Category Archives: Benefits of using a REALTOR

What Every REALTOR® Wants You To Know About Home Inspections


Buying a new home can be a very stressful time. In addition to taking on a large amount of debt, buyers have a sundry of other expenses that keep popping up, such as closing costs, insurance, moving expenses and the home inspection to name a few.

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In my opinion, the home inspection is one of the most important steps for buyers to take and one that too often they try to forego or circumvent. My approach is to get into a verbal arm wrestling match with buyers who try to avoid have an inspection by a qualified, licensed home inspector. And here’s why:

First of all, a home inspection by a qualified, licensed home inspector can identify a wide range of issues that may be lurking just out of sight to the buyer. Even if an item is working properly at the time, it may be just a matter of time before the owner could expect to have to repair or replace. Even if the item doesn’t need to be replaced at the time, it could possibly be a negotiating tool to adjust the price.

The second issue that I think needs attention is for buyers to not use an uncle or family friend to “take a look” at the property and see what they think. Having a family friend give their thoughts on the property may encourage the buyers one way or another, but in all likelihood unless that uncle or family friend is a licensed, qualified home inspector, their opinion will not considered acceptable as it pertains to the contract.

Maryland real estate contracts states that the buyers have the right to have the property inspected by “ … a qualified professional engineer, licensed home inspector, or other expert . . .”. Whether or not an uncle or family friend would qualify as an expert could complicate the contract as it relates to the property inspection.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

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What Every REALTOR® Wants You To Know – About Commissions


In order for the real estate market to work, there has to be sellers and buyers. It is the role of the REALTOR® to bring those two clients together. Anyone who has ever bought or sold a house will confirm that the world of real estate is a complicated and convoluted transaction.

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The role of the REALTOR® is to bring those clients together and work through all the details to make it happen. Whether you are a buyer or seller you should have a REALTOR® who will look out for your best interests. By doing so the REALTOR® earns their commission.

In the vast majority of transactions the seller will provide the commission fee. And although that money may seem like a large amount it really breaks down to a lot less than people realize.

In todays market the listing commission runs between 6% – 7%. Although I will mention that those fees are always negotiable, although most brokers will require agents to maintain a 6% – 7% range.

For the person of this article, lets assume that the seller is listing their house for $250,000 and signs a listing contract with a commission of 6%. The commission that would be paid by the seller at the closing if and when their house sells would be $15,000.

That may sound like a lot of money, and it is, but that fee does not go directly to the listing agent. It is split between the two brokers involved, the listing broker and the buying broker. For the sake of this article, lets assume that the brokers have agreed to split 50%/50%. At closing then $7,500 would go to each broker.

That fee of $7,500 would then be split between the broker and the real estate agent who actually handled the transaction. For simplicity, lets assume that the split is again 50%/50% although that percentage is very variable between agents and brokers. The amount that is now credited to the agent who handled the transaction is now $3,750.

The brokers fee is used to cover office space, telephones, television advertising, computer software, etc.

The agents fee which is now about $3,750 has to cover costs that many small businesses have to cover; such as a photographer to take pictures of the house (if the listing agent), signs, flyers, advertising, insurance, membership to the REALTOR® association, fees for the MLS, buy Sentrilocks for your front door, etc. You also have to remember that as an independent contractor, which is what most agents are, they also need to pay taxes on that amount. That amount is now down to about $2,500 for the sale of the house.

For that amount the seller’s REALTOR® will:

• Prepare a comprehensive market analysis
• Visits you, walks through the home, makes recommendations, answers your questions and fills out the listing contract
• Lists the home on the MLS
• Meets the professional photographer at your home and hangs out while that person takes photos and video
• Markets your home on various websites and print ads, and installs signage
• Holds an average of 2 Open House events
• Takes calls from prospective buyers and buyer’s agents and makes showing appointments
• Communicates with buyers or their agent regarding an offer
• Presents that offer to you, makes recommendations and prepares a counter offer
• Finalizes a contract with you and files it with the broker
• Meets the property inspector, appraiser, and sometimes handymen and waits around while they do their jobs so that your contract fulfills
• Communicates with the buyer’s agent regarding contingencies in the contract
• Presents you with additional addendums to the contract, as needed, sometimes preparing counters to those addendums
• Communicates with the escrow officer to make sure that the payoff on your mortgage is in order and that all paperwork is ready
• Attends closing with you
Nevertheless, most REALTORS® love what they do and work extremely hard to bring sellers and buyers together.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

