track progress of sale.
144. Contact lender weekly to ensure processing is on track.
145. Relay final approval of buyer’s loan application to seller.
146. Coordinate buyer’s professional home inspection with seller.
147. Review home inspector’s report.
148. Enter completion into transaction management tracking software program.
149. Explain seller’s responsibilities of loan limits and interpret any clauses in the contract.
150. Ensure seller’s compliance with home inspection clause requirements.
151. Assist seller with identifying and negotiating with trustworthy contractors for required repairs.
152. Negotiate payment and oversee completion of all required repairs on seller’s behalf, if needed.
153. Schedule appraisal.
154. Provide comparable sales used in market pricing to appraiser.
155. Follow up on appraisal.
156. Enter completion into transaction management program.
157. Assist seller in questioning appraisal report if it seems too low.
Closing Preparations and Duties
158. Make sure contract is signed by all parties.
159. Coordinate closing process with buyer’s agent and lender.
160. Update closing forms and files.
161. Ensure all parties have all forms and information needed to close the sale.
162. Select location for closing.
163. Confirm closing date and time and notify all parties.
164. Solve any title problems (boundary disputes, easements, etc.) or in obtaining death certificates.
165. Work with buyer’s agent in scheduling and conducting buyer’s final walkthrough prior to closing.
166. Research all tax, HOA, utility and other applicable prorations.
167. Request final closing figures from closing agent (attorney or title company).
168. Receive and carefully review closing figures to ensure accuracy.
169. Forward verified closing figures to buyer’s agent.
170. Request copy of closing documents from closing agent.
171. Confirm the buyer and buyer’s agent received title insurance commitment.
172. Provide “Home Owners Warranty” for availability at closing.
173. Review all closing documents carefully for errors.
174. Forward closing documents to absentee seller as requested.
175. Review documents with closing agent (attorney).
176. Provide earnest money deposit from escrow account to closing agent.
177. Coordinate closing with seller’s next purchase, resolving timing issues.
178. Have a “no surprises” closing so that seller receives a net proceeds check at closing.
179. Refer sellers to one of the best agents at their destination, if applicable.
180. Change MLS status to Sold. Enter sale date, price, selling broker and agent’s ID numbers, etc.
181. Close out listing in transaction management program.
Follow Up After Closing
182. Answer questions about filing claims with Home Owner Warranty company, if requested.
183. Attempt to clarify and resolve any repair conflicts if buyer is dissatisfied.
184. Respond to any follow-up calls and provide any additional information required from office files.
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5 Reasons You Should Never Buy or Sell a Home Without a Real Estate Agent
You’re DIY’ing this real estate thing, and you think you’re doing pretty well—after all, any info you might need is at your fingertips online, right? That and your own judgment.
Oh, dear home buyer (or seller!)—we know you can do it on your own. But you really, really shouldn’t. This is likely the biggest financial decision of your entire life, and you need Real Estate Agent if you want to do it right.
1. They have loads of expertise
Want to check the MLS for a 4B/2B with an EIK and a W/D? Real estate has its own language, full of acronyms and semi-arcane jargon, and your Real Estate Agent is trained to speak that language fluently.
Plus, buying or selling a home usually requires dozens of forms, reports, disclosures, and other technical documents. Real Estate Agents have the expertise to help you prepare a killer deal—while avoiding delays or costly mistakes that can seriously mess you up.
FREE DOWNLOAD: The Complete Home Buyer Guide
2. They have turbocharged searching power
The Internet is awesome. You can find almost anything—anything! And with online real estate listing sites such as yours truly, you can find up-to-date home listings on your own, any time you want. But guess what? Real Estate Agents have access to even more listings. Sometimes properties are available but not actively advertised. A Real Estate Agent can help you find those hidden gems.
Plus, a good local Real Estate Agent is going to know the search area way better than you ever could. Have your eye on a particular neighborhood, but it’s just out of your price range? Your Real Estate Agent is equipped to know the ins and outs of every neighborhood, so she can direct you toward a home in your price range that you may have overlooked.
3. They have bullish negotiating chops
Any time you buy or sell a home, you’re going to encounter negotiations—and as today’s housing market heats up, those negotiations are more likely than ever to get a little heated.
