When
you're ready to think about buying or selling your property, you
need to ask yourself the following questions:
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Do
you have the time, energy, sources of information, and contacts
to do the job yourself?
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If
you were one of the "do-it-your-self" people, would the results
be as good as or better than they would be if you had
professional assistance?
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Would it have gone smoother?
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Would it have given you more personal time?
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Would you have purchased for
less or sold for more if a real estate agent was involved?
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
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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 REALTOR®. A REALTOR® is a member
of the NATIONAL ASSOCIATION OF REALTORS®, a real estate trade
association and all members agree to abide by a 17 article Code of
Ethics. A REALTOR® 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
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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
REALTORS® have access to a variety of informational resources.
REALTORS® 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
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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
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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
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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
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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.
Selling Real Estate
Pricing
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This
process generally begins with a determination of a reasonable
asking price. Your real estate agent can give you up-to-date
information on what is happening in the market place and the
price, financing, terms and condition of competing properties.
These are key factors in getting your property sold at the best
price, quickly and with minimum hassle.
Marketing
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The
next step is a marketing plan. Often, your agent can recommend
repairs or cosmetic work that will significantly enhance the sell
ability 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 REALTOR®
Code of Ethics requires
REALTORS® 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 REALTORS® studies show that 82% of real
estate sales are the result of agent contacts through previous
clients, referrals, friends, family and personal contacts.
Security
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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
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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
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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?
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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 REALTOR®?
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All
real estate licensees are not the same. Only real estate licensees
who are members of the National Association of REALTORS® are
properly called REALTORS®. They proudly display the REALTOR "®"
logo on the business card or other marketing and sales literature.
REALTORS® are committed to treat all parties to a transaction
honestly. REALTORS® 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 REALTOR® again.
You
Be The Judge
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Real Estate transactions involve one of the biggest financial
investments most people experience in their lifetime. Transactions
today usually exceed $100,000. If you had a $100,000 income tax
problem, would you attempt to deal with it without the help of a
CPA? If you had a $100,000 legal question, would you deal with it
without the help of an attorney? Considering the small upside cost
and the large downside risk, it would be foolish to consider a
deal in real estate without the professional assistance of a
REALTOR®!