Five Ways for Buyers’ to Kill a Real Estate Deal


Anyone who has ever bought real estate will attest that buying real estate is a process and not a quick process either. Often times buyer’s feel that it is a waiting game from the time of contract acceptance to the closing, but in reality there are many, many things that are going on behind the scenes that will get them to the closing table.

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During this emotionally charged time for buyers’ often times they will make decisions that can adversely affect the outcome of buying a home. It is critically important that buyers’ maintain a steady financial posture during this time. Any expenses out of the normal day to day living should be discussed with your mortgage officer or REALTOR®.

Here are five areas that can be damaging to a real estate transaction:

1. Buying on credit. Often times home buyers are excited about moving into their new home and want nothing more than having all new furniture or even some new furniture. This is a problem that surfaces on a lot of transactions and buyers should avoid like the plague. Any additional debt will affect your debt to income ratio and could prevent you from getting a loan. Even if you apply for new credit, the simply inquiry that the creditor will do on your credit bureau may lower your credit score and again affect your ability to buy. The rule of thumb – don’t take on any new debt without first talking to your mortgage officer.

2. Missing a payment. Buying a home is an exciting time but it can cause a lot of stress for buyers. Additional stress can lead to missing payments on an account that you would otherwise be meticulous about paying. Many lenders may require a certain period of no-late payments to qualify for the mortgage, such as 12 months. One late payment may preclude you from qualifying or result in a larger interest rate that will be with you for a long time.

3. Be Careful with withdrawals AND Deposits. During the loan process, underwriters will be scouring your accounts for withdrawals and deposits. Withdrawals will reduce the funds you have available and may concern the underwriters. Unexplained deposits will be red flags as to where the funds are coming from. These funds will be examined throughout the process and will be reviewed again right before closing to ensure everything is still intact.

4. Co-signing a loan. You may have a friend or family member who is the most responsible person around but co-signing for a loan while you are in the process of closing on a house may be the kiss of death for your loan. Even though you may not be directly responsible for the co-signed loan, if they default, you are now on the hook for the payments. Because of that underwriters will factor those payments into your debt ratio and it may knock you out of the mortgage.

5. Changes in employment. Next to taking on additional debt during the loan process, changing employment is the second problem for home buyers. Even if the change in jobs brings more money, lenders will look at it as a risk. Often time new employees work for a few months on a trial basis and may ultimately lose the job they thought was a step up. Lenders want to see a stable, reliable income that is likely to continue in the foreseeable future.

The secret to getting to the closing table is to communicate with your REALTOR® and mortgage officer during the process and take their advice.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

6 Steps to Help First-Time Home Buyers


6 Steps to Help First-Time Home Buyers

Statistics show that there is a huge pent up demand for homes from first-time homebuyers.  Many first-time home buyers have remained on the sidelines for the last several years for many reasons; the economy, saving for the downpayment; reducing debt, etc.  But as these homebuyers come into the market, there are several steps to help with the purchase of their first home.

