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 (name of organization), 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.
WHAT CONTINGENCIES SHOULD INCLUDE IN MY OFFER?
Although this question seems straight forward, it is
not. Each offer to purchase property and each buyer and their
individual circumstances are unique. But having said that, if you need
to obtain a mortgage or some other type of financing, you would want to
make sure your offer is subject to you doing that within a reasonable
time.
If you have concerns about the structure or
condition of the property, you would want to make the offer contingent
on having a home inspection, or engineers report, on the property and
so on.
A word of caution, an offer to purchase is a
legally binding agreement and should be completed only by someone who
has the experience to protect your interest.
HOW SHOULD I PREPARE TO BUY IN A COMPETITIVE MARKET?
A competitive market, or hot market, is usually defined
as one where there is a relative shortage of marketable properties
coupled with an increase in demand for those properties. This would
describe the Grande Prairie market at this time.
There are three things you need to do in order to
buy successfully in such a market. First, you need to make sure you are
up to speed with what your buying dollar will purchase. In other words,
you need to be familiar with the Fair Market value for the type of
property you want in the area that you are looking in, so you know a
good buy when you see it. Secondly, you need to have all the financing
preapprovals in place. Thirdly, you need to have a quality, experienced
Realtor on your team to help educate you to the market, find the right
property and position your offer to purchase for success. In this type
of market it is not unusual to have multiple offers on the same
property brought in at the same time.
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.
USING A REALTOR - YOU BE THE JUDGE!
Real Estate transactions involve one of the biggest
financial investments most people experience in their lifetime.
Transactions today usually exceed $100,000. If you had a $100,000
income tax problem, would you attempt to deal with it without the help
of a CPA? If you had a $100,000 legal question, would you deal with it
without the help of an attorney? Considering the small upside cost and
the large downside risk, it would be foolish to consider a deal in real
real estate without the professional assistance of a Realtor!
WHAT IS A SELLER DISCLOSURE?
A Seller Disclosure, or Seller Property Disclosure
Statement, is a form that is completed by the Seller of a property that
discloses the condition of the property for sale and other information
known by the seller. The form itself is comprised of approximately 36
questions dealing with everything from Municipal compliance issues to
water problems. These disclosure forms are a mandatory requirement in
some jurisdictions, such as British Columbia, but in Alberta they are
voluntary unless specifically requested for by the purchaser.
HOW CAN I SELL QUICKLY FOR THE HIGEST POSSIBLE PRICE?
The best way to insure a quick sale at the highest
possible price, and with the fewest problems, is to list the property
right the first time. By that I mean priced competitively relative to
the competition in the market place and the condition of the property
itself.
As Realtors, we use what is called a Market
Evaluation to help the Seller determine the right price to ask. A
Market Evaluation, if done properly, takes into account comparable
homes for sale, home that have recently sold that would be comparable
to the subject property, homes that have not sold, or have expired, and
of course current market conditions. Pricing is just one part of the
sales process. The actual marketing plan provided by the Realtor and
his/her expertise and experience are paramount to the Seller achieving
their goals.
WHAT IS MEANT BY THE TERM DUAL AGENT?
A Dual Agent, or Agency, occurs when one brokerage or
Realtor represents both the Buyer and the Seller with respect to the
purchase of a home or property. There are strict rules that must be
followed in such circumstances, and it is important that all parties to
the transaction understand and have explained clearly to them the
implications of this type of Agency.
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 Realtor 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 Realtor 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.
USING A REALTOR - YOU BE THE JUDGE!
Real Estate transactions involve one of the biggest
financial investments most people experience in their lifetime.
Transactions today usually exceed $100,000. If you had a $100,000
income tax problem, would you attempt to deal with it without the help
of a CPA? If you had a $100,000 legal question, would you deal with it
without the help of an attorney? Considering the small upside cost and
the large downside risk, it would be foolish to consider a deal in real
real estate without the professional assistance of a Realtor!
