26 REASONS WHY USING A REALTOR® IS GOOD FOR HOMEBUYERS
First it is important to understand the the entire scope of the real estate transaction. Most homeowners choose to have their home marketed by a local real estate brokerage due to convenience, effectiveness, and security. A homeowner puts their home on the market usually knowing what they must get in order to be satisfied, and the supply and demand in an area dictates what a home will sell for. The homeowner does not determine the market value, the market does. That said, if the homeowner truly wants to sell their home, it is not the commission that is offered that that dominates the pricing decision, rather, it is what comparable homes in their market have sold for recently. Then you have the dynamic in today's housing market of the large number of homes that are be offered as a short sale, where the homeowner wants the lender to consider taking less for the home than is owed on the mortgage(s). In this case, the homeowner has little control over what the home will sell for because it is the bank that ultimately determines what price they will accept on the short sale, which the bank determines by obtaining appraisals and broker price opinions. In this event, the commission is not a concern to the homeowner and the bank automatically factors in the commission as a selling cost. The banks strongly discourage accepting a price that is below fair market value, otherwise, they risk devaluing the price of homes in a neighborhood. Again, market value dictates and commission has nothing to do with price setting.
Now that the dynamics of pricing are addressed, and to answer your question of what does a Realtor® do for you and why you should use a Realtor® vs. go it alone, below is a summary of everything a good Realtor® will do for their customer. Each transaction is different, and a good Realtor® will be prepared to assist you through the entire process and overcome obstacles that may arise...especially in the case of a short sale transaction.
1. Search local MLSs (some areas have multiple MLS systems) for homes that are available for sale that meet customer requirements. Set up customer searches of the most accurate and up-to-date information to send customer automated email notifications when new homes meeting their needs come on the market. *Many homes showing on 3rd party real estate websites are actually NOT available. Many short sales show up as active when they are under contract since the 3rd party websites treat active with contract homes as active.
2. Preview and provide research on area and homes in advance of showing if desired.
3. Schedule preview appointments to make efficient use of customers' availability.
4. Show homes, conduct additional research where necessary (a good Realtor® will know where to look for problems). There are many items that should be verified on a transaction before proceeding to the offer stage. Examples include: Are the homeowners' association dues current? Are their other loans and liens outside of the 1st mortgage? Is the seller going to turn on utilities for inspections? Is there a negotiator fee? Are there multiple offers? Have all permitting requirements been adhered to? Is there any record of past ground settlement?
5. Prepare comparable market analysis for homes of interest to verify value in order to formulate an offer amount.
6. Request seller's property disclosure (bank owned homes will not have a seller's property disclosure).
7. Obtain copy of association documents where applicable.
8. Prepare offer making recommendations, based on sale type, of what will ensure the best chance for success (many short sales and bank owned homes will have multiple offers).
9. Present offer.
10. If offer is not accepted, continue to search.
*During this time, the Realtor® will usually have recommendations for a lender if the customer is not already working with one. In today's market, it is customary that a pre-approval letter if financing required, or proof of funds if cash purchase, is submitted with all offers. The lender will prepare a closing cost worksheet or good faith estimate to provide customer with an estimate of costs and financial investment needed.
11. Review fully executed contract and collect and manage escrow deposit according to contract.
12. Provide copy of fully executed contract to customer, the lender, and the closing agent.
13. Provide a list of inspectors for various inspections to be done and schedule inspections. Customer may select whomever they choose. In this area, it is customary for inspections to occur within 10-15 days. On bank owned homes, 7 days for cash transactions and 10 days for financed transactions. Inspection period requirements will vary on a short sales which are sometimes required up front, and sometimes not required until seller has provided the short sale approval letter from the bank. *Expect a minimum of 90 days to close on short sale but be prepared it could take 6 months or more. Inspections the buyer(s) may elect to have include home (including roof certification and wind mitigation, chinese drywall, lead based paint where applicable), termite, well, septic, seawall, soil, etc.
14. Attend inspections. *I always attend inspections, and a good Realtor® will plan on attending these inspections, in my opinion.
15. Collect inspection reports and carefully review for major defects. Bank owned homes and short sale homes are all sold “AS IS” with right to inspect. If contract provides repair allowance, prepare a written request for repairs to be made that are allowable according to contract. If necessary, prepare a Release and Cancellation of contract and submit to escrow agent to obtain refund of escrow deposit. Verify the satisfactory completion of repairs.
16. Follow up with closing agent to be sure title search is clear, and if not, determine what is being done to resolve issues and what the time delays in closing will be, if any.
17. Follow up with lender on loan, including status of appraisal, and provide additional information to facilitate loan as required. Ensure loan commitment is obtained within time period specified in contract.
18. Provide customer with contacts to obtain homeowner's insurance. Flood insurance may be required by the lender on homes in certain flood zones.
19. Determine who the utility providers are and provide customer with contact information and instructions.
20. Obtain loan commitment letter.
21. Obtain title commitment and review for anything that is out of the ordinary.
22. Coordinate closing schedule with all parties.
23. Obtain HUD settlement statement which contains all the dollar amounts related to the transaction including the amount to bring to closing. Review for accuracy.
24. Schedule final walkthrough for the day before or day of closing.
25. Attend closing and hand over keys to a happy new homeowner!
26. After closing follow up. Relish the new friendship that has been created along the way.
Most Realtors® provide all the above services without any compensation until closing. This is the way the system was set up in the beginning. Most buyers appreciate that they do not have to pay a Realtor® for their services in advance, like they would have to pay a doctor or an attorney. It may be time to revisit this old system and determine a better way to compensate Realtors® for the several hours of service and application of years of experience they perform on behalf of customers. There is a saying that "Only a fool will hire themselves as an attorney". I have been in the real estate industry for 28 years, and in that 28 years I have gained a wealth of experience and I am firm believer that a good Realtor® is the most important choice a home buyer can make.
The HomeNet "YOU" Team would be honored to be of service to you in finding a great home at a great value, and to work on your behalf in making your home buying experience as risk free and stress free as possible.
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