7 Reasons to Work With a Realtor®
REALTORS® aren’t just agents. They’re professional members of the National Association of REALTORS® and subscribe to its strict code of ethics. This is the REALTOR® difference for home buyers:
An expert guide.
Objective information and opinions.
Expanded search power.
Your rock during emotional moments.
The term “agency” is used in real estate to help determine what legal responsibilities your real estate professional owes to you and other parties in the transaction.
The buyer's representative (also known as a buyer’s agent) is hired by prospective buyers and works in the buyer's best interest throughout the transaction. The buyer can pay the agent directly through a negotiated fee, or the buyer's rep may be paid by the seller or through a commission split with the seller’s agent.
The seller's representative (also known as a listing agent or seller's agent) is hired by and represents the seller. All fiduciary duties are owed to the seller, meaning this person’s job is to get the best price and terms for the seller. The agency relationship usually is created by a signed listing contract.
A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. The subagent works with the buyer to show the property but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer customer can expect to be treated honestly by the subagent.
A disclosed dual agent represents both the buyer and the seller in the same real estate transaction. In such relationships, dual agents owe limited fiduciary duties to both buyer and seller clients. Because of the potential for conflicts of interest in a dual-agency relationship, all parties must give their informed consent. Disclosed dual agency is legal in most states, but often requires written consent from all parties.
Designated agents (also called appointed agents) are chosen by a managing broker to act as an exclusive agent of the seller or buyer. This allows the brokerage to avoid problems arising from dual-agency relationships for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties.
A transaction broker (sometimes referred to as a facilitator) is permitted in states where nonagency relationships are allowed. These relationships vary considerably from state to state. Generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.
Know that there’s no “right” time to buy.
Don’t ask for too many opinions.
Accept that no house is ever perfect.
Don’t try to be a killer negotiator.
Remember your home doesn’t exist in a vacuum.
Choose a home first because you love it; then think about appreciation.
Talk to mortgage brokers.
Be ready to move.
Find a trusted partner.
Make a good offer.
Factor maintenance and repair costs into your buying budget.
Develop your home/neighborhood wish list.
Credit scores range between 200 and 850, with scores above 620 considered desirable for obtaining a mortgage.
The following factors affect your score:
Your payment history.
How much you owe and where.
The length of your credit history.
How much new credit you have.
The types of credit you use.
Credit scores play a big role in determining whether you’ll qualify for a loan and what your loan terms will be.
Keep your credit score high by doing the following:
Check for errors in your credit report.
Pay down credit card bills.
Don’t charge your credit cards to the max.
Wait 12 months after credit difficulties to apply for a mortgage.
Don’t order items for your new home on credit.
Don’t open new credit card accounts.
Shop for mortgage rates all at once.
Avoid finance companies.
Develop a budget.
Increase your income.
Save for a down payment.
Keep your job.
Establish a good credit history.
Decide what kind of mortgage you can afford.
Seek down payment help.
Mortgages are generally available at 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, shorter terms mean you pay less interest over the life of the loan.
Fixed vs. adjustable interest rates.
A fixed rate allows you to lock in a low interest rate as long as you hold the mortgage and, in general, is a good choice if interest rates are low. An adjustable-rate mortgage (ARM) usually offers a lower rate that will rise as market rates increase. ARMs usually have a limit as to how much and how frequently the interest rate can be increased. These types of mortgages are a good choice when fixed interest rates are high or if you expect your income to grow significantly in the coming years.
Also sometimes called “exotic,” these mortgage types were common in the run-up to the housing crisis, and often featured loans with low initial payments that increase over time.
This is a form of non-traditional financing where your interest rate will be very low for a short period of time—often three to seven years. Payments usually only cover interest so the principal owed is not reduced. This type of loan may be a good choice if you think you will sell your home at a large profit in a few years.
These loans are sponsored by agencies such as the Federal Housing Administration or the Department of Veterans Affairs. They offer special terms, including reduced interest rates to qualified buyers. VA Loans are open to veterans, reservists, active-duty personnel, and surviving spouses and are one of the only options available for zero down payment loans. FHA loans are open to anyone, and while they do require a down payment, it can be as low as 3.5 percent. Drawbacks include a slower loan process and—for FHA loans—the need to pay mortgage insurance.
As the housing market shifts, so do lending practices. A mortgage broker—an independent professional who acts as an intermediary between you and lending institutions—may be able to help you find a better rate than you can on your own. Also, be sure to shop around; slight variations in interest rates, loan amounts, and terms can significantly affect your monthly payment.
