Steps you should have looked at up to this point:
* Made the comitment to buy a home;
* Determined the price and size of home you can afford;
* Thought about the type of home you’d like to buy;
* Listed the features you need and want in your home;
* Studied the real estate advertisements, researched the market and visited open houses.
It’s time to add a real estate agent to your team. Real estate agents are either brokers or salespersons. The term “agent” is frequently misused in describing real estate agents.
Who does a Real Estate Agent work for?
Many people mistakenly think that the real estate agent represents the buyer and seller equally. However, this is usually not the case. In residential real estate transactions, real estate agents have traditionally been the legal agents of the sellers. When a seller contracts with a real estate agent to sell a home, the real estate agent fills out a “listing”, which is another term for the contract between the seller and the broker. When the home is sold, the listing broker earns a fee paid by the seller.
The listing broker owes a legal obligation to look after the best interests of the seller and is therefore called a “seller’s agent”. That real estate agent can offer invaluable services to buyers, but it is important for buyers to understand that the real estate agent is ultimately working for the seller.
In many real estate transactions, a second real estate agent called the “buyers agent” is involved. This is not the real estate agent who listed the property, but the one who actually finds the buyer for the property.
Some real estate agents work with and for buyers, and are then said to be acting as a “buyer’s broker” or “buyer’s agent”. In these situations, the real estate agent and buyer have a written agreement stating exactly what services the real estate agent will provide the buyer and who will pay for those services. A typical buyer’s agreement will commit a purchaser to work exclusively with that real estate agent for a specified period.
Real estate agents are obligated to inform you, early in your relationship with them, whether they are acting as a “seller’s agent” or “buyer’s agent”.
Be honest and remain loyal
Once you’ve selected a real estate agent, be honest in discussing your financial situation and carefully review the features you are looking for in a home. This will help the real estate agent find prospective homes best suited to your needs, and it will save you a great deal of time in the bargain.
Most importantly, remain loyal to the real estate agent you’ve chosen if the real estate agent earns your trust. This individual will be spending a lot of time and effort on your project, but won’t be paid unless and until the transaction is completed. In return, the real estate agent deserves a degree of loyalty from you.
Adding a Lawyer to Your Team
When you buy a home, you’ll have plenty of opportunities to sign your name. Among the flurry of papers requiring your signature, the most important are the “Agreement of Purchase and Sale” and the mortgage financing documents. Real estate agents have training and experience in drawing up the Agreement of Purchase and Sale, and will help you understand its contents. However it’s also important to have a lawyer on your team, someone who can wade through all the “legalese” to ensure that your rights and interests are fully protected.
Making an Offer
Your house-hunting expedition has been a success! You’ve found the right home, one that satisfies your needs, most of your wants… and best of all, it fits your pocketbook. Now comes one of the most important phases of your home-buying experience: making an offer to purchase the home.
Basically, the offer (called the Agreement of Purchase and Sale) is a precisely worded document that sets out the terms and conditions between the buyer (you) and the seller. Once the offer is made and accepted, and after any conditions of the offer are met (if there are any conditions), the offer becomes a legally binding contract. This means that you and the seller are obligated under law to hold up your ends of the agreement and complete the transaction. For that reason, you must be very sure you understand what’s in your offer before you sign it.
A properly drafted offer should leave no room for interpretation. It should contain everything that is important to you about the home and the transaction. For example, if the MLS listing states that the washer and dryer are included in the sale, put that fact into the offer.
Preparing the offer
If this is the first time you’ve purchased a home, you probably have never seen an Agreement of Purchase and Sale before, let alone drafted one. Not to worry. Your real estate agent is knowledgeable about this subject and will prepare your offer, taking into account all the factors that are important to you.
Who offers mortgage funds?
It might seem easier to ask, who doesn’t? Mortgage lending is big business, and everybody wants in on the act. That’s good news for you, because with so may players, competition for mortgage lending is extremely intense. All the more reason to shop around.
Banks and trust companies lend the majority of the funds. Credit unions welcome mortgage business from their members (even new members who have just joined), and some life insurance companies can lend you money. Mortgage brokerages exist solely to write mortgages, and then may sell them to outside investors. Private lenders are another alternative for mortgage funds and are usually accessed through the services of a mortgage broker or lawyer. You don’t have to visit them all – let your fingers do the walking. Most will be delighted to answer your initial questions by telephone – and if they’re not, that may say something about their dedication to service.
Mortgage brokers have acceess to conventional lenders (banks and trust companies), private lenders, pension funds, real estate syndicates and foreign banks. In effect, a mortgage broker‘s role is that of matchmaker, introducing the appropriate lender to the qualified buyer. Mortgage brokers can also be helpful in arranging financing for buyers who have questionable credit ratings, high debt service ratios or other potential problems. Most mortgage brokers, when arranging mortgage financing for qualified buyers, do not charge a fee to the borrowers.
The Home Inspection
When you walk through a home that you’re seriously considering buying, it’s often difficult to put aside your emotions and really “see” what kind of shape the place is in. Are you really going to crawl under the foundation or climb onto the roof to check the place out thrououghly? Not likely. Even if you did, few of us have the training to uncover the major structural flaws and maintenance problems that can result in expensive repair bills after you’ve bought the home.
A home inspection before you purchase gives you the security of knowing what to expect, and helps you make an informed decision about the value of the home and the costs of future upkeep. If a major problem is discovered, you can bring it to the seller’s attention before waiving any conditions on your offer. Since you don’t want to hire a home inspector for every home you may be considering, ask the real estate agent or lawyer to add a conditional clause to your offer, making it subject to a satisfactory inspection.
Closing the Deal
Your offer has been accepted by the seller and you can’t wait to move into your new home. These are exciting times, but don’t break out the champagne just yet. There’s still more to do before you officially become a homeowner. You’ve got to prepare for and complete the process known as “closing”.
Closing is the point at which the ownership and usually possession of the property is transferred from the seller to you. It takes place after the parties involved agree that all legal and financial obligations have been met. Several people, including you, will have a role in this process. The real estate agent and your lawyer will do much of the work.
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