You can expect lots of competition, cutthroat tactics, all-cash offers, and bidding wars. Don’t you want a savvy and professional negotiator on your side to seal the best deal for you?
And it’s not just about how much money you end up spending or netting. A Real Estate Agent will help draw up a purchase agreement that allows enough time for inspections, contingencies, and anything else that’s crucial to your particular needs.
4. They’re connected to everyone
Real Estate Agents might not know everything, but they make it their mission to know just about everyone who can possibly help in the process of buying or selling a home. Mortgage brokers, real estate attorneys, home inspectors, home stagers, interior designers—the list goes on—and they’re all in your Real Estate Agent’s network. Use them.
FREE DOWNLOAD: The Complete Home Sellers Guide
5. They’re your sage parent/data analyst/therapist—all rolled into one
The thing about Real Estate Agents: They wear a lot of different hats. Sure, they’re salespeople, but they actually do a whole heck of a lot to earn their commission. They’re constantly driving around, checking out listings for you. They spend their own money on marketing your home (if you’re selling). They’re researching comps to make sure you’re getting the best deal.
And, of course, they’re working for you at nearly all hours of the day and night—whether you need more info on a home or just someone to talk to in order to feel at ease with the offer you just put in. This is the biggest financial (and possibly emotional) decision of your life, and guiding you through it isn’t a responsibility Real Estate Agents take lightly.
Did you try the DIY route and the go Agent? Tell us about your experience. Sound of on the Patrick Parker Realty Facebook Page, our Twitter or LinkedIn Feeds or on our Instagram account. And don’t forget to subscribe to our monthly HOME ADVICE email newsletter for articles like this delivered straight to your inbox. You may unsubscribe at any time.
Buying a Home? 4 Demands to Make on Your Real Estate Agent
Are you thinking of buying a home? Are you dreading having to walk through strangers’ houses? Are you concerned about getting the paperwork correct? Hiring a professional real estate agent can take away most of the challenges of buying.
You want to deal with one of the best agents in your marketplace. To do this, you must be able to distinguish an average agent from a great one.
Here are the top 4 demands to make of your real estate agent when buying a home:
1. Tell the Truth About the Price
When making an offer on the home you want to buy, make sure that your agent walks you through their plan for getting both the seller – and the bank – to accept that price. Too many agents will just take the offer that you suggest and then try to ‘work’ both you and the seller in the negotiating phase later. In a competitive market, you need an agent who is going to help you make the best ‘initial offer’ so that you stand out from the crowd. Every house in today’s market must be sold twice – first to you and then to your bank.
The second sale may be more difficult than the first. When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that closed recently) to defend the selling price when performing the appraisal for the bank. A red flag should be raised if your agent is not discussing this with you at the time of the original offer.
FREE DOWNLOAD: The Ultimate Guide to Buying A Home
2. Understand the Timetable with Which Your Family is Dealing
You will be moving your family into a new home. Whether the move revolves around the start of the new school year or a new job, you will be trying to put the move to a plan.
This can be very emotionally draining. Demand from your agent an appreciation for the timetables you are setting. Your agent cannot pick the exact date of your move, but they should exert any influence they can to make it work.
3. Remove as Many of the Challenges as Possible
It is imperative that your agent knows how to handle the challenges that will arise. An agent’s ability to negotiate is critical in this market.
Remember: If you have an agent who was weak negotiating with you on parts of the purchase offer, don’t expect them to turn into a superhero when they are negotiating with the seller for you and your family.
4. Find the Right HOUSE!
There is a reason you are putting yourself and your family through the process of moving.
You are moving on with your life in some way. The reason is important or you wouldn’t be dealing with the headaches and challenges that come along with buying. Do not allow your agent to forget these motivations. Make sure that they don’t worry about your feelings more than they worry about your family; if they discover something needs to be done in order to attain your goal, insist that they have the courage to inform you.
Good agents know how to deliver good news. Great agents know how to deliver tough news. In today’s market, YOU NEED A GREAT AGENT!
