Real Estate Straight Talk

BUYER DO’S AND DON’TS

Whether you’re looking to purchase your first home or fiftieth home, the process is ever changing and it’s your Personal Buyer’s Agent’s job to make you aware of those changes and how they may affect your home buying process.  Keep this list with you as you proceed with your home buying process, particularly at the beginning, as I find that’s where many of the buyer mistakes are made.  So let’s get started on the best foot possible, and look at what you SHOULD DO as well as what you SHOULD NOT DO.

BUYER DO’S

BUYER DØ NØTS

DO get your loan process started before looking at properties. How do you know how much house you can actually afford to buy unless you’ve been PRE-QUALIFIED/PRE-APPROVED by a mortgage lender?  This will require answering some questions about your current income and debt situation as well as your credit standing with the credit bureaus. You may find you can actually afford a lot more house than you realized. You can also find out your limitations, which are equally important. If you're limited to a loan amount of $100,000, there is absolutely NO reason for you to be looking at $150,000 and up. Likely you’ll fall in love with a house you can’t buy and that is painful. Putting the loan process in front of the "looking" process prevents this from happening. If you’re not paying cash, choosing your lender is a very important step as they drive the process. If you’re not sure where to start, contact your Personal Buyer’s Agent. They’ll have lots of options for you, resulting from their experience with previous buyers and their lenders. Sellers expect Buyers to be able to purchase their properties before seeing them. Imagine you’re in their position. You work every day, have children’s dinners to prepare and homework to get done, and a Buyer has asked to see your property. You do extra cleaning, get the kids in the car and head for a restaurant for supper hoping the buyer who’s looking at your house will will be "the one". When you get back, you ask your listing agent “what did they think?” They say, “they loved it, but they can’t afford it”. Well, likely your next question is, “Why did you put me and my family through this for someone who wasn't even able to buy my house?” Get the picture?

DØ NØT expect Agents to show you houses without the knowledge of what price range you can afford. I often have Buyers tell me “I called ….and they wouldn’t show me a house because I haven’t been pre-qualified.  Well, my policy on this is, I’ll show you one vacant house before you’re pre-qualified.  That will give us time to get to know each other and know if we're a good fit. But to clarify the reason that Agent likely didn't want  to commit to showing you the property, is because you hadn't committed to the process.  Real estate Agents are in the business of helping SERIOUS BUYERS find the home of their dreams. SERIOUS BUYERS have done their homework and are confirmed to be financially ready to get on with their home search and purchase. If Agents spend their time with everybody who’s curious about a property, how will they have time to help their SERIOUS BUYERS? They can’t. So in order to serve their Clients to the best of their ability, they often have to limit their client numbers and that’s one of the first ways they do it. More importantly, you need a Seller to take you seriously, and that's what your Agent does when they make an appointment to show a property and note that you are a Pre-Qualified/Approved Buyer in this property's price range. That’s why I qualified the one home I’ll show you is vacant. Then, if it turns out you’re not ready, a Seller hasn't been put out by preparing their home for a showing and leaving while we were there. Sellers expect potential Buyers looking at their properties to be pre-qualified by a lender to purchase a home in their price range. Otherwise, why should they get everything ready and leave the house for the showing? You don’t like to have your time wasted. Sellers, Agents and their Buyers can't afford to.

DO start watching every penny you spend. You’re about to make likely one of the largest purchases of your life up to now – your new home. Your lender will have to verify you have the ability, experience and habit of saving money so you can always be prepared to make your monthly mortgage payment. A good rule of thumb is to always have a minimum on 6 months of mortgage payments set aside for emergencies.  This will be a plus if a lender sees this.  If your lender suggests doing something with your credit, get it done yesterday.  It's IMPORTANT!

DØ NØT use your available credit. Once you have an offer on a property, you have to be very careful with your finances.  Just before closing, your lender will do a final check of your credit and they’ll expect to get NO SURPRISES since they initially checked it at the beginning of your loan process.  If they do, you may have an issue with closing. I've seen closings never happen as a result of a Buyer making a big purchase just before closing. This is not the time to buy furniture, cars, boats, etc. If you want to buy new appliances and furniture, do it AFTER you close.

