The Difference Between Your Mortgage Rate and the Annual Percentage Rate (APR)
Understanding the difference between an annual percentage rate (APR) and an interest rate could save you thousands of dollars on your mortgage. But most homebuyers might not know that the interest rate and the APR measure two different costs associated with your home loan.
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Interest Rate and APR
An interest rate is the cost of borrowing the principal loan amount. It can be variable or fixed, but it’s always expressed as a percentage. An APR is a broader measure of the cost of a mortgage because it reflects the interest rate plus other costs such as broker fees, discount points and some closing costs, expressed as a percentage
Why have both?
The main difference is that the interest rate calculates what your actual monthly payment will be whereas the APR calculates the total cost of the loan.
RELATED: 6 Mortgage Terms To Know
You can use one or both to make apples-to-apples comparisons when shopping for loans.
For example, a loan with a 4 percent rate will have a lower monthly payment than a loan with a 6 percent rate, assuming both are fixed for the same term. Likewise, the total cost of a loan with a 4 percent APR will be less than one with a 6 percent APR.
Where it gets tricky
Interest rates and APRs have limitations to helping you understand the true cost of your mortgage. But taken together, borrowers should be able to use both figures to determine their total costs. The trick is to understand the interplay between the two figures.
If you are only focused on getting the lowest monthly payment, then focus on the interest rate. But if you are focused on the total cost of the loan, then use the APR as a tool to compare the total cost of two loans.
This chart shows the interest rate, APR and total costs over time for a $200,000 mortgage in which 1.5 discount points cut the interest rate by one-quarter of a percentage point, and another 1.5 discount points cut the interest rate by a further quarter of a percentage point.
3 loans, same amounts, 3 APRs
Time horizon matters
If you plan to stay in your home for 30 years or more, it probably makes sense to go with a loan that has the lowest APR because it means you’ll end up paying the lowest amount possible for your house. But if your time horizon isn’t that long, it may make sense to pay fewer upfront fees and get a higher rate — and a higher APR — because the total costs will be less over the first few years.
APR spreads the fees over the course of the entire loan, so its value is optimized only if a borrower plans to stay in the home throughout the entire mortgage.
Figure the break-even point
If you’re planning to stay in your home for a shorter period, you need to do the math and determine your break-even point.
For example, if you chose a 0.25 percent lower rate for an additional 1.5 points because of the lower APR, but you moved in five years, you lost money. Your break-even on the points was seven years.
Unfortunately, those calculations can be confusing for many, which is why it’s crucial to pick the right lender. Your Buyer’s Agent should have excellent relationships with lender’s and can refer you to someone they trust.
Did you recently shop for a Mortgage? Do you have Buyer’s Remorse? What might you do differently now that you didn’t do then? We want to here from you! Sound off on our Facebook Page or on our Twitter, Instagram or LinkedIn feeds. And don’t forget to subscribe to our monthly HOME ADVICEtm eNewsletter for articles like this delivered straight to your inbox. You may unsubscribe at any time.
Understanding Real Estate Agency & Agency Relationships
The term “agency” is used in real estate to help determine what legal responsibilities your real estate professional owes to you and other parties in the transaction.
The seller’s representative (also known as a listing agent or seller’s agent) is hired by and represents the seller. All fiduciary duties are owed to the seller, meaning this person’s job is to get the best price and terms for the seller. The agency relationship usually is created by a signed listing contract.
The buyer’s representative (also known as a buyer’s agent) is hired by prospective buyers to and works in the buyer’s best interest throughout the transaction. The buyer can pay the agent directly through a negotiated fee, or the buyer’s rep may be paid by the seller or through a commission split with the seller’s agent.
A subagent owes the same fiduciary duties to the agent’s customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. The subagent works with the buyer to show the property but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer customer can expect to be treated honestly by the subagent.
A disclosed dual agent represents both the buyer and the seller in the same real estate transaction. In such relationships, dual agents owe limited fiduciary duties to both buyer and seller clients. Because of the potential for conflicts of interest in a dual-agency relationship, all parties must give their informed consent. Disclosed dual agency is legal in most states, but often requires written consent from all parties.