Tell us about the experience you had with your Agent. What made them good? What made them GREAT? Sound off on the Patrick Parker Realty Facebook Page or on our Twitter or LinkedIn feeds. And don’t forget to subscribe to our monthly HOME ADVICE email newsletter for articles like this one delivered straight to your inbox.
7 Ways To Get A Deal During Real Estate’s Off-Season
Inventory might be lower, but so is your competition. Find out why you might want to buy a home during the winter.
The holiday season can seem to go by at warp speed with all the shopping, traveling, baking, and gift wrapping that goes on … in addition to everyday life. So selling or buying a home probably isn’t at the top of your (and most people’s) to-do list. That means low inventory but also mild competition, which presents an opportunity for the savvy buyer in cold-weather markets.
Here are seven tips on how to get a great deal on a home during the winter:
1. Negotiate with confidence
When you know you’ve got the upper hand in a deal, you should welcome the negotiation process. And during the winter, buyers typically have the upper hand. Given the luxury of choosing any time of year to sell, most sellers probably wouldn’t pick wintertime. So if someone is listing their home during winter, they probably need to sell it quickly, or their home has been sitting on the market for a while, and the seller is probably more than ready to negotiate.
2. Just show up
Sometimes a house for sale during the off-season can draw about as big a crowd as an annual watching-the-grass-grow event would. In other words, open-house attendance and general interest are bound to be low. The buyer pool is reduced in winter, and this often puts those ready to write an offer in a stronger position. So just showing interest and making an offer could get you that property.
3. Don’t let a little snow scare you away
Many buyers don’t want to trudge through the snow to find their dream house. Plus, it’s difficult to see a home’s curb appeal with snow hiding everything. But strive to look past dirty snow heaps and picture instead spring daffodils.
4. Know how to offer less than asking price
You might be calling the shots as a buyer of winter realty, but that doesn’t mean all sellers are willing to just roll over.
Offer a relatively low, but not a lowball, price. What’s the difference? A low offer might be 90% of the home’s price, but a lowball offer would be downright insulting. Even a small difference in price can mean significant savings for buyers in the long run. Another option; ask for perks such as furniture or the pool table that you admire.
5. Put your agent to work
During peak season, any real estate agent worth their salt will be busy. But during the off-season, even the best agents should have some more time on their hands.
Housing professionals, such as agents and mortgage brokers, are paid on commission, so they will be extra hungry during the lean winter months. That usually translates to better service and more flexibility to make sure your deal closes.
6. Offer to move through inspections and appraisals quickly
It’s always good to get the house you want to buy appraised and inspected as quickly as possible. If both processes go well, you can move forward, and if they don’t, you can move on. In winter, you theoretically can get both done quicker because there is less activity, and inspectors and appraisers can probably get to you faster.
7. Be flexible
For a person selling a home in winter, it would probably be a dream to sell the house and not have to move during the holidays. You can be the person to make that dream come true.
“Even though someone is selling in the winter, it doesn’t necessarily mean they want to move in the winter,” says Patrick Parker, Broker and owner of Patrick Parker Realty. “If you can agree to get into contract but allow the sellers to have possession of the home until after the holidays, this could probably translate into a better deal for you if you are looking to bid under the asking price.”
Did you get a deal buying a home during real estate’s off-season? Sound of on the Patrick Parker Realty Facebook Page, our Twitter or LinkedIn Feed and don’t forget to subscribe to our monthly HOME ADVICE™ eNewsletter for articles like this delivered straight to your inbox.
Sealing The Deal: Making The Offer And Closing
So you’ve found a home and want it to be yours. Here’s what to do next.
If you’re ready to make an offer on a property, you’ve most likely done a lot of hard work to get to this point: You found a New Jersey real estate agent, whipped your credit into shape, chose a mortgage lender, determined your down payment, decided what type of loan you want, and (finally!) found your dream home. Now the challenge is writing a winning offer, fulfilling necessary contingencies, and getting to the closing table, where you’ll receive the keys to your new digs.
You’ll need to take a calculated approach if you want to ensure you’re getting the best deal. Follow these crucial steps to make an offer and get to the closing table:
1. Craft a compelling offer
Inventory is low in many metros. The number of starter homes on the market has dropped by 43.6% since 2012 — and first-time homebuyers today shell out 5.6% more of their income toward a home purchase than they did four years ago. This means you may have to go up against a number of other buyers when you make an offer.
