What Realtors do for Buyers

With more than 80% of home buyers looking for homes themselves on the internet finding a home for a buyer can be less daunting. What I have found, however is that many of the homes they express an interest in turn out not to meet their criteria or that the list price of the home; that was listed in their price range, is a short sale home and likely will not sell for the low list price.

The buyer; who has prequalified for a mortgage loan, now has to set some type of criteria when looking for a home and specify the things they are looking for in a home that they can’t do without. Many times, on the surface, some of the homes they pick on the internet have an issue that they can’t live with. Then there are times when a listing agent needs to be called to clarify information in the listing before the buyer sees the home.

A Realtor checks every home that the buyer expresses and interest in and makes observations, does research and calls the listing agent if there are concerns or questions. The Realtor will check listings as well for available homes and share the information and listings with the buyer.

Once the searches are narrowed down the Realtor and buyer schedule an evening (or a day) and go looking at homes. With many homes to see, the Realtor provides the buyer with photos of the properties, a clipboard, and pen and note paper.

Sometimes the perfect home will be found on the first or second round but more often it can take several weeks or months to find a home. A buyer needs to keep in mind that there really is no such thing as a perfect home. No matter how great the home there is always something, big or little, that the buyer would change.

When showing homes a Realtor’s needs to be prepared for almost anything so here is a list of some of the things that you will likely find in an agents car:
* Bottled water * Cooler with ice * Snacks * Things to bribe youngsters * WD 40 * Sanitary gel * TP * Napkins or paper towels * Kleenex * Wet wipes * Flashlight * Measuring tape * Tool kit * Umbrella * First aid kit * Trash bag * Scissors * Pocket knife * Camera * Busy things for youngsters * All purpose cleaner * Room spray

The happy buyer(s) has found a home. The agent will do some research to see what a reasonable price for the home is. If the home is overpriced the Realtor will help the buyer negotiate a contract price based on like homes sold in the area and the condition of the home. If the home is underpriced it is likely a short sale and again the Realtor will help the buyer negotiate a contract price and wait, and wait and wait. Short Sale homes are not necessarily a bargain, which is another subject.

The Real Estate Purchase Contract (REPC) outlines specific requirements of the buyer and seller. The most significant requirements of the buyer are the earnest money deposit and the buyers due diligent dates. The earnest money deposit is in the form of certified funds and is held by the buyer’s broker. The funds are sending a message to the seller that you are earnest about purchasing their home. The earnest money is used at closing toward the purchase. The buyer’s due diligent includes meeting dates for obtaining financing, reviewing sellers disclosures, having the property appraised, having inspections done. Addendums to the REPC could be needed depending on the type of funding, whether or not the home is a short sale, whether or not repairs are requested, etc.

Once the contract is accepted by the seller (and approved by the bank if it’s a short sale), the Realtor goes to work protecting the buyer by working with the mortgage lender, the title company, a home warranty company, a home inspector and possibly lining up estimates of certain repairs.

The Realtor gets a copy of the settlement statement from the title company prior to going to the title company to close. The settlement statement is reviewed for excessive charges or incorrect amounts. The Realtor will attend the closing with you and your title officer. The selling and buying agents are contacted by the title company when the property is funded and recorded and the happy buyers move in.

REALTOR® Magazine-Daily News-6 Reasons Why Some Homes Sell

REALTOR® Magazine-Daily News-6 Reasons Why Some Homes Sell

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Quote of the Day

He had discovered a great law of human action, without knowing it - namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to obtain. - Mark Twain

House of Cards

This is a full length documentary on what happened in the mortgage industry.

8000 Reasons Get Your Butt In Gear: Deadline for First Time Homebuyer Tax Credit Looms

First time home buyers: Are you still at the computer, doing endless "research" on how to snag the $8000 TAX CREDIT for buying a house this year?

Does the November 30th deadline seem like a million years away as you think about fireworks (not turkey leftovers)?

First time home buyers: Get your butts in gear. NOW.

This is the wrong time to claim you only get motivated when a deadline looms.

This is the wrong time to tell everyone you are a "last minute kinda person" who pulls an all nighter when you have a term paper, and shops for Christmas presents on December 24th.

Here's why: Buying a house takes longer than you think. There are 8000 reasons you DO NOT want to miss this deadline.


Let's back things up. Do you think OTHER first time home buyers might wait until the last minute? Lenders could very likely experience an overwhelming amount of applications this fall.

With applications already taking 45 days, it could easily take 60 days to close your loan. Or more. Lenders are already ridicuously understaffed.

This means you will need to be in contract no later than the end of September.