Designated agents (also called appointed agents) are chosen by a managing broker to act as an exclusive agent of the seller or buyer. This allows the brokerage to avoid problems arising from dual-agency relationships for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties.
A transaction broker (sometimes referred to as a facilitator) is permitted in states where nonagency relationships are allowed. These relationships vary considerably from state to state. Generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Understanding Agency and Agency Relationships is an important part of how you perceive the success of your Real Estate transaction. What questions do you have about Agency Relationships? Sound of on our Facebook Page, Twitter or Instagram feeds or connect with us on LinkedIn. And don’t forget to subscribe to our monthly HOME ADVICEtm email newsletter for great tips for homeowners and sellers delivered straight to your inbox. You may unsubscribe at any time.
5 Things Real Estate Agents Wish You Knew About Buying a House
Buying a house isn’t like buying a Grande Americano at your regular Starbucks. Infinitely more money, thought, and prep work go into acquiring real estate – and given that it’s not a purchase you make often, it’s understandable if you might not be adept at wheeling and dealing.
But guess what? There is someone who can show you the ropes well within reach: your Real Estate Agent! Odds are (we hope), you’ve hired an Agent to help guide you through the home-buying process.
RELATED: How To Hire A Buyer’s Agent
But even then, there might be things you end up doing that make your Agent sigh deeply—and get a strong urge to sit you down and say, “Look, here’s the deal!”
Curious about what those things are? Read on for some of the things that Real Estate Agents really wish you knew, since it would save them – and ultimately you – a ton of aggravation seeing your deal through.
1. Know What You Can Afford Before You Start Looking
Finding the perfect home would be a snap if money weren’t an issue, but let’s get real. For most people, money doesn’t grow on azaleas, which means their finances must be taken into account. So don’t waste your time shopping for real estate before you know what price range you can afford.
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One easy way to get your bearings is to type your income, savings, and other details into a home affordability calculator. Better yet, get a mortgage pre-approval letter; the process involves a lender checking out your finances and determining how much it’s willing to loan you for a home.
Plus, a pre-approval letter helps you move fast when making an offer. Since you now have it in writing that your loan is guaranteed, it removes any possibility that you won’t secure financing.
2. Don’t Call The Listing Agent
In case you didn’t know, buyers generally have their own Agent, and sellers have theirs. And ideally, it’s the Buyer’s Agent and Listing Agent who interact with each other, conveying their clients’ questions and concerns to see if a deal can be done.
As such, when you do an end run and contact a Listing Agent directly, this seemingly innocent move can cause a whole ton of trouble.
RELATED: About the Negotiation Process
While you main not mean this, it’s almost an implication that you do not trust your Buyer’s Agent and/or that you do not have a strong working relationship. These things will impede negotiation. You’re actually giving power away to the seller’s Agent.
3. Please Do Not Talk Around Other Agents
Another time buyers may put their foot in their mouth is during showings and open houses. Since the Listing Agent may be present, this is a time when loose lips can sink real estate deals.
You might say things you are not supposed to say, such as how many houses you’ve checked out, how much you like or dislike the house, and, worst of all, how much you can afford or are willing to spend.
Sharing such info is akin to tipping your cards while playing poker: It gives the home sellers a whole lot of info they can use as leverage during negotiations.
So when in doubt, say nothing. Let your Agent be your voice at an open house or in any conversation with the sellers.
4. You Do Not Need To See Every Home Within A 50-mile Radius
You don’t have to look at hundreds of properties to find the right one.
The truth is, if you have an Agent truly working for you, you won’t be looking at tons of homes. Your Agent will screen properties for you and make sure you’re only looking at the ones that fit your needs. So if the first home you see is the one, that’s OK, your Agent did her job.
If you feel the homes you are seeing are not a fit for you, talk to your Real Estate Agent again about your wishlist and revisit your must-haves vs. like-to-haves, etc. They are there to serve and satisfy you. There is no harm in revisiting this conversation.