You may even have to offer more than a home’s listing price to persuade a seller to accept; your real estate agent will help you come up with a compelling offer. Also, especially in a competitive market, it’s important to know just how high you’re willing to go in the event the seller asks you for your best and final offer, and then let your agent step in to handle the negotiating.
If you get into a bidding war — and can’t increase your purchase price — try pulling on the seller’s heartstrings by writing a personalized offer letter. Say what you love about the property (“Your home is around the corner from our son’s school.”) and explain why you love their home (“We love the beautiful hardwood floors you’ve taken such great care of.”).
2. Get your contingencies going ASAP
Once a seller has accepted your offer, you’re off to the races! Now it’s time to complete your contingencies, which are the conditions put in the contract that must be met for the contract to be binding.
Here are some of the most common contingencies you’re likely to encounter during this process:
• Financing contingency. This clause in the purchase agreement states that your offer on the property is contingent on being able to secure financing. The main goal of a financing contingency is to ensure that if you can’t obtain a loan, you’ll be able to get your earnest money deposit back. The clause specifies that you have a certain number of days within which to get your mortgage approved by your lender. Many lenders recommend homebuyers allow for up to 14 days. During this time, your loan will go through underwriting and — assuming everything checks out — you’ll receive a firm written commitment from your lender, which you then deliver to the seller to lift the financing contingency. This contingency is less common in hot markets; sellers are more likely to choose a buyer who has been pre-approved for a mortgage.
• Appraisal contingency. This clause states that in order for you to qualify for a loan, the property must be assessed by a third-party appraiser and found to be valued at (or above) the agreed-upon purchase price. Your lender will approve the loan only up to the appraised value. So if your agreed loan amount is $300,000, but the house appraises at $290,000, your lender is unlikely to agree to finance the sale. You and the seller will need to negotiate to determine whether one (or both) of you will cover the remaining $10,000 — or whatever the remaining cost is. If the appraisal is lower than your offer, you do have options. Sometimes everyone has to compromise to get to the closing table: the seller might have to come down on price; a buyer might pay more money in closing costs; or both real estate agents might need to take a lower commission. Alternatively, if you think the appraisal was inaccurate, you could get a second appraisal and then have your lender compare the two before deciding what loan amount you can receive. You also have the option to walk away from the purchase; this might be your best move if you feel uncomfortable paying more than what you initially offered for the property.
• Home inspection contingency. There’s more to a house than what first meets the eye. A home inspection contingency — strongly recommended by real estate agents even when you’re buying a brand-new home — states that you will get a licensed home inspector to check the property within a specified period after you sign the purchase agreement (typically seven days). Once the inspection is complete, you’re allowed to request that the seller make repairs; in many states, you’re required to give the seller a copy of the report. It’s up to you to decide what repairs you request. The seller then has the option to make the repairs or counter. If an agreement can’t be reached, the buyer can back out of the deal with their earnest money deposit intact. A home inspection contingency can give you peace of mind, since you learn exactly what condition the home is in before you decide whether to go through with the purchase. If your soon-to-be basement is covered in black mold, for instance, that may not be a home you want to purchase, with or without mold remediation.
• Lead-based paint inspection contingency. This contingency is typically used when purchasing a home built before 1978. Only certified inspectors can perform lead-based paint inspections. (Your general home inspector may already be certified.) You’re not required to do a lead-based paint inspection, but the U.S. Environmental Protection Agency recommends getting one if young children will live in the home.
• HOA documents. This isn’t a contingency per se, since you don’t include it in the purchase agreement, but it’s a legal right given to all homebuyers who purchase a home governed by a homeowners’ association. The seller must provide you with what’s referred to as the Declaration of Covenants, Conditions, and Restrictions, or CC&Rs: legal language for the association’s rules and regulations. These documents include the association’s bylaws, board minutes, record of reserve funds, master insurance policy, annual budget, a history of special assessments, and information on fineable infractions (e.g., some associations penalize residents for walking a dog without a leash).