DO pick a Personal Buyer’s Agent to help you each step of the process. Choosing your Buyer’s Agent is a very important step to moving into your new home.  They will be working on your behalf each step of the buying process.  They will be representing YOUR best interests, just like the Listing Agent represents the Seller.  You may find your Buyer Agent at an Open House, in an ad, or as a suggestion from a friend or relative who previously worked with them. Make sure you choose an Agent who has experience, training and education to best serve your needs.  Check to see if they have initials after their name verifying they've gone the extra mile to get additional, unrequired training for no reason other than to best serve all their clients.  Make sure you can see feedback from previous buyers.  Make sure they're very knowledgeable of their market conditions and trends. Make sure they're interested in you and your needs.  In other words, it needs to be a good fit.  You don't have to be best friends, but they need to demonstrate a desire to make your home needs a priority.  The Buyer Agency Agreement should be signed early in the process to enter into a fiduciary relationship with your Agent, meaning they are working FOR YOUR BEST INTERESTS. Having your Personal Buyer’s Agent will also save you a lot of time. When you have questions – one call to your Buyer’s Agent. When you see properties that interest you, - one call to your Buyer’s Agent. They’ll get all the info to you, make all the appointments to see properties, advise you on all aspects of the process and much more.

DØ NØT call every number you see on a yard sign or ad. Most often this is the Listing Agent and they are working FOR THE SELLER. They may show you the property and give you needed information on it, BUT they are working FOR THE SELLER. They have the ability to work in Dual Agency, allowing them to work with both the Seller and the Buyer.  But in that situation, they are not able to advise either party because they know too much about both sides. This can be very workable with a savvy Buyer, but I strongly suggest that first time buyers seek their own representation so they can get the advice they need on every aspect of the transaction. It’s not that the Listing Agent doesn’t want to help the Buyer, or is in any way not qualified.  The issue is their initial allegiance is to the SELLER, verified in writing through the Listing Agreement. So in an Open House conducted by the Listing Agent, or if you call the Listing Agent and ask them to show you the property, remember not to say anything to them that you wouldn’t say to the Seller, as they are obligated to share anything and everything with the Seller, UNLESS you sign a Dual Agency Agreement with them. At that point, their lips are sealed to BOTH parties AND they cannot advise either party.  That's the "rub" - no advice.  At that point, they're operating as the “middle man” moving the process along to closing.  They can provide all material facts on the property to each side, but they cannot advise either.

DO be diligent to get things to your lender quickly. Your lender is working on many closings for many buyers at the same time. So if they ask you to get something to them, always do your best to get it to them quickly. Make them see that you're a serious buyer and you intend to close on this loan.  Often your lender will ask for additional pay stubs or tax returns. Know where these are and take them with you when you first meet with your lender after the Sales Contract for your new home has been signed. Having these in advance could save a lot of time at the end, when things can get very hectic.

DØ NØT take for granted your loan will go through without a hitch. I say this not to frighten you, but to prepare you for the unexpected. In today’s real estate and mortgage market, loan underwriter requirements can be tough. This is mostly a result of the many loan defaults of a few years ago. Lenders want to make very sure that every loan they approve as an asset will not come back to them later as a foreclosure and a liability. Even though most closings go through, and Buyers move into their new homes, seldom do they go from contract to closing without a little hitch. Remember, you have professionals working on your behalf - professional problem solvers.  We all just need to stay diligent and flexible and the next thing you'll hear is "Welcome home!"

 