5. Don’t Let Fear Of Commitment Give You Cold Feet
This tidbit you can file more under helpful advice because Agent’s have seen this before. Yes, buying a house is a big commitment. Yes, it’s scary, and your mind might race with all sorts of worse-case scenarios. What if you make an offer on a house, and that very day another house – even more perfect for you – crosses your path? Or, what if you move into a house you’re happy with, then a layoff leaves you unable to pay your mortgage?
Sure, these are all possibilities, but uncertainty is a part of life. It is normal to ask these commitment-phobic-type questions. Just don’t let them get in the way of this important and exciting life change.
And if the worse happens, you can always sell a house later on; this need not be a death-do-you-part endeavor.
Did you recently buy a home and would perhaps do things differently if you had to do it again? We’d love to hear from you! Sound off on our Facebook Page or on our Twitter, Instagram or LinkedIn feeds. And don’t forget to subscribe to our monthly eNewsletter for articles like this delivered straight to your inbox.
Is Every Offer Shown to the Seller? What to Do If You Think Your Offer Is Being Ignored
It’s unsettling to think your offer on a house is being ignored. After all, isn’t it only fair that every offer be shown to the seller? The real deal: While that might seem like a reasonable ask of the seller’s Real Estate Agent, it’s not necessarily required. Is it ethical for an Agent to present all offers to the sellers? Yes—and most do.
In general, written offers must be presented. This falls in accordance with the National Association of Realtors® Code of Ethics, which states that Realtors shall submit offers and counteroffers objectively and as quickly as possible. However, not all Real Estate Agents are members of NAR and required to abide by its code.
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Why A Seller Might Not See Your Offer
Some sellers set a limit for how low they’re willing to go in price and ask their Real Estate Agent to dismiss any offers below that price.
If the seller has specifically instructed their Agent not to bring offers that do not meet a certain minimum requirement, the Agent may not need to present any offer that falls short of the minimum.
Every state’s laws are different, but generally, if the seller has instructed his Agent in writing to withhold certain kinds of offers, then the Agent won’t present those offers.
The Shady Side of Withholding Offers
A Listing Agent withholding offers could be less than fully ethical if she is acting as a transactional broker (also known as a dual Agent), representing both the seller and the buyer. (Keep in mind that dual agency is illegal in some states.)
The concern is that the Listing Agent might withhold one offer in favor of a higher offer that benefits the broker financially. Doing so is a big procedural breach and can put the Agent at risk of losing their license.
What To Do If You Think Your Offer Is Being Withheld
As a buyer, if enough time has passed and you suspect your offer is being withheld, talk to your Real Estate Agent about the situation. Agents deal with this kind of thing frequently and will know how to broach the subject with the Listing Agent. Advising you is your Agent’s job, right?
Here are some of your other options:
Ask for a rejection in writing. There should be a place on your written offer for the seller to formally reject your offer. You can request that your Agent ask for this formal rejection.
Contact the seller. It’s unlikely your Real Estate Agent will be happy with your doing this, but it’s not illegal for you to contact the seller directly to ask about your offer. However, be prepared: This might not go over well. If a seller wanted to work directly with the buyer, he wouldn’t have hired a Real Estate Agent in the first place. Proceed with caution, and maybe ask your Agent first.
Report the Agent. If you are truly convinced the Listing Agent is withholding your offer for selfish reasons, you can report the Agent to her brokerage or to the licensing agency in your state. Again, this is not an option to take lightly as it could have serious repercussions for the Agent in question. Seller’s are allowed to refuse offers for any reason they wish. So even if you feel your offer was fair, if the seller refused it and you didn’t hear back, it may have nothing to do with the Listing Agent at all. Accepting an offer is at the Seller’s discretion, not the Listing Agent.
Be fair. Remember the legal reasons why offers are allowed to be withheld. Do not report an Agent or leave a negative online review if you do not have all of the details about the situation.