Depending on the age of the community, you could receive hundreds of pages. As a homebuyer, you’re entitled to a period to review the documents once you receive them from the seller. (The number of days allotted varies by state.) If you decide to back out of the deal by citing that you have an issue with the HOA documents, you must notify the seller during the specified review period.
3. Assemble your closing team
Once the seller has accepted your offer, you’ll need to choose a title company to oversee certain parts of the transaction. The title company is responsible for verifying that the title to the property is legitimate, which ensures that you become the rightful owner of the home. A lot of the work that goes into doing the title search happens behind the scenes: checking that there are no outstanding liens, judgments, or unpaid taxes on the property, nor any easements, restrictions, or leases that affect ownership of the home. The title company acts as a liaison between both parties; it also typically oversees settlement.
4. Keep your finances in check
Until you reach the closing table, you need to make sure that your financial information remains the same, specifically your credit report and your bank accounts. Buying a car before you get to closing, for example, could damage your credit score — and since your loan still needs to go through underwriting, a lower score may negatively affect your mortgage (e.g., if your score drops from 760 to 690, you could wind up paying a higher interest rate or losing your mortgage entirely). A shopping spree for new furniture is also a bad idea — wait until you get the keys!
Moreover, the underwriter needs to be able to track where the down payment is coming from to approve the loan, so avoid making any large deposits or transfers to your bank accounts. If you need to move money, tell your lender what you’re doing and why.
5. What you need to bring to closing
It’s settlement day! But before you’re handed the keys to your new home, you need to go through closing. The morning of your settlement, you’ll go with your real estate agent to do a final walk-through of the house. Pay attention to any repair work the seller had done. (The seller should have shared receipts from contractors to show that licensed professionals completed the repairs.)
Assuming the home is in good shape, you’ll make your way to closing, where you’ll meet with a representative from the title company, your real estate agent, and your loan officer for settlement. (Caveat: Your lender isn’t required to be at closing, but you probably want your loan officer there in case of any last-minute issues with the loan.) The seller may or may not join you at the closing table; if they have already moved out of the area, for example, they will often sign their documents remotely.
By law, the title company must provide you with a copy of your closing documents three days in advance of settlement. Take time to review these so there are no surprises at the last minute.
The day of settlement, bring:
• Photo ID
• Homeowners insurance certificate
• A cashier’s check or proof of wire transfer for the exact amount of money you need to close
• Your co-signer (if applicable)
• Your checkbook in case there are any last-minute changes. (You still have one of those, right?)
6. Prepare for the future
Now that you’re a happy homeowner, you’ve got responsibilities: maintenance, repairs, utilities, and more (including that mortgage payment)! If you used a local lender, your mortgage will probably be sold to a larger financial institution. This won’t affect your monthly payment — it simply means you’ll be writing checks to a different company. (If you want to get technical: you’re now paying off your loan to a mortgage servicer rather than a mortgage lender.)
Traditionally, homeowners make mortgage payments on a monthly basis. However, many mortgage companies give you the option to use a biweekly payment plan. If you choose to do so, know that biweekly installments don’t necessarily save you money in interest. In most cases, the mortgage company applies the money to your loan only when it receives your full monthly payment amount, so even though you’re making payments every two weeks, you’re still effectively paying your mortgage only once per month.
Congratulations on your new home!
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How Long Will It Take to Sell My House?
When you’ve decided to sell your home, the last thing you want is to have it sitting on the market forever, especially if you’re already gotten new digs. Conversely, you might not be ready for your home to go under contract within the first few days after listing it.
So how can you plan? Is there a way to predict what might happen?
Here are 5 ways to make a fairly accurate prediction of how fast your home will sell:
1. The price
The best way to predict how fast your home will sell is by the price you set. Want yours to sell right away? Price your home at or below market value, a figure you arrive at based on what comparable homes in the area are selling for and your home’s appraisal value. Price higher if you don’t care how long it takes to sell. Pricing is the most important factor when selling your home.
RELATED: The Importance of Proper Pricing
Pricing is the most important factor when selling your home. “The best time to get noticed is the first few days your property hits the market,” says Patrick Parker, owner of Patrick Parker Realty in Bradley Beach, New Jersey
If you price too high, people searching for a lower price range might miss your listing. Meanwhile, your home competes in a price range with homes that are probably more attractive than yours because of location, size, or condition — or all three.