If you have not already done so, you will need to accomplish this during the months of July, August and September:

1.Find a Mortgage person
2.Find a Real Estate Agent
3.Find a House
4.Make an Offer, negotiate terms. Find another house if first offer is rejected. Get new offer accepted.
5.Get financing completed and loan closed.

Some likely time lines and what to expect:

1. Apply for a mortgage. Provide the required documents and ask for a pre-approval. This will uncover any glitches standing in the way of your approval. This will make certain you have the right amount of funds in your account, or lined up as a gift. This will let you know your price range before you begin shopping for a house. This will let the Realtor know you have done your homework and are serious. ESTIMATED TIME REQUIRED: 1-2 weeks

2. Figure out where you want to live and find a Realtor. Look for a Realtor that knows the neighborhood where you would like to buy. Communicate openly and be on the same page if you are buying with another person. ESTIMATED TIME REQUIRED: 2-3 weeks

3. Shop for a house with your Realtor. ESTIMATED TIME LINE: 3-4 weeks.

4. Make an offer, negotiate terms, get in contract. Ask your Realtor about timing before making an offer on a short sale or a lender owned property. ESTIMATED TIME LINE: 1-2 weeks or more...depending on how many offers it will take to get a house. Market could become highly competitive as the deadline looms.

5. Secure financing with lender, and close the loan. Inspections and appraisal will occur during the time as well. ESTIMATED TIME LINE: 6 weeks to 8 weeks

Worst case estimated time line: 19 weeks.

Weeks until November 30th? 22 weeks, beginning next week.

Can you do this in less time? Yes you can.

Just like when you gave your Mom that lame ceramic unicorn for Christmas (purchased in a panic on Christmas Eve, thrown in an obviously used gift bag, then sneakily placed under the Christmas tree minutes before gift opening).

Written by Janet Guilbault, Mortgage Banker/Broker Based Out of the San Francisco Bay Area

FOR HOME SELLERS

Not necessarily in this order but before putting a home on the market a good agent will:

1. Order a preliminary title report to make sure there are no liens on the property.
2. Verify the information on the property tax records.
3. Find out why the seller wants to sell. Perhaps they don’t want to but feel they need to. An agent might be able to help the seller stay in the home.
4. Put together all the information about the property for listing and advertising.
5. Ask the seller to provide all disclosures.
6. Order a sellers home warranty.
7. Explain the agent’s fiduciary responsibility to the seller.
8. Get current market conditions for the area to recommend a price for the home.
9. Walk through the home noting all the pluses and minuses.
10. Make recommendations for the presentation of the home: yard work, cleaning, de-cluttering, removing unused items and staging.
11. Photograph the property for immediate distribution.
12. Schedule a professional photo and video tour company for professional marketing.
    Prepare flyer's, handouts and mailers.
13. Install, or have installed, a Realtor® sign.
14. Contact the Home Owner’s Association and gets a copy of the Covenants, Conditions and Restrictions (CC&R). Find out if there are any unpaid dues or special assessments, outstanding or pending. Find out the amount in the associations reserve account. List everything that is paid for from the association dues.
15. Put together a “Home Book” that includes a picture of the home, area and school information, city information with contacts, contact information for emergencies, utilities and area businesses. It has a place for warranties and notes from the seller to the potential buyer.

Now for the Marketing:

1. After the Realtor® sign is in place, make sure the flyer box is full and a sufficient supply is available for the seller.
2. Put the property listing on the Multiple Listing Service (MLS).
3. Be at the appointment for the professional photo/video tour company.
   Update the MLS with the pro photos.
4. Market the property on the Internet (numerous search engines and blogs) with a link to the property tour.
5. Determine whether or not an “open house” is appropriate.
6. There are several ways to have an open house. Everything from combining it with a garage sale to hosting a cocktail party.
7. Put the home on a Realtor® or Broker tour.
   Mail information to local businesses.
8. BE AVAILABLE

If the home is vacant:

1. Maintain the inside and outside of the home.
2. Arrange for a home sitter or someone to stage the home if necessary.
3. Make sure buyers, agents, inspectors and workers have access to necessary parts of the home.

Are Commissions Earned?

I recently read a blog about a realtor that was shopping for a TV. She liked the first one she saw at Sears, a salesperson (#1) answered a couple of questions and checked on inventory and discretely stepped aside. The buyer and her husband decided to continued shopping at other stores. She learned that the salesperson (#1) worked on commission and asked for his information before they left the store. They ended up going back to Sears to order the TV but the salesperson (#1) was not working. The salesperson (#2) on duty took #1's information and made the sale for #1 saying that #1 would have done the same for #2.

Who do you think should have been entitled to the commission; #1 or #2?

Even though #2 did the paperwork and ordered the TV to be delivered it was #1 who educated himself on the components of the TV and was able to answer any questions the couple might have had that helped them make a decision.