Just move on. Whether there really are ethical issues or the Listing Agent’s communication style just isn’t working for you, it might be best to look for another house. And do you really want to work with an Agent you don’t trust? Unless this house is a picture-perfect, once-in-a-lifetime deal, it’s probably in your best interest to keep looking.
Are you a recent homebuyer who has experienced concerns over the status of your offer? Tell us about it on Facebook on the Patrick Parker Realty Facebook Page or sound off on Twitter, Instagram or LinkedIn. And don’t forget to subscribe to our monthly HOME ADVICE™ eNewsletter for articles like this one delivered straight to your inbox.
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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10 Rookie Mistakes That Hurt First-Time Homebuyers
If you’re a first-time homebuyer, buying a house can definitely be overwhelming. With an Agent by your side to guide you through the process, you’ll make it through just fine – but you might want to be aware of these rookie mistakes.
FREE DOWNLOAD: The Ultimate Home Buyer’s Guide
If you’re searching for homes for sale on the Jersey Shore or Eastern Monmouth County where the market is ultracompetitive, making one of these mistakes could end up costing you big time.
Here are the Top 10 mistakes often made by first-time homebuyers:
1. Getting too emotionally attached
You’re about to purchase what’s probably the most expensive item you’ve ever bought. So try – as difficult as it is – not to get too attached. There will always be another house if you lose one.
A good tip would be to work with your Buyer’s Agent to find several homes you love so that you’re not too emotionally invested in one.
RELATED: How To Find The Right Buyer’s Agent
2. Finding the home yourself
We know you’re going to browse www.patrickparkerrealty.com and other real estate websites to find homes for sale in your desired location. But don’t rely on just your research skills. Finding your own home can be like diagnosing yourself of an illness.
Let your Agent vet homes for you. A good Real Estate Agent might find you properties that aren’t yet on the market. And of the homes that are on the market, your agent should be able to tell you what the home looks like, where it’s situated, the price per square foot in the neighborhood, and every other detail.
3. Going directly to the listing agent
If you’ve ever played Monopoly, there’s a card you might pick (a bad one) that says, “Do not pass go. Do not collect $200.” It means you did something wrong and now must pay the penalty.
The same applies if you go directly to a Listing Agent who is hired by and represents the seller, not you. Unless the Listing Agent is someone you have worked with or know personally and know they are an amazing agent, this is a big no-no. You need someone representing your best interests and your best interests only.
4. Assuming you have no rules to follow as a homeowner
One of the draws of homeownership is freedom: getting out from under someone else’s rules, whether those of your parents or your landlord. But some homes have deed restrictions that come with conditions.
Deed restrictions vary, depending on the community you’re buying in. Their purpose is typically to ensure the property holds its value, which is a good thing. But if you have plans that conflict with the restrictions, you won’t be a happy camper.
Get copies of the restrictions, read them, and ‘look under the hood’ at the internal health of a condo or homeowners’ association. Look for things like whether reserves are kept, the neighbors are paying their assessments, if there are pet restrictions, and whether you can run a business from the home.
5. Not saving enough money
If you saved up enough money for a down payment, kudos. That’s a huge accomplishment. Unfortunately, it’s only the tip of the iceberg. Transitioning from a renter or your parents’ home to your own home has incidental costs that may be overlooked.
Aim to have two to three months’ worth of mortgage payments in reserve. You should also count on paying closing costs (between 2% and 5% of the home’s price) and property taxes. After moving day, you’ll also need to buy household essentials you’ve never owned before, such as appliances, tools, and garden supplies.
Three to six months of expenses saved up in an emergency fund is even better. It’s not money to buy new furniture or remodel a room. It’s for the unexpected expenses, such as a leaky roof.
6. Not getting pre-approved for a loan
You’ve run the numbers several times now and know just what you can afford. That’s great. But if you want your offer to be taken seriously by the seller, get proof of income and assets in the form of a pre-approval letter from a lender.
This process can take just a few days and simply means that the lender has looked through your financial situation and is comfortable with the idea of lending you a certain amount of money.