Posted by Debo Cornett on March 8th, 2016 9:35 PM
WHAT THOSE INITIALS AFTER MY NAME MEAN TO BUYERS & SELLERS: People often ask me what those letters after my name mean.  Anyone who has passed their Pre-Licensing courses and State Real Estate Exam can list and sell real estate.  However, in the ever-changing real estate climate, and changing economy, mortgage requirements, tax rates, what Buyers expect from a property and much more, additional specialized education and training is essential for Agents to stay up-to-date on the needs of their clients and their market.  For that reason, all Agents are encouraged to seek continuous extensive training by working toward Accreditations, Designations and Certifications, provided nationally or through their state.  This additional training gives them the authority to place certain initials after their name.  These initials are a badge of pride for the Agent and a sign to Buyers and Sellers that they have an Agent who has made a commitment to their profession and to their clients.  Below are short descriptions of what these initials mean, per the Organization or Association that granted them.
  • REALTOR®.  Not all Real Estate Agents are REALTORS®.  The principal difference is a REALTOR® must complete additional training AND take an oath to uphold and demonstrate the Code of Ethics as required by the National Association of REALTORS® as well as the State and Local Associations.  This requires extensive training in codes of conduct with Buyers, Sellers, other Agents, REALTORS® and Customers.  The Code of Ethics is strictly enforced and contains 17 Articles and various Standards of Practice as guidelines for the REALTOR® to uphold every day.  
  • CRS (Certified Residential Specialist) Only 3% of all REALTORS® Nationwide are Certified Residential Specialists. CRS agents must meet stringent education and experience requirements. That’s why CRS agents are dedicated professionals. They work to ensure success for their home selling and buying clients by tapping into their superior training, exceptional professional referral network, and timely and cutting edge industry resources.  CRS agents have proven records of success—3X the success, in fact, according to the National Association of REALTORS®. Compared to the average REALTOR®, those with the CRS have been in the business nearly three times longer, have three times the number of annual transactions, and generate three times the amount of gross sales.
  • GRI (Graduate REALTOR® Institute) The Graduate REALTOR® Institute (GRI) symbol is the mark of a real estate professional who has made the commitment to provide a high level of professional services by securing a strong educational foundation.  Real estate transactions have become increasingly complicated.  New technology, laws, procedures and the increasing sophistication of buyers and sellers, requires real estate practitioners to perform at an ever-increasing level of professionalism.  This Designation is granted by the National Association of REALTORS®.  GRI designees are recognized nationally and act with professionalism and are committed to serving their clients and customers with the highest ethical standards.
  • ABR (Accredited Buyers Representative) The Accredited Buyer’s Representative, ABR®), designation is the benchmark of excellence in buyer representation. This coveted designation demonstrates to peers and consumers the Agent’s commitment to providing outstanding service for real estate buyers. 
  • e-PRO (Electronic Real Estate Professional) e-PRO® is the only technology certification to be officially recognized, endorsed, and conferred by the National Association of REALTORS®  (NAR).  Technology is the key to marketing properties and finding buyers for those properties.  An e-PRO has an endless number of resources to assist every client with their real estate transactions. 
  • SFR (Short Sale/Foreclosure Resourse) Designed for real estate professionals at all experience levels, the National Association of REALTORS® Short Sales and Foreclosure Resource certification, or SFR®, gives the REALTOR® a framework for understanding how to direct distressed Sellers to finance, tax and legal professions, qualify Sellers for short sales, develop a short sale package, negotiate with lenders, limit risk and protect Buyers and Sellers.  
  • SPS® (Strategic Pricing Specialist)  Most Sellers don't realize pricing their properties to sell isn't a number - it's a STRATEGY.  They're not aware there are number variables that affect the pricing strategy, such as knowing how real estate agents work, understanding the market trends and valuing the process of "how buyers buy".  SPS® designees have the skills needed to navigate the pricing strategy and know how to help Sellers understand how to place their properties on the market to ensure the maximum return.
Posted by Debo Cornett on February 19th, 2016 9:57 PM
HOME BUYER STEP #2:  In case you haven't read, Home Buyer Step #1, go back and read it first, then come back to this post.  Step #2 for a Buyer is to choose a very qualified, experienced, knowledgable Buyer Agent to walk you through each step of the process through, and after, closing.  It doesn't matter whether you've bought many properties in the past or this is your first, your Personal Buyer Agent is one of the most important decisions you'll make to keep the process on track and get to closing as smoothly as possible.  Don't just pick up the phone and call the first person you see in an ad, online, in the newspaper or on a sign in the yard.  Do some research to see what additional training this Agent has to best serve their clients' needs - YOU.  One way to determine that is by the Designations, Certifications, Accreditations they have earned.  If they've earned these levels of training and experience, they will proudly display them by their name.  You'll see another post on my blog (WHAT THOSE LETTERS AFTER AN AGENT'S NAME MEANS TO YOU) about the letters following an Agent/REALTOR®'s name so you'll have a better idea of the expertise they actually hold.  An important Accreditation to look for as a Buyer is the ABR, which means this Agent is an Accredited Buyer Representative.  They have attended classroom and/or online training to address issues any Buyer might experience during the buying process.  It helps them with their problem-solving ability and often more importantly, their problem prevention ability.  You won't regret taking the time to search out the best of the best in Buyer Agent Representatives by those that proudly proclaim by their name the letter ABR.  To find an ABR anywhere in the country, go to http://www.rebac.net/buyers-rep and search by the location (state and city or county) where you'll be buying.  There will be a list of all the Agents that hold this very special qualification.
