This Month in Real Estate (April 2014)
This Month in Real Estate (April 2014)
Choosing an Agent
When you are ready to begin the buying process, you might have spoken to a Realtor when you began your search or after you got a pre-approval. There are hundreds of agents in the Philadelphia area (or the area that you are in) who are ready, able, and eager to earn your business. This post is dedicated to choosing your agent because you would want someone who is knowledgeable about the home buying process and the market to guide and advise you throughout the process.
Where Can I Find an Agent?
Believe it or not, you might know someone who is a licensed real estate agent/Realtor within your close circle or someone who knows an agent; but they either work part-time, no longer licensed, or licensed and practice every day. But you should ask your friends, who do they know, they might refer you to someone who they know. The next place would be going to realty brokerages, such as Keller Williams, Coldwell Banker, Long and Foster, Exit Realty, Centry21, etc. There are normally agents on duty throughout the day to answer any calls from prospective clients (buyer and sellers).
The 3rd place could be driving down a street and seeing a house that you like, you see the ‘For Sale’ sign on the lawn and you call that agent’s/brokerage’s number on the sign. Then you would be able to answer any questions about the house you saw and request a showing. Lastly, you could find an agent by going to an Open House in a neighborhood that you’re interested in moving to. There are agents that sit at open houses, and on the sign-in sheet would be a question asking “If you are working with an agent?” Answer honestly, because that agent that sat that open house would contact you to find out more information about your interest in the house and purchasing a home.
Bonus: Even if you might have been thinking about purchasing a home, you might not have actually talked to anyone publicly about it. You might meet someone who happens to mention that they are in real estate and ask if you know anyone who is interested in buying, selling, or investing in real estate. Remember: you never know who might be in real estate unless you speak about it or overhear someone speaking about it.
Interviewing the Agent(s)
Depending on your preference, you might choose to either chose the agent that you met or interview that person or persons. In this stage, you are hiring someone to be your guide and represent you in the home buying process. In PA, you can have a buyer’s agent work for you for free; normally the seller pays the commission for both agents (not all the time, that is negotiable) when the deal closes. The agent would bring a packet of information describing the home buying process as well as learning about your needs and wants in your home. This is important since it give the agent the information that they need when searching for your home.
When you chose your agent, you want to make sure that you are comfortable with them and you trust them to guide you through the process and to represent you with their best interests at heart. You are their boss and they have to whatever (ethically and legally) you asked them to. Agents went to school and passed the test to earn their licenses; and some might’ve paid and sat through the Code of Ethics training to become a REALTOR®. So you would want someone who is knowledgeable and able to answer your questions.
With that being said, you want to make sure your agent is knowledgeable, tech savvy, and available to your needs. You would like someone who returns your phone calls and keeps the lines of communication open to you, as well as disclose everything that is going on in the transaction. If you cannot get in contact with your agent or they don’t return your calls or emails within a reasonable amount of time, you might need to speak with that agent.
The ultimate goal is making sure that your agent is able to get through the transaction smoothly and quickly.
Towards the end of your meeting, the agent, if you choose to hire them may ask you to sign a Buyer Agency Contract with them. This basically outlines the duties and responsibilities between the agent and buyer — as well as how the agent would be compensated during the transaction. This is also how the agent gets paid. Although you may not be paying a fee upfront, this contract states that there is a mutual agreement between agent and buyer that they are entering into a agent/client relationship and that the agent is working for the buyer in finding them a home.
Pursuant to PA law, you would be asked to sign a Consumer Notice. This is not a contract but it outlines the different types of agency during the transaction; it describes how the agent can represent the buyer in the transaction. Bylaw this is required, when discussing a true interest in real estate. If you choose not to sign the Buyer Agency Contract, whatever is discussed would not be held in confidentiality; but if you signed the contract, anything that is discussed, would be held confidential.
Lastly, make sure you get copies of all documents signed. It is important that you read and keep all records of what you signed during the process.
If you are interested in buying and would like to discuss further the home buying process, feel free to contact me.
Ready to Buy? Get Pre-Approved!
So if you are ready to buy, the next step is to get a pre-approval. Unless you are paying cash for your home, you would need some type of financing for the purchase of your home. By getting pre-approved starts the loan process, thus narrowing your home search to a number that you can afford.