You’ll probably need to eventually reduce the price to sell. “You’ve now started chasing the market instead of the buyers chasing you,” says Parker.
RELATED: Request A Free Home Market Analysis
2. Your willingness to negotiate
If you’ll not accept a penny less than full asking price, expect your house to sit longer than others in your area. After pricing too high, a reluctance to negotiate is the second reason homes stay on the market a long time. A solid offer is nothing to scoff at.
3. The photos
Want your home to sell fast? Besides getting it looking all nice and spiffy on the outside and staging it indoors, get your home photographed by a pro.
“Having good photos of your home can definitely shorten the amount of time your property sits on the market,” says Parker. Buyers naturally gravitate to homes that have better photos.
4. Crunching the numbers… for those who love stats!
If you got an A in statistics class, you’ll love this method to determine how long your house will sit. It involves inventory levels, median market time, median sales price, and percentage of list-to-sales prices.
If the inventory of homes is low, the house will sell faster. Your house will take longer to sell in a buyers’ market that has lots of inventory.
Looking at how many days on average it takes for similar homes in your area to sell gives you an idea of how long yours will take. This is assuming a median sales price. Pricing below or above affects how long the house will sit.
Percentage of list-to-sales prices is an indicator for how closely the list prices assigned by sellers reflect the value a buyer is willing to pay. If the percentage is over 100%, homes sell for more than list price. Less than 100%, and homes sell for less. The actual number tells you how much more or less. This stat varies depending on location.
5. A good agent
It’s important to choose an agent with experience selling the type of home you have and one who’s familiar with the area.
The right real estate agent can make a huge difference in how long it takes to sell a home. One huge benefit of working with Patrick Parker Agents is our local market expertise. We grew up here. We live here. We love it here.
Have you recently sold your home? What have you learned about time-on-market? Are you currently selling? What are your time-on-market challenges we can help you address? Sound off on our Facebook or Twitter pages and don’t forget to sign up for our monthly Patrick Parker Realty eNewsletter for articles like this delivered straight to your inbox!
Why Using An Agent Is Better Than Going For Sale By Owner
Yes, at the end of the already arduous selling process, it can be painful to turn over that commission. And when you really start to crunch the numbers, it’s very tempting to forgo the listing agent altogether and enter the “For Sale By Owner” (FSBO) fray.
But there are huge advantages of using a real estate agent that you might not realize. Maybe your real estate agent is also an expert stager. Maybe they’ve got handyman friends and can help you get a really good price on a little fix-it work before your home joins the ranks of homes for sale on in New Jersey. Maybe they’ve connected you with the most honest mortgage lender in town.
Never mind that a great New Jersey real estate agent also can get you a better sale on your property. An Agent can save you time and money and fetch a higher selling price by driving more traffic to the home and creating buzz!
Here are five reasons to opt out of FSBO and hire a real estate agent to help with selling your home:
1. They market your home for free
Selling your house is really about marketing your house, which means producing marketing materials for said house. Translation: cash out of pocket and potentially subpar materials if you’re attempting to tap into those long-dormant graphic design skills.
FREE WHITEPAPER DOWNLOAD: Why Use An Agent To Sell Your Home?
But when you sign with that agent, they take over; professional photographs, postcards, brochures, advertisements, and a proper floor plan are just some of the materials that an agent whips up on your behalf — then distributes to contacts you couldn’t even hope to have.
2. They’re stage parents
You may love your homey living-room setup, but that arrangement probably doesn’t show off the space in the best way for selling. A savvy agent will come in, objectively assess your space, and then gently tell you what to keep and what to toss (or store) so that the space presents better. An even savvier agent will redistribute your existing furniture for maximum aesthetic appeal, then add accents for flair.
If you’re lucky, they might even have staging furniture at their easy — and free — disposal. And that sharp eye can extend to lesser-trafficked rooms as well. You’d be surprised how far new white towels and a shower curtain can go… as for bedrooms, simple, inexpensive changes like paint and new linens make a world of difference to potential buyers.