If you don't think Realtors earn their commission you might ask a few just what they do behind the scenes to make sure that they give their clients the best of what they have to offer.

I'll provide lists of what Realtors generally do in other posts.

Thinking of Making an Offer on a Short Sale?

Re-posted from Mark Shepherd; Facebook:

Thinking of Making an Offer on a Short Sale? What You Need to Know Are you looking to buy a new home? Are you thinking that now is a great time to find bargains? That's true, but it pays to know a little about the seller's situation before you make an offer. If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.You're a good candidate for a short-sale purchase if:

• You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.

• Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you're pre-approved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.

• You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property—or you need to be in your new home by a certain time—a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you're serious about purchasing a short-sale property, it's important for you to have expert assistance. Here are some people you want to work with:

• Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who's knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.

• A qualified real estate professional. * You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they've represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. All Multiple Listing Services permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”

• Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it's much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval.

If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.Some of the other risks faced by buyers of short-sale properties include:

• Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you’ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.

• Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you’ve already negotiated, which may not be agreeable to you.

• No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits. The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers. * Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

STUFF ABOUT THE $8,000 TAX CREDIT

The Internal Revenue Service (IRS) has posted a revised version of Form 5405, First-Time Homebuyer Credit to incorporate provisions from the American Recovery and Reinvestment Act. Qualifying taxpayers who buy a home this year before December 1 can claim up to $8,000 or $4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns.
To qualify for the first time home buyer credit, the residence must be purchased. A residence which is constructed by the taxpayer is treated as purchased on the date the taxpayer first occupies the residence.
A home purchased between January 1, 2009 and December 1, 2009 qualifies for the $8,000 tax credit that does not have to be repaid, rather than the $7,500 tax credit that has to be paid back. Qualified buyers that filed returns claiming the $7,500 credit can file an amended return to correct the error and claim the $8,000 credit instead. Why they would end it on December 1, 2009 and not January 1, 2010 is beyond me.
An amended 2008 return can be filed to claim the credit or the buyers can wait and file the Form 5405 with their 2009 return.
A credit can’t be claimed in anticipation of a purchase that has yet to happen. The purchase has to be finalized. IRS news release 2009-27; First-Time Homebuyers Have Several Options to Maximize New Tax Credit.
There is no requirement to pay back the credit for a principal residence purchased in 2009. There is however an obligation to repay the credit on a home purchased in 2009 if it stops being the principal residence within 36 months from the date of purchase. The full amount of the credit becomes due on the return for the year the home stopped being the principal residence. The full amount of the credit is reflected as additional tax on that year's tax return.
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns.
Any home purchased as the taxpayer’s principal residence and located in the United States qualifies for the credit.
Taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit unless that home was outside of the United States. Owned includes homes that were received as a gift or inheritance. Vacation homes and rental property do not qualify for this credit. The taxpayer can rent out a room in the residence and qualify for the credit.
The credit is phased out based on modified adjusted gross income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. IRS Notice 2009-12 provides guidance for allocating the first-time homebuyer credit between taxpayers who are not married. If two single people purchase a home together and only on is considered a first time home buyer, that person is eligible to take their allocable share of the credit.
There are no minimum income criteria. Someone with no taxable income who qualifies as a first-time homebuyer can file a return for the sole propose of claiming the credit.
A residence that is converted to a rental is generally no longer considered a primary residence after three years. If the property owner did not live in the home and did not own the home they were living in for the last three years, they would be considered a first time home buyer.
There is no requirement to claim the credit.
YOU CAN NOT TAKE THE CREDIT IF:
Your income exceeds the phase-out range.
You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild (lineal descendent).
You do not use the home as your principal residence.
You sell your home before the end of the year.
You are a nonresident alien.
You owned a principal residence at any time during the three years prior to the date of purchase of your new home.
The amount of the credit that is actually given is going to be net of what you owe. If, in anticipation of buying a home, the taxpayer decreases the amount withheld by his or her employer, the federal income tax withheld would then normally leave the taxpayer with a tax due and the credit will be reduced. An example is that if the credit is $8,000 and the tax due is $2,000 the refund would be $6,000. If the taxpayer overpaid their income tax their refund would be the amount of the overpayment plus the credit.
Though not stated anywhere that I can find, it is likely that if the taxpayer has outstanding debt such as IRS, student loans or child support the credit would be applied to those debts first.
Before anyone applies for a bridge loan of the $8,000 to be applied toward closing cost or to buy down interest they better be sure they can pay it back if IRS doesn’t send it to them.
AS ALWAYS – CHECK WITH YOUR CPA OR ATTORNEY