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When Should Buyers Engage in a Direct, Cash Sale?

There’s a lot of hype about conducting your real estate transaction without using a local, licensed agent to help you.  Yes, you can buy a house or vacant land all on your own, but experience shows that you usually end up paying more and having unintended challenges along the way.

A licensed REALTOR® is responsible for making sure that you get the outcome you are expecting.  That’s not to say that it will always be the outcome you expected from the beginning, but it is to say that you should understand the consequences of the decisions you make throughout the process.

All too often, folks tell me about their transaction after the fact and lament the fact that they “didn’t know what they didn’t know.”  I got into a conversation with Jim and Gloria when I was on vacation recently.  I was strolling around the RV park in which I was staying for the evening when we started chatting as I was passing their site.  They shared with me that they had been living there for the past three months because the people they were buying their home from kept delaying completing the sale because.  Jim and Gloria were feeling pretty frazzled by that point because they had just found out that they were delayed again for at least 10 more days.

We talked about their situation and I helped them draft an amendment to their contract that would put some consequences on the seller for failure to complete the transaction.  I also explained that if they refused to sign the amendment, Jim & Gloria could cancel the sale and get their money back from escrow but they would still be out the cost of inspections.

Just the 15 minutes we spent together made them feel much more relieved! They told me at the beginning of the conversation that they would never try to buy a house on their own again and were telling everyone they ran into that they needed to hire a REALTOR®!

My purpose is to make sure that every client is clear about their options in every step of the transaction and is able to make their choices each step with full understanding of the consequences and possible results.

If that’s the kind of experience you want, call me at 661-375-7325 and let’s talk about what’s important to you about moving.

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How Much Shopping for a Mortgage Should You Do?

Does getting a mortgage feel like rolling the dice?

How much shopping around for a mortgage should you do?  The short answer is enough to feel comfortable, but that doesn’t really address the question.

The reason for shopping for anything is to satisfy yourself that you got a good deal.  When it comes to buying your home, especially true for first time buyers, there is a lot of integrated complexity and the mortgage process is often overlooked.  Because I’m not a lender, I’m not going to tell you about all the intricacies from  that perspective but  instead from the purchase and real estate consultant perspective.

As your real estate consultant, I focus on helping you get clarity around what’s really important to you when it comes to buying your new home.  And yes, part of that is getting the best possible deal both on the purchase price and terms and for the mortgage but if what’s truly important to you about having your new home is being in a place where you feel comfortable, that feels like “home” to you, then sometimes a compromise in the financial aspect is what’s needed.

Shopping for a mortgage, especially going the online route for a home purchase, may offer what seems like the best deal.   You may save money by shopping around but does that help if you ultimately don’t get the house of your dreams?  Online mortgage companies are more concerned about high volume than they are about personal service.   Often times,  your mortgage may take  longer than it should to process causing you to fail to meet your contractual deadline for mortgage approval.

Another common obstacle in the mortgage process is the Appraisal.  Although the lender orders the appraisal, they do it through an Appraisal Management Company who then puts it out to bid for Appraisers.  It is quite possible to end up with an out of area Appraiser that does not have full access to local comparable properties that are required to accurately appraise the property you are purchasing.  This means that your Appraisal could come in below the purchase price you have contractually agreed to and require you to bring in additional cash to close the gap between the appraised value and purchase price or potentially to lose the home of your dreams if you are unable to do that.

It’s also important to be aware that there are two contractual requirements regarding the Appraisal, one is value but the other is time.  If you fail to meet your contractual obligation for either of these requirements, you are also at risk of losing your dream home.

By this time in the process, you have already spent about $1,000 on inspections and Appraisal of your own hard-earned money that you will simply lose if you are unable to complete the transaction.

Generally your best bet when it comes to getting financing for your new home is to talk to your qualified professional Real Estate Consultant first, and get their recommendations for best choice of lenders.  Using a lender that your Consultant has confidence in based on experience also may help to secure your purchase offer over that of another when your Consultant is able to make a good case for your lender to the Seller’s agent.

It’s not just about getting the cheapest mortgage.  It’s really all about getting a complete package that is affordable financially and gets you moved into your new home.