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  1. Do not delay contacting a REALTOR®.  All too often first time home buyers who are renting will wait until their lease is about to expire and then try to buy a home without realizing how long it takes for the process.  Then if the buyers can not find a home to close on in a short period of time, they wind up renewing their lease or trying to find some kindhearted friends or relatives that they can stay with for a while resulting in a double move.  My advice is to contact a REALTOR® as far in advance as possible to begin the process.  Six months to a year is not unreasonable.  This provides the added benefit that if there is a blemish on your credit report it gives you time to deal with that issue rather than at the last minute.
  2. Borrowing the maximum amount a lender will allow and not creating a realistic budget.  Mortgage companies are in the business of making money.  Its no surprise that they do this by loaning money – the more they lend, the more the make.  Nevertheless, it’s important that home buyers determine what fits into their budget and stick to it.  In reality, the mortgage market is very good and predicting what mortgage amount will be realistic for home buyers, however, if you like to travel or spend money on other things, be sure you evaluate that into your mortgage amount.  Its also important to have a firm understanding of what expenses you will occur with your new home.  Heating a 2,200 square foot home is very different than an apartment.
  3. Looking ahead. Most first-time home buyers stay in their homes approximately four years.  It’s important to have some idea of how long you plan to stay in the house and to evaluate the resale value.  If your buying a townhouse in a large development that is just starting, and the new construction will be going on for a few years, it may be difficult to sell your property when construction is going on.  If your thinking of staying several years and starting a family, the school district may be a major issue for you.  If you get to the point that you think you may want to sell your home, be sure to talk to a REALTOR® about the price that it may sell for.  There are on-line companies that will indicate what your home will sell for with little or no regard what your home is actually worth.   Often times these prices are tens or hundreds of thousands of dollars off.
  4. Shopping for a House is different that buying a house. This goes as well for seasoned home buyers as well as first-time home buyers.  When the time comes to put in an offer and buy a house, time is of the essence!!  There is a fine line between moving quickly and moving too quickly, but I always tell my clients that when you decide to put in a offer call me – do not rely on email.  There is nothing wrong with “sleeping on it”, but the saying in real estate is “The house you looked at today and want to think about until tomorrow, may be the house someone looked at yesterday and wants to think about until today!”
  5. Pre-approval for a mortgage.  This is one topic that can not be overstated.  When meeting with a REALTOR® one of the first conversations they should have with you is whether or not you have been pre-approved for a mortgage.  There are several reasons for this.  The most important is to find out what price range you are realistically able to buy.  All to often, buyers have the mistaken idea that they want to buy a home around $700,000 when in reality they can only get a mortgage for $500,000.  If they have already been looking at homes in the range of $700,000 everything that I show them at $500,000 will most likely be disappointing.  The second reason for talking to a mortgage broker early on is that if there are issues with your credit score it may be things that can be corrected, but that usually takes time.  If you wait until the last minute to apply for a mortgage, you may not be able to close on time.  The third thing that I will mention is when you put in an offer it is always, always, always a better situation to include a letter from your lender stating that you have been pre-approved for the purchase price rather than indicating to the seller that now you will try to get a loan.  The last item I will mention regarding the mortgage is that it is very complicated regarding the amount of cash you have and the debt you have.  Whether or not you should hang on to the cash or pay down some debt is a call that is best made by the mortgage office.  They can be a big plus in this area.  
  6. If you want to impress a seller, strike while the iron is hot.  One thing that I advise clients is that when you want to buy a house, be prepared to make quick decisions.  If the sellers counter your offer, which is usually what happens, make a quick response as to the offer.  Waiting the full amount of time before the offer expires indicates to the sellers that you really aren’t too interested in the house.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision,

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

What Every REALTOR® Wants You To Know – When Selling Your Home


Selling your home can be a very stressful time, especially if you are also coordinating closing on a house you are buying. Here are some tips to help you find the right REALTOR® when selling your home.

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First of all, find the right REALTOR® for you. Just as there are no two people alike, there are no two REALTORS® alike. There are some traits that I think are very important when determining who you want to represent you, but your confidence in their ability is very important.

If you talk to agents who have years of experience, they will suggest to pick someone with years of experience. But I have seen new agents who are hungry and excited to be in real estate do a fantastic job. And I have seen agents with “years of experience” who have not kept up with technology and are living in the past.