7. Paying private mortgage insurance (PMI)
If you don’t put down at least 20%, you’ll have to pay PMI. Many first-time buyers pay this, she says. If you do, make sure you notify your lender when you pay down your mortgage and owe just 80% of the home’s value. Your lender will automatically cancel your PMI when you owe 78%, but you don’t want to pay a month more of PMI than you have to.
8. Not checking the price of homeowners’ insurance
Buying a home on the water is a dream come true for many people. But make sure you can afford to insure that home because it could be pricey. Being on the water means higher wind insurance and, of course, higher risk of flood. Other factors may increase your insurance, such as if your new home has a pool and more. Do your research ahead of time. Your Buyer’s Agent will have a network of experts you can ask about these things.
9. Not checking your credit score
Here’s a weird trivia fact: About 42 million credit reports contain errors. True, the error might be just a misspelling of your street address, which wouldn’t affect you. But some errors could hurt your score badly, such as showing you have late payments when you don’t.
Check your credit at least three months prior to house hunting. If there’s an error, ask the credit bureau to kindly fix it. Your interest rate depends on it.
10. Not getting a home inspection
All homes need inspections, even brand-new ones. But some homebuyers skip this step because they get emotionally attached to the home and want it no matter what. If the home does have issues, you’ll want the seller to fix them or to lower the price.
If you’re first-time homebuyers, you might be a bit shy about asking the seller to fix that stuck window or leaky faucet. But the reality is that the buyers who ask for more often get more. So don’t be afraid to speak up and get outstanding issues fixed before you sign those settlement papers.
Did you make any rookie mistakes and have tips to share? Sound of on our Facebook Page, or on our Twitter, LinkedIn or Instagram feeds. 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.
5 Crucial Questions Home Buyers Should Ask Sellers Before Moving In
Moving into a home you’ve just bought is exciting—and sometimes exasperating. That’s because, although you might love your new place, you don’t know it all that well—which means that sooner or later, you’re bound to end up in a situation where you’re floundering cluelessly with the circuit breaker, or petting a neighbor’s seemingly adorable Pomeranian who nearly nips off a finger. Home, sweet home, right?
Yet you’d be surprised by how many of these unfortunate surprises home buyers can circumvent merely by asking the person who sold them the home some pointed questions before moving in. Sure, you’ll also be soaking up intel from the seller’s disclosure agreement, the home inspector who gave a thumbs-up to the place, and eventually even the neighbors. But truth be told, there’s nothing better than hearing about a home straight from someone who’s been living there for umpteen years. So go ahead and ask!
FREE DOWNLOAD: The Ultimate Home Buyers Guide
Just keep in mind that some sellers might feel tight-lipped if they think your questions might jeopardize the sale. As such, many of these questions are best asked near the end of the process—like during your walk-through or at closing.
1. Are there any special quirks about the house?
A thorough inspector will point out any oddities that are unsafe or devalue the house, but only someone who’s lived there will have a handle on all the unique characteristics worth mentioning—light switches in unexpected places, doors and windows that stick up or down, poltergeists, you name it. This question is most effectively asked during the final walk-through.
RECOMMENDED: ‘I’m wondering if you can tell me anything I might need to anticipate moving forward?’ Be subtle but persistent.
2. Have you had any past problems with the house that you’ve fixed?
True, sellers are often required to disclose most existing problems or issues related to the home. But what about past problems that have since been repaired?
RECOMMENDED: ‘I’ve read the disclosure statement. Is there anything else that has happened or that you’ve done that would be helpful to know?’ Use the disclosure as a jumping-off point to learn about what’s not listed.
3. Where are the water shut-off valve, sump pump, circuit box, and more?
Hopefully, the home inspector will locate all of these things and point them out to the new buyer as part of educating them about their new house, But not all inspectors do. So these are some important safety questions.
Ask the seller to show you not only the location of these valves, switches, and pumps, but also how they work. If you’re moving into an older home, chances are that many of the utility features will be unique in their operations, so rather than fumble around blindly, it’s a no-brainer to lean on the seller.