Where can I start?
You can start the loan process at any financial institution, that you choose; it is really up to you as to who do you prefer to allow during the home buying process; such as your own personal bank, credit union, your Realtor’s in-house loan officer, or a mortgage broker. It’s really up to your preference.
Pre-Approval vs Pre-Qualified
Depending on your financial history, the loan officer might decide to give you a Pre-Qualification — meaning that it is only the loan officer’s opinion on loan financing approval; there is no verification nor formal approval given. For example, if you have a great job making $200,000 per year with little to no debt and you stayed with your company for over 2 years, the loan officer could give you the green light without verification or researching your current status. Because of the uncertainty of what you can afford it could lead to danger, with you possibly looking at a home that you cannot afford.
Pre-Approval is when the loan officer has gathered all required documents such as W-2, tax returns, pay stubs, proof of employment, housing verification, etc. and researches to determine the amount that you can afford in house. You would get an official letter and is more of a guarantee as to what homes you can afford and what price ranges you can look at.
In order to look at homes as well as to save time, most Realtor’s prefer to see the pre-approval letter before taking a client to view properties. In addition to, it is required when placing an offer on a house.
Is There an Expiration Date?
Yes, there is an expiration date on the pre-approval letter. The duration normally ranges between 30-60 days. If you need additional time, you can request your loan officer to extend the approval until you find the home that you would like to put an offer in.
What Makes Me Pre-Approved?
Depending on the type of loan you are applying for it depends on your credit score, employment history, debt to income ratio, and savings towards a down payment.
What if I am Not Able to Get Pre-Approved?
All is not lost! You can still achieve home ownership, it would just take hard work and dedication. The biggest issue that I’ve ran into is credit scores. If it is your credit score, you can get help from your loan officer; they would have an available program to help fix your credit. Depending on who you are working with, their companies might require a score of 640 before issuing a pre-approval, while there are some officers can work with a score as low as a 580.
There are many different types of loans that you may get. I will cover the types of loans you can get in another posting.
Are You Ready to Buy a Home?
Purchasing a home for the first time is a huge deal and should not be taken lightly. You will be purchasing one of the largest investments that you can make in your lifetime; it takes time, money to find your next home and not to mention that your emotions can get caught up in the process. Going through the home buying process can start 6-12 months prior to purchasing with just the thought of purchasing. Before starting the home buying process you NEED to ask yourself some questions to determine if you are mentally and financially ready to purchase a home, click on the link to go through the “Are You Ready To Buy A Home Flowchart“. The goal is to make the home buying process as quick, smooth, and painless as possible to ensure an easy transaction. Answer the questions honestly and depending on your answers, you would know if you are ready to purchase a home.
If you find that you are not ready to purchase a home because you do not have the savings available for a down payment or your credit is not as good, whatever the case: all is not lost. Just because you may not be able to buy now, you can buy in the future; it just takes hard work and determination. Or… you may have the finances but are not mentally prepared to own a home — and that is fine. It is better (and I would prefer) that you revisit the thought of purchasing a home when you are fully committed to go through with the process. It not only save you time but money as well and you would not want to be forced to purchase a home when you are not ready. Remember: a home is supposed to be a blessing, not a curse.
Go through the chart to determine if you are ready to buy a home!
Series Announcement: Buying a Home
Now that Spring is here, the real estate market should be seeing a boost in sales. Especially after record-breaking temperatures and snowfall. So to start off the spring season, I figured I’ll do a series dedicated solely to the home buying process. The next few posts would go over everything that is needed for one who is interested in buying a home. Whether it is your first time, or a seasoned and active buyer, everyone can benefit and become a more educated and informed buyer.
Remember: Knowledge is Power. The more informed you are, the easier it would be to make a decision that you are comfortable with. I am a firm believer that a home is supposed to be a blessing, not a curse; and a home is one of the most expensive investments that you can make in your life. So I cannot stress the importance of being an informed buyer.
Benefits of Homeownership, Choosing a Realtor, Steps in the Home Buying Process, Financing, Placing an Offer, What to expect during Settlement, etc.
Of course there would be a selling series immediately following the completion of the buyer’s series. (Keep checking the blog)