Loan terms, rates, and products can vary significantly from one company to the next. When shopping around, these are a few things you should ask about.
What are the most popular mortgages you offer? Why are they so popular?
Are your rates, terms, fees, and closing costs negotiable?
Do you offer discounts for inspections, home ownership classes, or automatic payment set-up?
Will I have to buy private mortgage insurance? If so, how much will it cost, and how long will it be required?
What escrow requirements do you have?
What kind of bill-pay options do you offer?
What would be included in my mortgage payment (homeowners insurance, property taxes, etc.)?
Which type of mortgage plan would you recommend for my situation?
Who will service this loan—your bank or another company?
How long will the rate on this loan be in a lock-in period? Will I be able to obtain a lower rate if the market rate drops during this period?
How long will the loan approval process take?
How long will it take to close the loan?
Are there any charges or penalties for prepaying this loan?
How much will I be paying total over the life of this loan?
Investigate local, state, and national down payment assistance programs.
Explore seller financing.
Ask your family for help.
Consider a shared-appreciation or shared-equity arrangement.
Lease with the option to buy.
Consider a short-term second mortgage.
Where you live should reflect your lifestyle. These questions will help you find the best community for you.
Is it close to my favorite spots?
Is it safe?
Is it economically stable?
Is it a good investment?
Do I like what I see?
What’s the school district like?
Condominiums, townhomes, and properties located within a homeowner association offer certain perks, but it’s important to consider them in your decision process.
How much storage is available?
How’s the outdoor space?
Are amenities important?
Who handles maintenance and security?
Are there required reserve funds and association fees? How much are they?
What are the association rules?
What’s the average vacancy rate?
How many units are owned by investors?
Can I meet other residents before making an offer?
Before you purchase a condo, you should have an attorney review property documents for you. However, you should contact the board yourself ahead of time. You’ll learn how responsive and organized its membersare and be alerted to potential problems.
How many units are owner-occupied?
What covenants, bylaws, and restrictions govern the property?
How much does the association keep in reserve?
Are association assessments keeping pace with the annual rate of inflation?
What does the assessment cover?
What special assessments have been mandated in the past five years, and how much of that was the responsibility of individual owners?
What’s the turnover rate?
Is the condo building in litigation?
What other projects has the developer built?
Are multiple associations involved in the property?
Do you belong to a professional association?
Will your report meet all state requirements?
How experienced are you?
How do you keep your expertise up to date?
Do you focus on residential inspection?
Do you offer to do repairs or improvements?
How long will the inspection take?
Will I be able to attend the inspection?
Some items should always be examined.
The home’s “skeleton” should be able to stand up to weather, gravity, and the earth that surrounds it. Structural components include items such as the foundation and the framing.
The inspector should look at sidewalks, driveways, steps, windows, doors, siding, trim, and surface drainage. They should also examine any attached porches, decks, and balconies.
A good inspector will provide very important information about your roof, including its age, roof draining systems, buckled shingles, and loose gutters and downspouts. They should also inform you of the condition of any skylights and chimneys as well as the potential for pooling water.
They should thoroughly examine the water supply and drainage systems, water heating equipment, and fuel storage systems. Drainage pumps and sump pumps also fall under this category. Poor water pressure, banging pipes, rust spots, or corrosion can indicate larger problems.
You should be informed of the condition of service entrance wires, service panels, breakers and fuses, and disconnects. Also take note of the number of outlets in each room.
Heating and Air Conditioning
The home’s vents, flues, and chimneys should be inspected. The inspector should be able to tell you the water heater’s age, its energy rating, and whether the size is adequate for the house. They should also describe and inspect all the central air and through-wall cooling equipment.
Your inspector should take a close look at walls, ceilings and floors; steps, stairways, and railings; countertops and cabinets; and garage systems. These areas can reveal leaks, insect damage, rot, construction defects, and more.
Inspectors should check for adequate insulation and ventilation in the attic and in unfinished areas such as crawl spaces. Insulation should be appropriate for the climate. Without proper ventilation, excess moisture can lead to mold and water damage.
They’re charming, but fireplaces can be dangerous if they’re not properly installed. Inspectors should examine the vent and flue, and describe solid fuel-burning appliances.
A colorless, odorless gas that can seep into your home from the ground, radon is often referred to as the second most common cause of lung cancer behind smoking.
