When you're ready to think about buying or selling your property, you need to ask yourself the following questions: Do you have the time, energy, sources of information, and contacts to do the job yourself? If you were one of the 'do-it-yourself' people, would the results be as good or better than they would be if you had professional assistance? Would it have gone smoother? Would it have given you more personal time? Would you have purchased for less, or sold for more, if a real estate agent was involved? Read the following information and learn how a real estate agent can help you understand everything you need to know about a real estate transaction.
The Buying Process
The process of buying a home or investment generally starts with determining
your buying power; that is, your financial reserves plus your borrowing
capacity. If you give a real estate agent some basic information about your
available savings, income and current debt, they can refer you to lenders best
qualified to help you. Most lenders -- banks and mortgage companies -- offer
limited choices.
Finding
Once you know how much you can and want to invest, the next step is to find the
properties that most nearly fit your needs. This is the time to choose a real
estate licensee. When picking a real estate agent look for one who is also a
REALTORŪ. A REALTORŪ is a member of the NATIONAL ASSOCIATION OF REALTORSŪ, a
real estate trade association, and all members agree to abide by a 17 article
Code of Ethics. A REALTORŪ has many resources to assist you in that search.
Sometimes the property you are seeking is available but not actively advertised
in the market, and it will take some investigation by your agent to find all
available properties.
Selecting
Your job is to make the final selection of the right property for you. This is
when excitement and emotion run high. Your real estate agent can assist you in
the selection process by providing objective information about each property.
Agents who are REALTORSŪ have access to a variety of informational resources.
REALTORSŪ can provide local community information on utilities, zoning.
schools, etc. There are two things you'll want to know. First, will the property
provide the environment I want for a home or investment? Second, will the
property have resale value when I am ready to sell?
Negotiating
There are a myriad of negotiating factors, including, but not limited to price,
financing, terms, date of possession, and often the inclusion or exclusion of
repairs and furnishings or equipment. The purchase agreement should also provide
a period of time for you to complete appropriate inspections and investigations
of the property before you are bound to complete the purchase. Your agent can
advise you as to which investigations and inspections are recommended or
required.
Due Diligence
With a negotiated agreement in hand, it is time to complete the evaluation of
the property. Depending on the area and property, this could include inspections
for termites, dry rot, asbestos, faulty structure, roof condition, septic tank
and well tests, just to name a few. Your agent can assist you in finding
qualified responsible professionals to do most of these investigations and
provide you with written reports. You will also want to see a preliminary report
on the title of the property. Title indicates ownership of property and can be
mired in confusing status of past owners or rights of access. The title to most
properties will have some limitations; for example, easements (access rights)
for utilities. Your agent, title company or attorney can help you resolve issues
that might cause problems at a later date.
Financing
As soon as you are reasonably sure the property is right for you, the process of
obtaining financing begins. Your agent can help you in understanding different
financing options and in identifying qualified lenders.
Closing or Settlement
Finally, there is the closing, or settlement, as it is known in different parts
of the country. Every area has its own unique customs. In some areas, the title
or escrow company will handle this process. In other parts of the country, an
attorney does it all. Again, your real estate agent can guide you through this
process and make sure everything flows together smoothly.
Marketing
The next step is a marketing plan. Often, your agent can recommend repairs or
cosmetic work that will significantly enhance the salability of the property.
Marketing includes the exposure of your property to other real estate agents and
the public. In many markets across the country, over 50% of real estate sales
are cooperative sales; that is, a real estate agent other than yours brings in
the buyer. Your agent acts as the marketing coordinator, disbursing information
about your property to other real estate agents through a Multiple Listing
Service or other cooperative marketing networks, open houses for agents, etc.
The REALTORŪ Code of Ethics requires REALTORSŪ to utilize these cooperative
relationships when they benefit their clients.
Advertising is part of marketing. The choice of media and frequency of advertising depends a lot on the property and specific market. For example, in some areas, newspaper advertising generates phone calls to the real estate office but statistically has minimum effectiveness in selling a specific property. Overexposure of a property in any media may give a buyer the impression the property is distressed or the seller is desperate. Your real estate agent will know when, where and how to advertise your property.
There is a misconception that advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORSŪ studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends and family, and personal contacts.
Security
When the property is marketed with the agent help, you do not have to allow
strangers into your home. Agents will generally pre-screen and accompany
qualified prospects through your property.
Negotiating
The negotiation process deals with much the same issues for both buyers and
sellers, as noted above under the buying process. Your agent can help you
objectively evaluate every buyer's proposal without compromising your marketing
position. This initial agreement is only the beginning of a process of
appraisals, inspections, and financing -- a lot of possible pitfalls. Your agent
can help you write a legally binding, win-win agreement that will be more likely
to make it through the process.
Monitoring, Renegotiating and Closing
Between the initial sales agreement and closing (or settlement), questions may
arise. For example, unexpected repairs are required to obtain financing or a
cloud in the title is discovered. The required paperwork alone is overwhelming
for most sellers. Your agent is the best person to objectively help you resolve
these issues and move the transaction to closing (or settlement).
How Do Real Estate Agents Get Paid?
Real estate agents or brokers are generally paid through the sales commission
paid by the seller when a transaction closes. Agents have expenses and financial
obligations just like you, so it will be to your mutual benefit if you choose a
real estate agent and stick with that person. The agent will respect your
loyalty and respond with a sincere commitment to you.
Why A REALTORŪ?
All real estate licensees are not the same. Only real estate licensees who are
members of the NATIONAL ASSOCIATION OF REALTORSŪ are properly called REALTORSŪ.
They proudly display the REALTORŪ logo on their business card or
other marketing and sales literature. REALTORSŪ are committed to treat all
parties to a transaction honestly. REALTORSŪ subscribe to a strict Code of
Ethics and are expected to maintain a higher level of knowledge of the process
of buying and selling real estate. An independent survey reports that 84% of
home buyers would use the same REALTORŪ again.