People Who May Assist You

People Who May Assist You
Having the right professional people to assist you when you buy a home can be crucial. It can save you money, and it can save you from major headaches. Remember that you hire the people assisting you with your purchase. In almost every purchase transaction something does not go as expected. You have every right to ask when an error has occurred that it be set right. The other people involved in the purchase transaction are your paid advisors. It is your money, and you should be making the decisions.

A Real Estate Agent
A good agent will help you to find the home that meets your needs. They will negotiate for the best price on your behalf, and supervise all levels of the transaction, such as inspections, and closing. Your agent should be representing you alone.

There are different types of agency relationships, depending on the type of agency contract that you have signed.     

Seller’s Agent: The agent works solely for the seller.
Buyer’s Agent: The agent works only for the buyer. Even if the agent gets a portion of the commission payable to the seller’s agent, he does not represent the seller.

Both these types of agency relationships are known as single agency, where the agent represents one party in the transaction. Even though a buyer’s agent represents the buyer, there is one thing inherent in the buyer’s agent relationship that makes the transaction more questionable. The commission is still based on the sales price of the house. There is a conflict when you have an agent who is negotiating to reduce the purchase price on your behalf, and at the same time the higher the price, the higher their commission.

In a dual agency relationship there may be two Realtors, one representing the buyer, and one representing the seller. The difference is that both agents work for the same broker. If a buyer decides to purchase a property, and the sellers agent works for the same broker the agency relationship changes as soon as the offer is made on the property. The single agency relationship just changed, and each agent now also represents the other party. Either the buyer or the seller. It becomes that way because it is the broker that holds the agency. Since the broker is now the same, the agents now both represent the other client. If the real estate agent that you select works for a company with just a few other agents, the chances are small that an agent from the same company will be representing the buyer of the house you decide to purchase. If your agent works for a large company, with many offices and lots of agents the chances are much more possible.

There are two potential problems with dual agency. You will need to feel confident that your agent is not sharing information about you to any other agents of the company. Also, if it seems as if you are being pushed into buying property that is being listed by the same broker, be cautious. The agent may be getting a larger commission if the same broker represents the property you buy.

Your real estate agent does not get paid unless you buy a home. This can create a conflict in some agents. It should not create any conflict in a good agent. A good agent should put your interests ahead of their own at all times.

Commissions are calculated based on the sales price of the home. Since you are the buyer, your agent would get paid from the seller. Commissions should be negotiable. The listing agreement should state that commissions are not fixed and can be negotiated between the agent and the seller. Typically if the agent works for a broker, the broker also takes a percentage out of the agents commission.

Characteristics of A Good Real Estate Agent:

You should interview at least three agents before selecting one. If you need referrals, ask friends, business associates, members of your church, clubs and organizations. Your employer may have a relocation service that uses a particular Real Estate Broker.

Take each referral as a suggestion. It is highly likely that the person doing the referral has never actually used the person for which they are referring. In any case no matter how highly recommended, you should still interview each candidate.

Your Interview with The Real Estate Agent

Ask each agent that you interview to bring a listing of every property the agent listed or sold in the previous 12 months. Here is the information you need and what you are looking for from that list:

After going over the agent’s list you should also ask questions of the agent. Consider the following as a good starting point:

Now comes the time to make the all important referral calls. You should have a complete list of clients and be able to choose from that list anyone you would like to call. Do not let the Realtor just give you a fixed list of referrals. Any agent who will not give you the full list or wants to delete it down has something to hide. Do not use that agent.

You do not have to call every client the agent gives you. It is necessary only to get a good representation. To do this, go through the list and weed out all clients that were sellers. Since you are a buyer, their experience does not pertain to you.

Next, look for people who bought property similar to the price and type you are looking for.

Now look for two buyers who bought about 12 months ago. Then find two who bought about 6 months ago. Finally, search for buyers who just closed escrow on their homes. This should give you a representative sample of the Realtor’s clients.

Now that you know whom you will call, you need to write down what information you want to ask. You should consider the following questions:

After the interviews you should have a lot of information about the agents you are considering. As the final criteria you need to ask yourself a few questions. How comfortable do you feel with this agent? Do they make a good impression? What do you feel about the personality of the agent? Since buying a home can be stressful, it is helpful to have someone who perhaps has the ability to ease your mind. If you like the person yourself it can really be helpful.

Good Relations with your Real Estate Agent
Do not work with more then one agent. A smart agent will ask you whom else you have been working with. If they find that you are working with someone else you may not get their full attention and dedication. A buyer’s agent already knows that they must find a house for you in order to get paid. If they find out that in addition to that, they are in competition with someone else they may opt out all together. If however, you were looking for a home in different geographical areas, then it would make sense to use more then one agent.

Escrow
Your escrow officer is the neutral party in your purchase transaction. The geographical area in which you close escrow determines who handles these responsibilities. It may be a lawyer, bank, real estate broker, or the firm that issued the title insurance.

Escrow fees are based on your properties purchase price. Geographical area and local custom usually dictate who pays for these fees. This is often negotiable.

The Mortgage Broker
It is the Mortgage Brokers job to find you the best loan. They do not lend money themselves. A good broker will shop for a loan for you, explain all of your options, and can assist you through all the paperwork involved.

Mortgage Brokers are in the business of selling mortgages. The interest rate that you get and the points you have to pay should be the same as if you went directly to the lender for the loan. This will not be the case if the broker receives a larger commission for their work and passes this cost on to you. The commission that the broker receives from the lender is negotiable. On a large loan it will be several thousand dollars. You should never hesitate to ask the broker what his commission would be. It may be possible for the broker to use a share of his commission to pay for some of your closing costs.

When choosing a mortgage broker you should check the following:

How many lenders does the broker do business with?
A broker should do business with a wide array of lenders offering the most competitive pricing and programs. If your broker only works with the same lenders over and over you are not getting the best representation.

Is your broker knowledgeable about all of the different loan programs he is suggesting to you?
Your broker should be able to go into detail with you on every program and explain how they differ and how they work.

A Good Lender
Friends and relatives who have had a good experience when obtaining a mortgage loan can sometimes make good recommendations on a lender. your realtor is also a good source. As you talk to lenders and ask them questions on their loan programs and interest rates also pay attention to the following traits:

Need A Lawyer?
The contract you sign for the purchase is a legally binding contract. If you have any questions concerning the legality of something in the contract or during any part of the purchase transaction, you should consult a lawyer. No one else involved in this transaction can give you legal advice.

What determines when you need one? Often it's the location of the property. The Residential Purchase Agreement is already an approved document by the bar. In other areas it is common practice for an attorney to draw up the contract for purchase and handle the close of escrow.

How complex a transaction do you have? If your purchase is not covered by a standard contract you should consult an attorney. Your real estate agent is not qualified to make legal judgments on complicated items such as partnership agreements between unrelated people and any complex situations on how to take title.

You have no agent. If the purchase transaction does not involve agents, you should have an attorney to consult. The attorney should at least prepare the purchase contract. Just because you are doing a purchase transaction without agents, you still have to disclose information, provide inspections, and remove contingencies.

If you do decide to obtain the services of an attorney, make sure that the one you choose specializes in residential real estate transactions. Your Realtor should be a good source of referral.

Make sure that the advisors you use stick to their own area of expertise. Do not allow a Realtor to give you legal advice. At the same time, do not allow a lawyer to give you any advice on property values.