GENERAL QUESTIONS
What is the difference between a real estate agent and a real estate broker?
What is earnest money?
Who pays the typical fees in a real estate transaction?
BUYER QUESTIONS
I want to buy a house. It is listed with a real estate agent. Can I negotiate a lower fee if I represent myself or do I need my own agent?
How many homes should I view prior to buying?
Should I get a home inspection?
SELLER QUESTIONS
What is the best way to determine the price that I should list my home for?
What should I do to my house to get it ready to sell?
Why not just go with one of those discount real estate brokers?
What is the difference between a real estate agent and a real estate broker?
Most states (including Georgia) require real estate sales professionals to be licensed by the state so that they can control education and experience requirements and have a central authority to resolve consumer problems.
Brokers are generally required to have more education and experience than real estate salespersons or agents.
The person you normally deal with is a real estate agent or salesperson. The salesperson is licensed by the state, but must work for a broker. All listings are placed in the broker's “possession” (the company), not the salesperson's. A broker can deal directly with home buyers and sellers, or can have a staff of salespersons or agents working for him or her (their own company). In some instances, like mine for example; a person can have an Associate Broker’s license. This means that the person has met all of the state’s requirements to have his/her own real estate company but chooses no to do so.
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What is earnest money?
The book definition of earnest money is: "a sum of money given to bind an agreement, such as the sale of real estate, the advance of a loan or some other transaction requiring a deposit. Earnest money is forfeited by the donor if he or she fails to carry out the terms of the contract or agreement."
In other words, earnest money is money applied "up front" from a buyer to show a seller the buyer is serious about the purchase. The money is deposited in an escrow account and held by the Broker of which all parties agree hold the earnest monies. The earnest money is applied toward the buyer's loan at closing. Earnest money is NOT the down payment. In today’s Georgia Association of Realtor’s contract, which we almost always use, you have to follow strict time lines. If you fail to follow these time lines, you risk the loss of your earnest money. One more VERY IMPORTANT reason to have an agent represent you.
I am frequently asked, "How much earnest money is enough?” This is a hard question to answer. Earnest money is not required, though the vast majority of sellers expect it, and an offer without any earnest money will usually not be taken seriously. Earnest money is exactly what it sounds like. How earnest are you about purchasing this home?
There is no "standard amount" for earnest money. The bottom line is the amount required is whatever it takes to convince the seller you're serious about buying their house.
Earnest money is released to the seller if the buyer defaults on the contract after it's accepted. If the contract fails due to no fault of the buyer, then earnest money is typically returned in full to the buyer. The specifics are thoroughly explained in the contract. Make sure that your agent goes over this in great detail with you. The last thing you want to do is lose a few thousand dollars due to lack of attention to detail.
Earnest money, like virtually any part of a real estate transaction, is a negotiable item.
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Who pays the typical fees in a real estate transaction?
Buyer usually pays for:
Appraisal
Credit Report
Discount Points
Escrow Payments
Homeowner’s Association Fees
Homeowner’s Insurance
Buyer’s portion of pro-rated interest
Mortgage insurance (if required by lender)
Origination Fees
Recording Fees
Title Insurance
Any fees associated with FHA or VA loans
Seller usually pays for:
Seller’s portion of pro-rated interest
Pest Inspection
Real Estate Commission
Transfer Tax
DON’T FORGET-WHO PAYS CLOSING COST IS NEGOTIABLE!
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I want to buy a house. It is listed with a real estate agent. Can I negotiate a lower fee if I represent myself or do I need my own agent?
A lot of buyers think that if they call the agent on the sign and work with that agent that they can somehow save money (probably by saving half of the commission and taking it off of the sales price). This doesn’t happen. The commission is agreed upon between the seller and the listing agent when the property is listed. The agent on the sign get’s the entire commission if you deal directly with him/her.
BUYER’S REPRESENTATION IS FREE!!! The seller pays the real estate commission, not the buyer, and real estate commission is already determined and stated in the listing contract. It doesn't cost you anything extra to have your own agent represent you because the seller is already paying for it. The only time that I can think that a buyer would have to pay his agent a commission is if the buyer chose to purchase a “FSBO” and the seller would not pay the buyer’s agent a commission. Most of the time, even in this case, the seller would pay a commission to the buyer’s agent for bringing a buyer and facilitating the sale of the property.