What to look for: Basements or any area with protrusions into the ground offer entry points for radon. The Environmental Protection Agency publishes a map of high-prevalence areas. A radon test can determine if high levels are present.
A fibrous material once popular as fire-resistant insulation, asbestos was banned in 1985. However, it’s often found in the building materials, floor tiles, roof coverings, and siding of older. If disturbed or damaged, it can enter the air and cause severe illness.
What to look for: Homes built prior to 1985 are at risk of having asbestos in their construction materials. Home owners should be careful when remodeling because disturbing insulation and other materials may cause the asbestos to become airborne.
This toxic metal used in home products for decades can contribute to several health problems, especially among children. Exposure can occur from deteriorating lead-based paint, pipes, or lead-contaminated dust or soil.
What to look for: Homes built prior to 1978 may have lead present. Look for peeling paint and check old pipes. To get a HUD-insured loan, buyers must show a certificate that their older home is lead-safe.
Other hazardous products
Stockpiles of hazardous household items — such as paint solvents, pesticides, fertilizers, or motor oils — can create a dangerous situation if not properly stored. They can easily spark fires and can cause illness or even death if ingested, even in small amounts.
What to look for: Check all the corners, crawl spaces, garages, or garden sheds in the home. If these products are found, make sure you ask for their removal and get a disposal certificate prior to closing.
When hazardous chemicals are disposed of improperly, they can seep through the soil and enter water supplies. A leaking underground oil tank or septic system can contribute to this.
What to look for: Homes near light industrial areas or facilities may be at risk, as are areas once used for industry that are now residential.
Whether you’re building the home of your dreams or looking for an existing unit, there’s a lot of data involved in finding the right environmentally friendly dwelling. Here’s a breakdown of the different certification systems for energy-efficient homes.
The Residential Energy Services Network is a not-for-profit corporation that develops industry-wide standards and rules for energy efficiency ratings and certification systems for buildings. In addition to overseeing the HERS index (see below), RESNET certifies contractors of all types, including builders, roofing and siding professionals, and remodeling contractors.
The Home Energy Rating System is an index measuring a home’s energy efficiency. An average home built to current industry standards for energy efficiency will have an index of 100. A lower score indicates higher levels of efficiency (for example, a home with a score of 70 is using 30 percent less energy than the average home). The opposite is true with homes that score higher than 100. This index is overseen by RESNET.
The United States Green Building Council is the agency that bestows Leadership in Energy and Environmental Design certifications on environmentally friendly buildings and projects. The highest certification a building can earn is “LEED platinum.” Projects earn points based on numerous categories such as indoor air quality and water efficiency. More points add up to a higher certification level.
The Energy Star program is overseen by the U.S. Environmental Protection Agency. Products such as refrigerators, light bulbs, and furnaces can earn Energy Star certifications. Separately, homes can be Energy Star–certified through an independent inspection.
This program is also administered by the EPA. Homes that go above and beyond the Energy Star requirements by incorporating additional features to combat moisture, mold, pests, and pollutants can earn this label.
National Green Building Certification
Overseen by the National Association of Home Builders, this program helps residential building professionals develop and build sustainable projects. Buildings can earn bronze, silver, gold, or emerald certifications. At the Emerald level — which is the highest certification a project can earn — a building “must incorporate energy savings of 60 percent or more.”
Once you are under contract, your lender will send out an appraiser to make sure the purchase price is in line with the property’s value.
Appraisals help guide mortgage terms.
Appraised value is not a concrete number.
Appraised value doesn’t represent the whole picture of home prices.
Appraisers use data from the recent past.
There are uses for appraised value outside of the purchase process.
It’s natural for the sale price of a home to loom large in your mind. But don’t forget to look at what your property tax bill might be.
What is the assessed value of the property?
How often are properties reassessed in this area?
When was the last reassessment done on this property?
Will the sale of the property trigger a tax increase?
Is the tax bill comparable to other properties in the area?
Does the current tax bill reflect any special exemptions for which I might not qualify?
Every lender requires documents as part of the process of approving a mortgage loan. Here are documents you’re generally required to provide.
If a home is being sold for less than what the current owner 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.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. Home owners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Answering these questions will help you determine if a short sale is a good fit for you.
Are you very patient?
Is your financing in order?
Do you have any contingencies?
Can you take rejection?
Increase your chances of getting your dream house in a competitive housing market.
Get prequalified for a mortgage.
Stay in close contact with your real estate agent.
Scout out new listings yourself.
Be ready to make a decision.
Keep contingencies to a minimum.
