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Buyer Resources

Articles For Buyers

What Every Buyer Needs To Know:

Because buying a home is one of the single greatest investments most people make during their entire life time, it is important that you avoid costly mistakes and make informed decisions throughout the entire buying process. Whether you are a first time home buyer or an experienced investor, you should ask as many questions as you can and obtain as much information as possible. The articles below contain some valuable information about "buying real estate" that you might find helpful. If you have any additional questions or need more information, click here to contact a real estate professional at Lake,Town & Country Realty.

 10 Reasons To Use A Buyer's Agent

Following are 10 great reasons to use a buyer's agent when buying real estate:

#1. Having a buyer's agent is FREE to the buyer.  Some people think they can save money by not using a buyer's agent. In most cases, this is simply not true; and in fact, it is usually just the opposite. In residential real estate, the commission is usually paid by the seller whether or not a buyer's agent is involved. Where else can you employ the services and receive the benefits of a trained and experience professional on your side for free!

#2. Having a buyer's agent gives you more negotiating power.  Having a buyer's agent helps you hold all the cards when negotiating with the seller. The buyers agent may know you can afford more than you offer and how much you love the home but won't disclose this to the listing agent or seller. This keeps the listing agent and seller in the dark about your intentions and makes them all the more willing to accept lower offers. If the listing agent knew how much you loved the home and that you could afford more than you are offering, they may not agree to the price you are offering.

#3. It gives you full access to the MLS.  As a member of the multiple listing service (MLS), your agent has full access to the searchable database of MLS listings. We can ask you the right questions to determine what you are looking for and what areas you are most interested in. Once we know your price range and what you are looking for, we will use the full power of the MLS to help you find it. We can provide printouts, email reports, and do custom searches to find available homes that meet your criteria. We can also setup auto emails to notify you automatically if a listing comes on the market that meets your criteria. To request auto emails, click here. Sometimes we can even tell you about new listings before they come on the market.

#4. A buyer's agent will save you valuable time.  Why do something yourself when you can have a professional buyer's agent do it for you? A Buyer's agent spends a lot of time previewing homes and staying familiar with the current listing inventories. This knowledge -- as well as useful technologies such as virtual tours, interactive maps, Internet websites, and use of the MLS system -- will save you from wasting valuable time previewing homes that don't meet your needs. Your agent will also perform a lot of the services that you otherwise might have to do your self such as writing up offers, delivering earnest money, contracts, etc. to the title companies and lenders.

#5. It makes life easier and reduces stress.  When you have a buyer's agent, you don't have to worry about driving neighborhoods for hours or worrying that you're missing the house that would be perfect for you. You can spend your time doing the things you enjoy while the search is being handled by someone else who is a professional. We've helped hundreds of people with their real estate needs, and our experience will help keep you from any unpleasant surprises throughout the entire buying process. When you use us as your buyer's agent, you'll actually be surprised at how much we do for you behind the scenes. You don't have to worry about the deadlines and "what ifs" because we do it for you.

#6. Your agent takes care of all the paperwork.  From writing up the offer, to reviewing seller disclosures, to filling out escrow instructions, to reviewing the title work and closing documents. . . it's nice to have a trained professional by your side to handle the paperwork and to help answer any questions you might have. We done this more than a time or two, and we'll help you cross your t's and dot your i's and follow up with all the parties involved to make sure everyone meets their deadlines.

#7. A buyer's agent is a great resource of knowledge and information.  Not only are we very familiar with the history and demographics of the area, but we know a lot about real estate. We will educate you about market conditions, and answer any questions you have about the home buying process, including explaining fair housing laws and agency relationships. Our goal is give you the best and most accurate information to help you make the best possible informed decisions.

#8. You benefit from a network of professionals.  Over the years, we've developed good working relationships with several home inspectors, mortgage lenders, title companies, and other professional tax and legal advisors. We know from experience which ones have delivered on time consistently and which ones have fallen short of the bar. We'll help you find the right professionals to help ensure a successful buying process without any regrets.

#9. A buyer's agent looks out for your best interest at all times.  Your buyer's agent has a legal and ethical responsibility to represent your best interest at all times. Some of the duties that your agent has to you include: loyalty to you, promoting your best interests, disclosing known material facts, maintaining confidential information, and accounting for any money they handle in the transaction. If your agent knows something about the seller that might influence your decision to buy or not or to alter your offering price, they have a duty to disclose that to you subject to federal and fair housing laws. In shot, it's nice to know that someone has your back when you're in the trenches of buying real estate.