If this raises more questions than answers for you or if you are thinking about moving and want to talk more about that, feel comfortable calling 661.375.7325 to get all your questions answered.

Your friend in real estate,

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Is it a Seller’s Market or a Buyer’s Market?

A question most often asked by someone thinking about buying or selling a home is, “Is it a buyer’s market or a seller’s market?”  It’s a bit surprising how often real estate professionals don’t know the definitive answer to that question!

Experience shows that 6 months of available housing inventory is considered to be a balanced market.  Less than that favors sellers and more than that favors buyers.  In the greater Tehachapi area, you can’t just consider the entire region because the absorption rate varies significantly from one community to another.

The real answer though is. “it depends.”  It depends on a number of different factors beyond the actual calculation of available inventory and probability that a particular house will sell.  It depends on things like the popularity of a particular area, what’s going on politically in that community, whether or not the community is showing up in local media in a positive or negative way.

The truth is that even if the numbers show that it is the type of market that you would prefer the reality may be different.  Want to know more?  Call 661-375-7325 today and let’s talk about the specific neighborhood you are interested in moving from (is it a seller’s market?) or moving to (is it a buyer’s market)?

 

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Should You Pay A Record Retention Fee When Buying or Selling a Home?

Whirlpool 3159698458_ec3c3f3c23Most real estate agents work on a commission basis.  That means that whether you are buying a home or selling your house, the agent representing you is most often paid as a percentage of the purchase price.

An excellent agent is worth every penny they get paid.  And sometimes, worth much more than the commission earned on a particular transaction.  For example, right now I’m involved in what should have been a simple, slam-dunk transaction that has dragged on for 10 weeks and involved much more time effort and energy than any of the multiple transactions I’ve already closed in the same time period.

But I digress.

The point of this article is to make you aware of transaction-related fees that may appear on your closing statement and are often presented by a real estate agent as a “requirement.”  We’re talking about “transaction,” “processing,” or “records retention” fees that are disguised as required  in order to close your transaction.  I have heard that these fees can vary in amount anywhere from $100 – $1000.

These fees bother me for several reasons.  Foremost, is that those types of fees are simply the cost of doing business. The law requires that certain documents are included in a real estate transaction (transaction fee to make sure all documents are property executed).  Processing fees may be interchangeable with transaction fees but sometimes are charged by a third-party (for example in the dwindling popularity of short sales).  The law also requires that real estate brokers retain their records for a specific period of time (records retention fee, anyone?).

Keep in mind that each real estate brokerage sets their own business policies. The brokerage may indeed require these fees for their own transactions.  The good news is that there is no legal requirement to include these extra fees in your transaction.  In fact, paying those fees is a bit like watching extra money flushed down the drain.  So, what can you do about it?

If you are already in an active escrow transaction, and you love your agent, the best thing to do is have a discussion about the fees and negotiate those fees to satisfy yourself.

If you are just getting started with buying or selling a home, make sure that one of the questions you ask the agents you are interviewing is whether or not they charge any fees in addition to the commission.

It’s important to interview the agent you plan to work with in order to make sure you are a good match.  One of my favorite questions to ask is “do you discount your commission?”  Curious about the ramifications of the agent’s answer?  Call, text or email and I’ll be happy to discuss it with you.   If you would like a list of great questions to ask when interviewing, please let me know.  I’ll be happy to share that with you as well.

Is there ever a time that you might want to pay the a la carte fees?  I suppose if you decide to hire a discount broker and the addition of the fees doesn’t get the cost above what you would have been paying you could consider it.

One caveat to keep in mind is that “you get what you pay for.”  In the case of these extra fees, you are paying for what you are already getting.

Personally, I believe that if an agent is going to work on a contingency basis, as I do with the majority of my clients, than the commission should cover all the costs.  There are certain cases when I also will work on an a la carte basis, but then the client is fully informed of each of the fees he or she may encounter for my services.

This is one in a series of articles designed to help the consumer navigate the world of a real estate transaction.  Real estate is local, and working with someone who knows the area and the specific issues that may affect your transaction is important.

Sally Sig extra smallPlease share your thoughts or questions by commenting below, emailing me at Blog@93561Home.com or phone / text at 661.375.REAL (7325)

 

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