  • Honesty There is no substitute for honesty. If you do not have a comfort level of honesty from your agent, get another agent. Selling your home is a large financial transaction and the honesty of your agent is of utmost importance. Besides, honesty is so important that the National Association of REALTORS® lists it in the Code of Ethics.
  • Professionalism REALTORS® who are professional and listing a home for sellers will tell you that there is a lot of work behind the scenes to make this happen. It’s important that agents can have dialogue about what is being done. There is an old school philosophy of “Post and Pray”. Basically some agents put a sign in the front yard and pray. Not that there is anything wrong with praying, but it takes some elbow grease. In addition, suits and ties may not be in style today, but if you feel like locking the front door when you see your agent show up in torn jeans, you may want to find a new agent. One of the areas that I think is critical to identifying agents who are professional are their use of technology.
  • Strong Negotiating skills Getting an offer on your house is just the beginning of the hard work. Hammering out the details of the contract to get you the most money for you house requires strong negotiating skills. If the market is hot and you have numerous offers coming in, negotiating skills may not be as important, but in todays market negotiating is critically important. My advice is that in the beginning if you can find some simple things to agree on, this will often times lead to further agreements. Also, agents need to have the mindset of working to make it work, not taking a hardline approach of holding their ground. The unwritten rule is that if it’s not illegal, immoral or unethical, it’s negotiable!
  • Creativity No two transactions are alike. It is difficult to have a real estate form that will cover every situation that real estate agents may be confronted with. Being able to roll with the punches and be creative in putting the contract together is a big plus for REALTORS®. I remember one transaction that I had where the sellers and buyers could not come together on the price of the home. I represented the buyer’s and during one of our many conversations I remembered they both say that each of their fathers was a contractor and could not wait to get in the house to do some remodeling. As such, we negotiated with the sellers to provide all the raw materials from Home Depot to finish the basement. To the sellers, this was a relatively small purchase, but to the buyers, it was a huge step in having their basement finished. We closed shortly after that.
  • Company Reputation Not all brokerage firms are created equal. There are many small, home-grown brokerage firms and the large, national firms. I have worked for several years with Coldwell Banker brokerage firm. This is my preference but I believe that the national firms have a powerful resource behind them. In any event, it’s not the size of the company as much as it is the reputation of the company.
  • Communication One of the largest complaints that clients have about real estate agents is communication. Unsurprisingly, one of the largest complaints that real estate agents have about clients is communication. It is important that agents and clients discuss what communication is important and what they expect. Not only how to communicate, but how often or what is important and what is not. I have had clients that the wife wanted a text message and the husband wanted an email message. Knowing that upfront is helpful, but it was only learned by discussing it with them upfront.

If you are thinking of buying or selling, talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to text or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

What Every REALTOR® Wants You To Know – Myths in Real Estate


Myths are nothing new. In days gone by, information was exchanged at the back fence with a neighbor or at the local store. Today, with the explosion of information on the Internet we can exchange information at lightning speed. Truth and myths travel at the same speed.

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Buying a house is not something that people do everyday. Many will be out of the housing market for years or even a lifetime. Some may buy or sell a house every few years. Nevertheless, the real estate market is a fast changing market that needs expert guidance.

The biggest thing to remember is that not everything you read on the Internet is true. Boy, there’s a news flash! I always get weary when someone starts a sentence, “Well, I read on the Internet that ….”

Here are some ideas that float around with potential seller’s and buyer’s that may not only be false, but may actually damage your efforts in buying or selling.