#10. It's nice to have a friend in the business.  One of the things we enjoy most about working with buyers is the friendships and relationships that are formed. Our goal is to provide you with the services and be the type of person that you feel the same way about us when the transaction is completed. Your friendship and trust mean more to us than any compensation we get from selling real estate. We hope that if you ever need help buying or selling real estate in the future, or if you know anyone that needs help buying or selling real estate, that you'll give us a call!

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 Finding The Right Property

One of the first steps in buying real estate (that many buyers often overlook) is knowing what you are looking for.  We suggest you make a written list of the things that are important to you (for example: does the home need to be on one level, do you prefer a certain area, how many rooms do you need, what price range are you in, etc.  If you're not sure what you want or what you can afford, then you need to do some research and get prequalified by a good lender before you meet with your real estate agent.  Once you have a "wish list" or a clear idea of what you want, prioritize the list. Put the most important things at the top of the list.  Once you and your spouse have a clear understanding of what you want and what is most important (and you know what you can afford), then you're ready to put your real estate agent to work for you.

To receive a FREE list of all MLS listings that meet your criteria or to receive auto-email notices when new listings come on the market, CLICK HERE!

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 Negotiating With The Seller

Here's a few tips to help you negotiate with the seller.
  • Know the market and negotiate accordingly.  Your agent is the best source of advice in this area.
  • Never negotiate directly with the seller. That's what your real estate agent is for!
  • Always provide a prequalification letter from the lender with your offer if you will be getting a loan.
  • Always have your agent prepare a Seller's Net Sheet to present with the offer.
  • Make a list of things that will need to be fixed, replaced, or that are damaged.
  • Find out as much as you can about the seller's motivation and reason for selling.
  • Never let the seller know how much you like the property.
  • In a hot market, ask for an acceptance/counter upon presentation of offer.
  • The more you put down as earnest money (without conditions) the easier it is to negotiate terms.

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 Doing Your Due Diligence

Once you have an accepted offer (hopefully with a due diligence clause), you should consider hiring a property inspector to inspect the property.  You can also do a walk through to visually inspect the property.  During the due diligence period, you should check all appliances, water faucets, hoses, toilets, AC, Heater, Hot Water, etc.  You will also be able to review a Seller's Disclosure with your agent to see what the Seller knows about the property.  By law, the Seller must disclose in writing any material fact that would adversely effect the value of the property.  You should also meet with a title company or escrow officer and review the title to make sure that the person selling the property is the legal owner and that there are no unknown encumbrances or problems with the title.

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 Financing Options & Advice

There are many options for financing your next real estate purchase.  You not only need to select a mortgage lender or broker, but you will need to decide what type of loan and financing is best for you.  There are a variety of sources for loans including: conventional, FHA, VA, first time home-buyer programs, special government loans such as rural housing loans, private loans, and seller financing - as well as many others.

Following is a brief description of the most common loan types and structures:

Fixed-Rate Mortgages - You should seriously consider a fixed rate if you are planning on living in your new home for many years, and/or if you are not a risk-taker and prefer the stability of knowing how much your payment will be each month.  Most fixed rate loans are for 30 years.  Once your loan amount and interest rate are calculated and locked in, a fixed rate mortgage will guarantee that you will have the same payment over the life of the loan. Making extra payments to principal will allow you to pay your loan off sooner.  If interest rates are low, you'll come out ahead with interest rates that will stay low no matter how high interest rates go in the future.  You can also amortize a fix rate loan for less than 30 years (20 year and 15 year are standard terms). This will make your monthly payment slightly higher, but will help you pay off your loan much faster and reduce the total overall amount you pay in interest.

Adjustable Rate Mortgages (ARM's) - Since an ARM rate rises and falls depending on the current interest rates (usually tied to an index such as Certificate of Deposit index, Treasury or T-Bill rate, Cost of Funds-Indexed Arms or COFi, or LIBOR [London Interbank Offered Rate]), your mortgage payment will rise and fall accordingly. If your income is not sufficient to cover the highest possible payments, then this option is probably not for you. However, the lower initial payments will allow you to qualify for a larger loan than if you choose a fixed-rate. The downside is that your payments will increase if/when the rates go up.  You may want to consider an ARM loan when you know you will be selling the property in a short time, or if there is a real likelihood that you can refinance or qualify for a better loan in the near future.