3. They know (the right) people
The best agents are the ones who set you up with their squad. Need a backyard refresh before putting your home on the market? They’ll hook you up with their go-to, well-priced landscape architect … who just happens to be available at a moment’s notice. Need someone to tackle all those small but beyond DIY home repairs? Agents always know the neighborhood handymen who are familiar with the architecture of the area. Freaked out about the loan process? Your agent’s mortgage broker is the one who will find you the best rate and walk you through the process.
During the stress of the selling process, it’s easy to throw your hands up and just toss money at a problem — money you don’t really have and don’t really need to spend. Your agent is there to save you from your own panicked impulses.
4. They’ll get you more money
Do you have any true idea of how the home-selling magic works? Don’t worry: agents do. Pricing is the -most important factor when selling your home and this is where Agents bring the most value. They will obtain top dollar for your home with trade secrets that only their expertise brings to the table.
RELATED: The Importance of Proper Pricing
Whatever their strategy, they’ll have a strategy. And once an offer comes in, they’ll know if and how you should counter, and what that counteroffer should look like. Higher price, different closing date, different contingencies, fees exclusion — your agent will expertly final negotiations with your absolute best interests in mind.
5. They save you time — and time is money
Bottom line: Your agent is there to do the things you cannot. Selling your home is an arduous process that requires multiple thinking caps you might not personally have at your disposal.
Never mind that it’s also a major time-suck. If you have to take time off from work to show your home to potential buyers, it’s costing you money. Sell your home is your Agent’s full-time job. They do the work!
Have you gone FSBO? What pitfalls have you fallen into? Did you opt for an Agent over FSBO? What were the benefits? Sound off on our Facebook or Twitter pages and don’t forget to sign up for our monthly Patrick Parker Realty eNewsletter for articles like this delivered straight to your inbox!
How Patrick Parker Realty Saves You From the Hidden Costs of Home Ownership
Here at Patrick Parker Realty we know that one of the worst things that can happen to you as a seller is to walk away from closing with less than what you expected. We know you need the proceeds of your sale to fund other major purchases, like a replacement home, every nickel counts.
So how can you be sure you don’t face any hidden surprises at closing? Easy… ask us for an estimated net sheet prior to accepting an offer. While not exact it will provide a fairly clear picture of how the chips will fall at closing.
Some of the items to carefully review include:
Real estate agents are required to disclose their fees in writing, but if you have negotiated a lower rate or there have been some unexpected expenses with the sale, this amount could rise. Be sure to review the commission amount on the closing statement for any errors.
If you are closing your transaction at a time that is close to the same time you typically pay your annual property tax premium, be sure to bring a receipt to the escrow officer so you don’t pay the tax twice. While you would no doubt receive a refund for the balance, it may take weeks or months to extract it from the taxing authority.
If you purchased or refinanced your home within the last two years, it’s likely that you may qualify for a discount on your title insurance premium. If you are being charged the full premium, be sure to request a re-issue rate.
Buyer closing costs
If you have agreed to pay for closing costs on behalf of the buyer, place a limit on how much you can be charged. Without a cap this can amount to a blank check allowing the lender to charge fees they may typically have waived if the buyer were paying the closing costs.
In many states and local municipalities a transfer tax is charged when a home is sold. Be sure you are clear about the amount that will be charged and the formula for how this is calculated.
Notary and document preparation fees
The escrow company charges fees to prepare the closing documents. To be sure they are competitive with other escrow companies in the area, put on your detective cap and make a few calls to their competitors. This is especially true if the closing will be handled by an out of area firm, an attorney, or even a local real estate broker.
Don’t forget about your refunds! These could include money being held by your lender to pay for annual tax and insurance payments (often referred to as impound accounts). While they are often credited in your final payoff, sometimes they aren’t. Also talk to all of your service providers, from phone service providers to power companies, about any deposits which you may have coming back.
When you arrive at closing be sure to bring along your estimated closing statement. By comparing your first estimate with the actual closing statement you can often discover ways to save a few dollars just by asking some simple questions.
And remember, you can always contact us with any questions regarding costs associated with closing. We are here to help!
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