But don’t get caught in a buying frenzy.
A homeowners insurance policy will protect you against certain losses and damage to your new home and is generally required by lenders prior to closing. Some lenders will collect the money you owe for homeowners insurance as part of your monthly mortgage payment and place it in an escrow account, paying the insurer on your behalf when the bill is due.
Dollar limitations on claims:
Actual cash value:
The first step is to shop around; quotes on the same home can vary significantly from company to company.
Review the Comprehensive Loss Underwriting Exchange report.
Seek insurance coverage as soon as your offer is approved.
Maintain good credit.
Buy your homeowner’s and auto policies from the same company.
Raise your deductible.
Ask about other discounts.
Seek group discounts.
Conduct an annual review.
Investigate a government-backed insurance plan.
Insure your house for the correct amount.
Title insurance protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as misspellings of a person’s name or an inaccurate description of the property. In some states it is customary for the seller to purchase the policy on your behalf.
Your mortgage lender will require it.
There are two different policies to consider purchasing.
You have the right to choose your provider.
Even new construction needs coverage.
When you walk away from the closing table with a big stack of papers, know what to file away for future reference.
Your lender is required to provide you with this three-page document within three business days of receiving your loan application. It will show estimates for your interest rate, monthly payment, closing costs, taxes, and insurance. You'll also learn how your interest rate and payments could change in the future, and whether you'll incur penalties for paying off the loan early (called "prepayment penalty") or increases to the mortgage loan balance even if payments are made on time (known as "negative amortization").
Your lender is required to send this five-page form—which includes final loan terms, projected monthly payments, and closing costs—three business days before your closing. This window gives you time to compare the final terms to those in the Loan Estimate (see above), and to ask the lender any questions before the transaction is finalized.
Mortgage and Note
These spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
This document officially transfers ownership of the property. In a cash deal, it goes to you, but otherwise you won’t get the deed until you pay off the mortgage.
These are binding statements by either party. For example, the sellers will often sign an affidavit stating that they haven’t incurred any liens on the property.
This word describes any amendments to the sales contract that affect your rights. For example, the sellers may arrange to retain occupancy for a specified period after closing but agree to pay rent to the buyers during that period.
These documents provide a record and proof of your coverage, be they insuring the title or the property itself. Homeowners insurance documents will generally be your responsibility, while proof of title insurance will be given to you at the closing table.
Closing time is hectic, but you should always make time for a final walk-through to make surethat your home is in the same condition you expected it would be. Here’s a detailed list ofwhat to check for on your final walk-through.
Basement, attic, and every room, closet, and crawl space have been checked.
Requested repairs have been made.
Copies of paid bills and warranties are in hand.
No major, unexpected changes have been made to the property since last viewed.
All items included in the sale price—draperies, lighting fixtures, etc.—are still on site.
Screens and storm windows are in place or stored onsite.
All appliances are operating (dishwasher, washer/dryer, oven, etc.).
Intercom, doorbell, and alarm are operational.
Hot water heater is working.
Heating and air conditioning systems are working.
No plants or shrubs have been removed from the yard.
Garage door opener and other remotes are available.
Instruction books and warranties on appliances and fixtures are available.
All debris and personal items of the sellers have been removed.
Update your mailing address at usps.com or fill out a change-of-address form at your local post office.
Change your address with important service providers, such as your bank(s), credit companies, magazine subscriptions, and others.
Create a list of people who will need your new address.
Whether you plan on sending formal change-of-address notices in the mail or just e-mailing the family members, friends, and colleagues who should be informed, a list will ensure no one gets left out.
Contact utility companies.
Make sure they’re aware of your move date, and arrange for service at your new home if the service provider will remain the same.
Check insurance coverage.
The insurance your moving company provides will generally only cover the items they transport for you. Ensure you have coverage for any items you’ll be moving yourself.
Unplug, disassemble, and clean out appliances.
This will make them easier to pack, move, and plug in at your new place.
Check with the condo board or HOA about any restrictions on using the elevator or particular exits or entrances for moving, if applicable
Pack an “Open First” box.
Include items you’ll need most, such as toilet paper, soap, trash bags, chargers, box cutters, scissors, hammer, screwdriver, pens and paper, cups and plates, water, snacks, towels, and basic toiletries.
If you’re moving a long distance:
Obtain copies of important records from your doctor, dentist, pharmacy, veterinarian, and children’s schools.
E-mail a copy of your driving route to a family member or friend.
Empty your safe deposit box.