4. How is the neighborhood?
This is a great question to help establish rapport between buyer and seller, and is also best asked near the end of the buying process.
RECOMMENDED: ‘Tell me about the neighborhood.’ Keep it light.
Often the good, the bad, and the ugly will tumble out if approached conversationally. While you’re at it, if you’re new to the area, consider asking the seller for recommendations for everything from grocery stores to their favorite restaurants.
5. Is there anything you want to leave behind?
This one doesn’t so much help you get to know your home, but it might result in a few nice bonuses. It’s worth a shot to see if the seller is willing to part with large items he or she might not want to bother moving.
Most things that are being left, such as appliances, are dealt with in the original contract, but as it gets closer to closing, sellers are often wanting to unload some other things too. You might get lucky and wind up with something great.
Are you a recent homebuyer? Do you have questions you wished you asked? Let us know on the Patrick Parker Realty Facebook Page or on our Twitter, LinkedIn or Instagram Feeds. 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.
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.
5 Mistakes You Can’t Afford to Make When Buying in the Winter
Winter is supposed to be a buyer’s market, right? Fewer buyers = way less competition. After all, you have no problem trekking through the snow to find the perfect home. Let the others wait until spring. Right?
But winter home-buying assumptions can cost you. Just because the market moves slower doesn’t mean there aren’t pitfalls lying beneath the powder. Keep in mind these five common mistakes—otherwise you might just lose out on your dream space. And that would lead to a very long winter indeed.
1. Failing to use your imagination
Yes, the property looks a bit … drab. But don’t all homes seem sad in winter, especially if they’re not charmingly covered in snow? Don’t dismiss a property because of bare tree limbs and dead grass. Imagine what the home could be in all its springtime glory.
Pretend the trees are blooming and the rose bushes are covered in color. That’s the mental picture you should use to make your decision.
2. Ignoring possible closing date delays
Don’t assume everything will go as planned. Things will go wrong and this is normal. Does the plumbing need updating? Is the wiring a little funky? These delay-causing problems are always a headache, but in winter they can create a full-on migraine. This goes double for custom or new-build homes.
While many trades will work through the winter, there are certain processes that cannot be completed during heavy snowfall or dramatically low temperatures. This can be frustrating and particularly problematic if the home buyers’ closing date on their current home is coming up quickly.
So, build in some buffer time for your new home’s closing – or just a little snow might crash your move-in day hopes.
3. Lacking flexibility
House hunting always requires a certain level of spontaneity – you have to be ready to pounce as soon as you hear a place fitting all your criteria is on the market. But when the weather’s against you, make sure to loosen your schedule even more.
4. Assuming you’ll automatically score a sweet deal
In the winter (generally speaking), home prices are lower. Sellers are motivated. The competition’s bundled up inside, warming their hands by the fire. Bidding wars are a vestige of the summer months. Now’s a great time to buy, right?
Unfortunately, the math doesn’t necessarily work in your favor.
A lot of buyers assume they can get a better deal in winter because [fewer] people are competing but that’s not always the case. Inventory is lower, so the number of people who are competing is similar.
No, prices may not rocket to the sky-high levels seen when the weather is warm. But if you expect to score a bargain-basement home deal, you might be disappointed.
5. Lowballing your offer
If you don’t get a discount on a home during the winter months, maybe you think you can create your own discount with a lowball offer. Sellers listing their homes in the winter must be desperate to sell, the theory goes.
Not only can a lowball offer be off-putting to the seller, but sometimes they can be so offended, they will be closed to a counteroffer. This is where working with your Agent to craft a competitive is critical. Nothing is worse than losing the home you love to another buyer because you prioritized the deal over finding a place that perfectly fits your family.
Related: About The Negotiation Process
Does house hunting in the winter leave you cold? Or can you skate past these mistakes and land the cozy home of your dreams? Sound of on our Facebook Page or on our Twitter feed. And don’t forget to subscribe to our monthly HOME ADVICE eNewsletter for articles like this one delivered straight to your inbox.
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