Getting Started In Real Estate - REDUNDANT
How much house can I afford?
The amount of home that you can afford is a direct function of a couple of things: Credit, income and savings. Credit being the most important. But I would recommend anybody find a good lender, meet with them, let the lender pre-qualify you. The term is to get pre-qualified. Let the lender tell you what home you should be looking for for two very good reasons. You don't want to under-buy, meaning, you'll still be getting killed on taxes. You don't want to fall in love with a comfort zone just beyond your comfort zone because then you'll be disappointed and heart-broken
How important is my income when qualifying for a home purchase?
When it comes to qualifying for a home purchase, income is not as important as credit is, and that comes as a surprise to many buyers. But the reality is that this is what an institution (a financial institution) is looking at, your creditworthiness; as your past history predicts your future potentiality of being a good borrower.
How much will a new home cost me after taxes?
When getting started in real estate, taxes are not something you get past, taxes kind of stay with you. In my state for example, your property taxes are 1.25% of your purchase price annually. Throughout the country, taxes could vary by state or county, but it is something that's incorporated into your monthly payment.
Do I need a realtor in order to buy a house?
When getting started in real estate, there is no law that says you need a realtor to purchase a home. However, to seek out the guidance and counsel of a professional realtor that has dedicated their life to learning this business in and out probably would be a good use of your time. Now, getting the right fit is a different story, because obviously like in any business, realtors come in any conceivable variety with personality, so, if you can find someone you sync up with, I would highly recommend using them. Of course I'm biased with realtors in all this, but overall I would highly recommend seeking out the guidance of a good realtor.
How does a realtor get paid?
The realtors are paid from the seller. The seller agrees, early on when they'r listing their home, to part with a certain percentage of the home's value, the sale price. That is, in my state, anywhere from 5-6%, although it could vary around the country. That 5% or 6% is then divided up, usually 50-50, half going to the listing agent and the other half going to the selling agent. It is possible that that person can be the same person, but you dont' know that going in.
How do I know whether my realtor is doing a good job?
When getting started in real estate, I always rely on instinct when knowing if my realtor is doing a good job; in other words, you will know if you feel like you're being well serviced. Most consumers have a high expectation for the opportunity they are giving a realtor, or anyone for that matter; and at the end of the day you're not feeling like you're in the loop, like you're up to speed, like the agent is adding value, you probably will know if your realtor is doing a good job sooner rather than later.
What is a "listing agreement"?
With regards to getting started in real estate, a listing contract or as I prefer to call it, a “listing agreement” is basically the agreement between the seller and the agent as to how long they're going to be working together, what compensation will be going to the brokerage fee, and any other specifics. For example, whether or not a lock box will be involved, whether or not a yard sign will be involved, anything that you wouldn't want incorporated into your agreement between yourself as a seller and an agent would be in a listing agreement.
What is an "exclusive right to sell" agreement?
An "exclusive right to sell" agreement is the agreement between the listing agent and the seller. It means that the agent is the exclusive representative; no one else is representing the seller but that individual or that brokerage firm. An "exclusive right to sell" incorporates all the term of the listing, the amount of brokerage, the listing price, whether or not a lockbox will be used, whether or not a yard sign will be used, and any other pertinent information that both sides agree to.
Can I "fire" my realtor?
With regards to getting started in real estate, firing your realtor depends on the listing side; you do have an agreement which has a beginning and an end. Now, unless something is written in there like some sort of a clause that the seller may fire the agent at any time, the seller might have to work with that agent up until the agreed upon time. Now, on the other side of the coin is the buyer; buyers rarely sign any kind of an agreement with a selling agent, so up until the point where they are in escrow, if a buyer working with an agent is not happy with that agent, the buyer will most likely have the ability to fire the realtor and part ways.
What is the "Multiple Listing Service" (MLS)?
When getting started in real estate, the Multiple Listing Services (MLS) are located throughout the country and are maintained by your local Board of Realtors. In other words, a realtor is a member of a trade organization. These trade organizations have local chapters called Board of Realtors, these Board of Realtors maintain a database which is the Multiple Listing Service. Now, you as a realtor must be a realtor, not a licensed agent, you must be a member of the trade association and must adhere to a strict code of ethics standards and rules for the Multiple Listing Service. At this point you are able to input, access, and work with the MLS. However, ultimately, the MLS is the bloodline of real estate, MLS is the inventory, and it's the news what is sold, what's in escrow, so forth and so on.
What does "location, location, location" really mean?
With regards to “location, location, location”, when it comes to real estate, houses may come and go, neighborhoods may change; but the only thing that is finite and limited is the ground underneath us, the land. As the saying goes, "They aren't making any more of it”. So, if you have a good location, it will be a good location for a good long time. This is the cliché, "location, location, location".
Do I need to check with local police about the neighborhood history?
I would absolutely encourage any buyer to go check with any local municipality to find out whatever they are curious about about the area, for a host of reasons. First of all, I want everyone to have a happy and healthy experience. I want them to just live on and just enjoy the neighborhood. I want them to have wonderful thoughts and memories of me putting them into this property. I would take it a step further. I would talk to neighbors. I am instrumental, often: I've knocked on many a door and talked to people about neighborhoods. So yes, I am a big fan of diligence when it comes to finding out about a local community.
What is the difference between a "buyer's market" and a "seller's market"?
The difference between a buyers market and a sellers market is all about supply and demand. All about when a market is red hot, and buyers have low interest rates, and they have reason to believe prices are on the rise. This then becomes a seller's market because the buyers have the incentive to get things done. When that is turned around, for example, if there is a negative consumer confidence, if there is some scary news on CNN headline news that's going to drive buyers back out of the market, then suddenly what you have is a buyer's market because the buyers just aren't in the mood to buy, and as a seller, you're looking to work with anybody hoping to produce a reasonable offer.
What are "comps" or "comparables"?
When getting started in real estate, “comps” and "comparables" are terms that we use almost everyday in valuation. Comps and comparable basically mean that this is the home I'm interested in, but how do I know what I should be offering? Well, let's find at least three other real estate properties that are incredibly similar to it which have sold in the very recent past. This will help us determine what the market will bear in terms of value for the real estate.
How long will it take to find a new home?
This is contingent on many, many different factors. It's a function of seasonality, of inventory, or personal preference. I've worked with every conceivable type of buyer. Some are flexible and some are very rigid. So, I wish I had a universal answer to that question, but it's more complicated than you could ever imagine.
What should I look for during an open house or showing?
There are many things you should be looking for during an open house or showing, but just in a brief list: Probably you would like to know how long has the property been on the market, what is their motivation for selling, and how does it compare in terms of value to the other homes that are on the market competing against it.
How do I decide which home is the best choice for me?
When getting started in real estate, I think when deciding which home is the best home for you, it all starts with determining what your price comfort zone is. Again, get to the lender, find out what price range you should be looking at, and then the answers usually present themselves. Some people like vintage cottages and don't care about a three to five year deferred maintenance on the property. Other people just want brand new construction and they'd rather end up on maybe a condominium, three on a lot, two on a lot, something like that.