There are “caps” on how much your lender can increase your rate, both for a period of one year and for the life of the loan. Plan ahead, and have your lender calculate what the maximum payment would be if your rate went to the highest amount allowed by the cap for your particular mortgage. If you are not confident you'll be able to pay that amount on a monthly basis, perhaps you should reconsider this type of loan.

Convertible ARMs - If neither the fixed-rate nor the adjustable-rate mortgage seems like the best option, perhaps the convertible ARM will be right for you. This alternative combines the initial advantage of an ARM with a fixed rate after a predetermined number of years. Obviously, this type of mortgage has more advantages when the initial interest rate is low and the future rate is not guaranteed.

Government Loans - There are several types of government loans.  Most of them are conditioned upon either the property and/or the buyer meeting certain qualifications.  If you meet these qualifications, you may want to consider this type of loan.  Usually government loans have a much better interest rate, but often they contain a back-end clause "recapture fee" that requires you pay a certain percentage of the sales price back to the government.  Carefully consider all fees and terms associated with special government loans.

VA Loans - Veterans may qualify for a loan from the Veterans Administration. There is a limit on the amount you can borrow, so this option works best for those buying a lower priced home.

FHA Loans - The Federal Housing Association offers loans to lower-income Americans. Look for the phrase “FHA approved” when looking at ads for homes. Both VA and FHA loans require that the property meet certain requirements, so you need to check with your real estate agent before making an offer on a property.

Financing a home is an important proposition, so we suggest you seek advice and ask lots of questions from a qualified mortgage broker or loan officer.  We suggest you visit with at least two mortgage brokers or loan officers and ask them which programs you qualify for and what they suggest given your situation.  Make sure that you ask for a Good Faith Estimate from each lender you visit with.  This discloses the rate and terms and closing fees that they anticipate you will pay if you get the loan they suggest.

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 Earnest Money, Escrow, & Closing

When a buyer makes a written offer to purchase real estate, the buyer will specify a certain amount of "Earnest Money" included in the offer.  Earnest money represents the buyer's good faith and intent to purchase the property.  It can be as little as $10 and as much as the entire purchase price.  While $500 to $1000 may be the standard amount, usually the more earnest money you deposit with your offer, the more attractive you offer will be to the seller.

Often times, the earnest money is refundable based on certain conditions such as the appraised value being as much as the offer price, the buyer qualifying for a loan within a certain time period, etc.  You can make your earnest money non refundable which makes your offer seem more solid to the seller, but which also may cause you to loose your earnest money if you are unable to meet all the conditions of your offer in a timely manner.

Once the buyer and seller have come to a "meeting of the minds" and have agreed upon the sales price and terms, a copy of the purchase agreement and the earnest money usually goes to an escrow company.  This is a neutral third party that will hold the earnest money and other funds required for closing until all of the closing documents are signed by both parities and all of the conditions of the contract are met.  It also disburses funds per the escrow agreement and/or the terms of the purchase agreement. 

During escrow, the buyer will often submit a loan application, the property will be appraised, there is often a due diligence time period in which the buyer may have an inspection of the property and review the seller's disclosures.  A title company will also prepare a preliminary title report showing all encumbrances, easements, and recorded documents that may effect they buyer's rights to use and enjoy the property.  There may be Covenants, HOA Rules, and/or judgements, liens, etc. that will need to be paid off before the property can change legal ownership.  Make sure you ask your title company and/or escrow officer about title insurance and inquire about additional riders and/or policies that might benefit you.

Closing is the process of signing all the documents, funding the loan, paying the seller, and signing over the deed of the property to the buyer.  We suggest you always have your real estate agent and a qualified escrow officer review all closing documents with you to make sure all of the numbers and calculations are correct.  More often than you might expect, the lender or the title company may make a mistake that could cost you hundreds or thousands of dollars.  You should compare the final loan docs with the original Good Faith estimate to make sure your lender isn't charging you more than they originally quoted you as well.

Once deed and mortgage have been recorded with the recorders office and the seller has received payment, the buyer becomes the legal owner of the property.

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 Free Buyer consultation

If you're not sure what you're looking for, or if you would just like to meet with one of our real estate professionals to review your situation, we'd love to take a few minutes to listen to you and help you with your real estate needs. Please call us today to schedule a FREE no obligation consultation at (260) 854-2800, or CLICK HERE to drop us an email.

Lake,Town & Country Realty

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