Plan ahead. Develop a master to-do list so you won’t forget something critical heading into moving day. This will also help you create an estimate of moving time and costs.
Discard items you no longer want or need. Ask yourself how frequently you use an item and how you’d feel if you no longer had it. Sort unwanted items into “garage sale,” “donate,” and “recycle” piles.Pack similar items together. It will make your life easier when it's time to unpack.
Decide what you want to move on your own. Precious items such as family photos, valuable breakables, or must-haves during the move should probably stay with you. Pack a moving day bag with a small first-aid kit, snacks, and other items you may need before unpacking your “Open First” box.
Know what your movers will take. Many movers won’t take plants or liquids. Check with them about other items so you can plan to pack them yourself.
Put heavy items in small boxes. Try to keep the weight of each box under 50 pounds.
Don’t overpack boxes. It increases the likelihood that items inside the box will break.
Wrap fragile items separately. Pad bottoms and sides of boxes and, if necessary, purchase bubble-wrap or other packing materials from moving stores. Secure plants in boxes with air holes.
Label every box on all sides. You never know how they’ll be stacked. Also, use color-coded labels to indicate which room each box should go in, coordinating with a color-coded floor plan for the movers.
Keep moving documents together in a file, either in your moving day bag or online. Include vital contact information, the driver’s name, the van’s license plate, and the company’s number.
Print out a map and directions for movers and helpers. Make several copies, and highlight the route. Include your cell phone number on the map.
Back up computer files on the cloud. Alternatively, you can keep a physical backup on an external hard drive offsite.
Inspect each box and piece of furniture as soon as it arrives. Ahead of time, ensure your moving company has a relatively painless process for reporting damages.
Update your pet’s tag with your new address.
Make sure your pet’s collar is sturdy and correctly sized. The tag should also include your mobile number and e-mail address so that you can be reached during the move.
Request veterinary records.
Ask your current vet to send your pet’s medical history directly to the new vet. Have their contact information handy in case of emergency or if the new vet has questions.
Keep a week’s worth of food and medication with you.
You may want to ask for an extra prescription refill before you move. Take the same precaution with special therapeutic foods.
Seclude them from chaos.
Keep your pet in a safe, quiet room on moving day with a clear sign posted on the door. There are many light, collapsible travel crates available, but ensure it is well ventilated and sturdy enough for stress-chewers. Also, introduce your pet to the crate before the trip.
Prepare a pet first aid kit.
Include your vet's phone number, gauze to wrap wounds or to muzzle your pet, adhesive tape for use on bandages, nonstick bandages, towels, cotton swabs, antibiotic ointment (without pain relief medication), and 3% hydrogen peroxide.
Play it safe in the car.
Use a crate or carrier in the car, securing it with a seat belt. Never leave your pet in the bed of a truck, the storage area of a moving van, or alone in a parked vehicle. If you’re staying overnight, find pet-friendly lodging beforehand and have kitty litter or plastic bags on hand. Get ready for takeoff.
When traveling by air, check with the airline about pet requirements or restrictions and whether you must purchase a special airline crate that fits under the seat in front of you.
Prep your new home.
Set up one room with everything your pet will need: food, water, medications, bed, litter box, scratch post, and toys. Keep windows and doors closed when your pet is unsupervised, and beware of small spaces where nervous pets may hide. If your old home is nearby, give the new home owners or neighbors your phone number and a photo of your pet, in case your pet tries to return.
Learn about local health concerns and laws in your new area.
If you’re moving to a new country, contact the Agriculture Department or embassy of the country to obtain specific information on special documents, quarantine, or costs related to bringing your pet into the country.
Before the property changes hands, consult this list to make sure these items are transferred with the house.
Owner’s manuals and warranties for any appliances left in the house.
Garage door opener(s).
Extra set of house keys.
Other keys. Think beyond the front doors; do you have any cabinets or lockers built into the home that require keys?
A list of local service providers, such as the best dry cleaner, yard service, plumber, and so on. You’re not just helping the new owners, but also the local businesses you’re leaving behind.
Code to the security alarm and phone number of the monitoring service if not discontinued.
Smart home device access. Any devices listed as fixtures need to be reset for the new homeowner. Make sure your account information and usage data are wiped from the device so that they may use it. Check with your device’s manufacture to find out how to do this.
Numbers to the local utility companies. This can be especially helpful to owners who may not yet have easy access to the Internet in the new home.
Contact info for the condo board or home ownership association, if applicable.