  • Over pricing your home. Every seller wants to get the most for the property they are selling, and every buyer wants to buy the property for the least they can get it for – that is pretty much a given. But over pricing your home may be the kiss of death in real estate. If I have a buyer who is looking to buy a house for $400,000, I am not going to show them a house listed for $499,900, even if that house may only be worth $400,000. Overpricing your home may result in not getting the traffic you need to sell your house. My advice: List your property close to what you expect the actually selling cost to be.
  • Not using a REALTOR® can save you money. Buyers generally do not pay anything to the agent for their services. The commission is paid by the sellers. It is important that you read any contract to determine how the commission will be paid. As a buyer if you contact the listing agent about the property, you have to remember that generally the listing agent works for the seller – not you! I always, always, always advise buyers to have their own agent. Sign a buyer’s agreement and let them represent you.
  • FSBO – For Sale By Owner – is statistically not a financially good move. Yes, it is true that you can sell your own property, and yes there are discount brokers who will tell you that the only thing you need to do is have your property listed on the MLS. Generally speaking FSBO will languish on the market for extended periods of time. In addition, studies have shown that property sold by a REALTOR® sold for 17% more than FSBO. That is much more than any commission will cost.
  • Renovate your home to get top dollar. Many people believe that remodeling your home will get you a lot more money for your home. It may, but more than likely, you will spend more for the remodeling that you will recover in the sales price. Renovating a house shortly before selling may actually backfire. Potential buyers may not share your taste but may not want to redo a kitchen or bathroom that has just been done. Also, remodeling part of your house and not the whole house may make the house look unfinished. Unless, there are things that need attention, like heating and air conditioning, plumbing, or a new roof, I would suggest that you adjust the price of your home, rather than start remodeling.

If you are thinking of buying or selling talk to a real estate professional – talk to a REALTOR® – who can give you the information you need to make an informed decision.

As always, if I can help with any of your real estate needs, please feel free to tex or call me at 301-712-8808 or email me at RolandLow1@gmail.com.

Roland

Mortgage Rate Update – The Economic Reality


A day doesn’t seem to go by without the media reporting how bad the economy is.  It reports about companies that are laying employees off; retail sales slumps; companies closing; and of course the roller coaster ride of the stock market.  Tucked somewhere in all that chatter the media reports that mortgage rates are down.

I have stated many times on this blog that interest rates for mortgages are at an extremely low rate – 4.1% as of September 12, 2011 for a 30 year fixed.  Adjustable rate mortgages are at 2.8%.  These rates are the lowest they have been for “at least 40 years” according to the National Association of REALTORS®.  Yet, there are few buyers jumping into the market!

There are a lot of reasons for buyers not wanting to get into the market, and there are as many reasons as there are buyers.  But some of the more common reasons revolve around the job market and the ability to get a mortgage.

With the unemployment rate around 9.2% there are literally millions of men and women who have lost their job or may be underemployed.  And, there are millions more who undoubtedly are concerned waiting to see if their job will be the next to go.  Bank of America just announced laying off 30,000 employees in the next couple of years.  Several other companies have announced lay offs and that has to wear on those who are employed.  Retired individuals who rely on their savings have seen dramatic drops in the stock market and many of those folks have seen large drops in the money they expected to receive.

Yet, there are millions of people – in fact the majority of people – who are working and have the money to get into the home market, yet, in large part, they do not.  Why?

Again, there are as many reasons as potential buyers why someone does or does not do something, but there is one reason that seems to be a recurring theme.  Banks are not loaning mortgages.

Even though home prices have fallen dramatically in the last few years and interest rates are at historical lows, potential buyers are not able to obtain the mortgages needed to purchase homes.  People with pristine credit ratings are complaining that the banks are requiring them to “jump through hoops” to obtain a mortgage.  The normal credit score for a 30 year fixed mortgage historically was 650, now the banks are requiring a credit score of 700.  Even with the higher score, buyers are bewildered with the requirements banks are insisting on to approve a loan.

To make matters worse; when a potential buyer hears of interest rates in the vicinity of 4.1% and then talks to the mortgage lender and are told that they will  only qualify for an interest rate of say 6.5%, they feel ripped off.  Even though 6.5% is still a respectable interest rate, buyers are put off and walk away with bad feelings.

I encourage anyone who is thinking of buying real estate to talk with a REALTOR to get the facts of todays market.  If you do not know a mortgage broker who can help you get through the maze of information, your REALTOR will be able to help you with that.  Real estate is still a viable option in attaining wealth and this is a good market to buy a home.

As always, if I can help you with any of your real estate needs, please don’t hesitate to text or call me at 615 417-8182, or email me at RolandLow1@gmail.com.

Roland