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When you're ready to think about buying or selling your property,
you need to ask yourself the following questions:
Do you have the time, energy, sources of information, and contacts
to do the job yourself? If you were one of the 'do-it-yourself'
people, would the results be as good or better than they would be
if you had professional assistance? Would it have gone smoother?
Would it have given you more personal time? Would you have purchased
for less, or sold for more, if a real estate agent was involved?
Read the following information and learn how a real estate agent
can help you understand everything you need to know about a real
estate transaction.
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
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
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
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
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
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
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
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 marketplace 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
The next step is a marketing plan. Often, your agent can recommend
repairs or cosmetic work that will significantly enhance the salability
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
and family, and personal contacts.
Security
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
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
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?
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.
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