When a seller signs the listing agreement to list the property, the agent he signs with promises to represent the seller’s best interest. So, if you go into an agreement to purchase a home and you’ve called the agent on the sign to do so, know that you are NOT BEING REPRESENTED. You need someone on your side; someone with your best interests in mind. How could the listing agent possibly try to get you the lowest price on a property while, at the same time trying to get his seller the highest price?
This is what is called “Buyer’s Agency” or “Buyer’s Agent”.
No matter how you cut it, the buyer still walk away with the house and the seller still walks away with approximately 94% of the purchase price.
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How many homes should I view prior to buying?
This is an interesting question and one that is also difficult to answer...
The short answer is "as many as it takes to find your home".
The long answer is complicated and will likely change depending on your circumstances.
Buying a home will most likely be the largest investment you ever make. Because of this, it is important to make sure you find a home that meets your current and future needs.
I tell my buyers to list home prioritize features into three categories:
1) Must Haves -- things you simply have to have in your new home.
2) Nice to Haves -- things that you would like but could do without
3) Can't Haves -- things you simply DO NOT WANT in a home or neighborhood.
Armed with a detailed list of these prioritized items, a good agent can include and exclude many homes from your search. As more homes are visited, it becomes easier (most of the time) to refine the homes that may work for you. Be prepared, a lot of the time, buyers actually change their priorities as the process moves along. You will find that something that you though you had to have ends up not being so important in the grand scheme of things.
Everyone is different. I’ve helped people who bought a home after looking at 3 houses and have had other people I've shown over 30 homes to. It is important not to get into "analysis paralysis" and second-guess everything. It's also important not to pass up on a home you love "just in case" something better is out there. But by taking a “common sense” approach to looking at homes, keeping your priorities in order and working closely with your agent, you can find the home that is perfect for you and your family.
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Should I get a home inspection?
Absolutely.
Home inspections are not required before purchase. However, I always recommend that every home have a professional home inspection during the buyer due diligence period. The cost varies by inspector, but it's probably the best $300 - $600 you'll ever spend.
A good home inspector will be able to tell you many things about the home you are purchasing. You'll get maintenance tips, you'll get peace of mind, and you’ll get a great sense of the condition of the home. A good inspector can find structural problems, ensure the wiring and plumbing "meet code" and evaluate the condition of all the appliances included in the sale. They will check out the home from top to bottom and you'll walk away with a detailed report on just about everything in your home.
Getting a professional home inspection is one of the most important steps in the purchase of a home, whether it was built 100 years ago or yesterday.
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What is the best way to set a price on my home?
There are two main ways to establish a home listing price:
1) Get an appraisal: A real property appraiser will give you an estimated market price for about $350. I am an appraiser and I offer this on my menu of services to my seller clients with a couple of stipulations.
2) Get a "CMA" (Comparative Market Analysis): A CMA can be provided by any real estate agent. The agent will look at recent sales that are comparable to your home and determine the market price for your home. A comparable is a house similar in size, age and condition that is physically located near your home and has sold recently (preferably within the past six months). Comparable sales are the best indicator for what your house could sell for. The advantage of a CMA over an appraisal is cost--a CMA is free ~ the appraisal could be free if you work with me! Appraisals are much more detailed and appraiser’s are licensed and trained to arrive at a more precise market value.
Ultimately the market decides what your home is worth. The true definition of "market price" is what an able and ready buyer is willing to pay..
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What should I do to my house to get it ready to sell?
This is something that should be seriously considered before listing.
Your home should be removed of ALL clutter. It should be clean. You should make sure that the walls are in good condition (fairly good paint) and that the carpet is clean. Also, always remember, first impressions are priceless. Make sure that your lawn is inviting and that your grass is always manicured.
These are just a few standard suggestions. Each home is unique and should be discussed at your listing appointment with the agent that you’re interviewing.
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Why not just go with one of those discount real estate brokers?
BECAUSE YOU GET WHAT YOU PAY FOR!!! I could go on and on but that is the absolute bottom line!
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If you have a particular question, please go to my blog, post it and I’ll get you an answer as soon as I can!