Posted by Debo Cornett on February 19th, 2016 8:45 PM
HOW DOES PRICE AFFECT TIME ON THE MARKET?  What an important question for every Seller to consider before pricing their property for sale.  Price and Time are at opposite ends of the selling process spectrum.  When considering selling your property, ask yourself this question "What's most important to me - how quickly I can sell and go on with my life or getting the highest possible price for the property?"  The answer to this question will be the driving factor and determine the results of the listing/selling process.  I often have Sellers answer, "both are important".  Unfortunately, Time and Money oppose each other.  They can't work together.  Here's a short statement to remember - "Time Equals Money".  In real estate, the longer a property stays on the market the less money a Seller is likely to realize (property becomes shop worn, other properties similar to it are getting the available buyers at a lower list price, Seller is paying expenses on a property they want to be out of, etc).  So I often tell Sellers to remember "Time Eats Money", which more quickly gets to the core of the issue.  So, here are questions that will help you decide which is more important.  1) How quickly do you need to be in another location?  2) Must the Sales Price be your most important issue and do you have endless time to wait to get that price?  Your answer to those 2 questions will tell you what is REALLY most important to you.  If you have a new job starting soon in another town or state, or if you are close to defaulting on your current mortgage, you DON'T HAVE TIME.  Time must be your biggest drive to sell.  This will result in a lower, more aggressive List Price to competitive comparable properties, but will likely sell closer to the List Price and likely higher than those competing properties that may sell months later.  If you're in no hurry to sell, you just want all you can out of your property to move to another, then TIME'S ALL YOU GOT.  These Sellers typically list at the higher end of the price range over competing comparable properties and will most likely be on the market long after those competing properties have sold.  Per national statistics, after a long period of time on the market, with each price reduction, Sellers will likely experience an even lower Sales Price than they would have, had the property originally listed at that reduced price.  Remember "TIME EATS MONEY" and "MONEY EATS TIME" (the more money you need out of the sale, the more time it's likely going to take to sell, the more time on the market, the less likely you're going to get the most money out of the property).
Posted by Debo Cornett on February 18th, 2016 1:03 PM
SELLER'S MOST IMPORTANT CONSIDERATION:  We've all heard the phrase "location, location, location", so we've come to believe that location is everything when it comes to selling a property.  Though location is definitely important, it may not be the most important consideration for a Seller, and particularly for a Buyer.  In the last several years of real estate marketing, we've all seen there are actually 3 things that majorly affect the sale of a property.  They are Price, Condition and Location.  You'll notice, location is in there, but it's #3, likely because it's the one area a Seller has no control over.  Location is what it is. However, the Seller can change the Condition and the Price of the property, but notice the first thing listed is Price.  When most people shop for anything, price is most often their first consideration.  After finding the best price, they'll look further to see it what is offered at that price fits their needs.  There are seldom properties in a bad condition and/or less desirable location that won't sell at the "right price".  So, particularly in our current nationwide Buyer's Market, Price is ALWAYS the first consideration for appealing to more Buyers.  So if you're considering selling your home, let's get with the program and replace that mindset of "location, location, location" with "price, price, price".  You'll likely see a quicker sale and at a price closer to List Price.  It may even initiate multiple offers and the possibility of a Sales Price at or above the List Price.
Posted by Debo Cornett on February 18th, 2016 12:24 PM
HOME BUYERS' STEP 1:  I have Buyers ask all the time "What should I do first?"  My answer is ALWAYS "Talk with a lender who can give you a realistic picture of how much you can afford."  Once that's been done, we know our search limitations.  This is the most helpful bit of information to get things going and keep them moving toward getting into their new home more quickly.  Once a Buyer knows how much they can actually spend on their new home, their Buyer's Agent will look for properties fitting their specific needs only within that price range (possibly slightly higher to accommodate negotiations).  This also allows a Buyer to narrow their search.  Looking at everything that's currently on the market can be very overwhelming, so narrowing search parameters, prevents Buyers from  being distracted by all the properties that don't fit their needs.  One of the most painful experiences for a new Buyer is they find a property that fits everything they want and need, and after falling in love with it, they discover they can't afford to purchase it because their first step was to look at properties they like, not determining their ability to buy.  So make an appointment with a home loan lender and get started on finding your new home.  If you don't know who to call, contact me, or your Buyer Agent, to get suggestions.
Posted by Debo Cornett on February 18th, 2016 11:54 AM