Home Buying Process Real Estate Professionals

1. Home Buying Process Real Estate Professionals

2. Objectives • Identify Types of Real Estate Professionals • Define Pre-Qualification and Pre-Approval • Determine How To Find and Work With Real Estate Professionals • Discuss Buying Directly From a Home Owner

3. Real Estate Brokers • Licensed by the state to operate a real estate agency • Employs real estate agents • Arranges for the sale, purchase, lease or exchange of property for a fee

4. Real Estate Agents • Represents a broker in a real estate transaction. • Licensed by the state and has been trained to represent the buyer or seller in the sale of houses, buildings or land. • A Realtor is a real estate agent who is a member of the National Association of Realtors.

5. Types of Real Estate Agents • Listing Agents • Sellers’ Agents • Dual Agents • Buyers’ Agents

6. Types of Real Estate Agents Listing Agents • Work for the sellers of houses. • Name of contact on “For Sale” signs, real estate magazines, newspapers or on the Internet. • May or may not be involved in the actual sale of the house, but will receive a percentage of the sales commission.

7. Listing Agreement • Contract created between the seller and broker • Obligates the real estate agent to seek qualified buyers, report all purchase offers and relevant information to the seller and help negotiate the highest possible price for the property

8. Types of Real Estate Agents Sellers’ Agents • Obligated to keep the seller’s best interest in mind. • Has a financial interest to close a sale at the highest possible price since the commission is a percentage of the sale price.

9. Types of Real Estate Agents Sellers’ Agents vs. Listing Agents • Seller’s agent is the one who actually sells the house • May or may not be the listing agent for that property.

10. Types of Real Estate Agents Dual Agents • Represents both the seller and the buyer in the same transaction. • Legal in New Mexico • NOT recommended • No one represents the buyer’s best interest.

11. Types of Real Estate Agents Buyers’ Agents • Represents the interest of the buyer. • Legal obligation to represent the buyer’s best interest in obtaining the lowest sale price possible and best conditions in the purchase contract.

12. Buyer’s Agent • Compensation is set up based on effectively negotiating a lower sales price. Example: • Basic Fee: $200 • Incentive: $200 for every $1,000 negotiated • Listing Price: $125,000 • Negotiated Price: $110,000 • Compensation: $3,000 Seller must be informed that the buyer is contracted with an “Exclusive Buyer’s Agent.”

13. Pre-Qualification • An informal way a financial institution can tell you the amount you can borrow to finance or refinance a house. • A tentative decision based on information that has not yet been verified. • Employment • Income • Down payment information • Outstanding debts

14. Pre-Approval • A commitment from the lender to lend you the money. • Application and Records • Pay stubs for last 2-3 years • W-2 forms for last 2 years • Tax returns for last 2 years • Assets and long-term debts • Recent bank statements • Proof of additional income

15. Pre-Qualification by a Real Estate Professional Drawbacks • Agent may report personal financial information to the seller, making it difficult to negotiate a lower price. • Agent may show you only houses within the upper range of what you can afford.

16. Pre-Qualification by a Real Estate Professional Suggestions: • Provide the agent with a general price range • Keep personal financial information confidential • Pre-qualify yourself with a lender of choice

17. Working with aReal Estate Professional • Help you decide your needs and wants. • Show you affordable houses in your determined price range. • Give you copies of listing sheets that describe these houses. • Provide house prices and property tax information for houses in the neighborhood of interest.

18. Working with aReal Estate Professional • Help you determine how much a house is worth by giving you information about other houses that they have sold recently. • Provide information about the schools and community services in the area. • Buyer’s agents present the offer to the seller.

19. Working with aReal Estate Professional • Refer you to possible home inspectors, lenders, appraisers, and escrow agents, etc. • Explain all of the legal paperwork to you so that you understand what you are signing. An attorney may need to be involved.

20. Finding aReal Estate Professional • Recommendations • National Real Estate Companies Referral Services • State Real Estate Commission • Local Association of Realtors Chapter

21. Buying Directly From Owner FSBO (For Sale By Owner) • What are advantages and disadvantages of buying a house directly from the owner?

22. Buying Directly From Owner Disadvantages • Lack of Housing Expertise • FSBOs are often overpriced. • Real Estate Agents help determine the fair value of the house. • Real Estate Agents help evaluate the condition of the property.

23. Buying Directly From Owner To Determine the Fair Value: • Look on-line or call the local assessor’s office for the tax value of the property. • Find out how other comparable houses in the neighborhood are valued. • Ask a real estate professional to show you comparable houses on the market. • Look at realtor listing available on-line of houses with the same specifications, and compare prices.

24. Buying Directly From Owner Advantages • Buyers are not required to use the services of a real estate brokerage firm when purchasing a FSBO. • Real estate agents may discourage you from buying a FSBO house because they have less of chance of earning a commission.

25. Summary • Identified Types of Real Estate Professionals • Defined Pre-Qualification and Pre-Approval • Determined How To Find and Work With Real Estate Professionals • Discussed Buying Directly From a Home Owner