Real estate agent vs. realtor

Learn the difference between real estate agents and realtors, as well as how to choose one.

If you will soon be buying or selling a home, you will need the assistance of a professional real estate agent or realtor. You have probably heard these terms used interchangeably, but real estate agents and realtors are not precisely the same.

All realtors are real estate agents, but not all real estate agents are realtors. In the United States, the realtor designation applies to those real estate agents who are members of the National Association of Realtors (NAR), or whose firms belong to that organization. The National Association of Realtors, founded in 1908, is the largest professional organization for real estate agents. It has over three quarters of a million members in the United States, and it is divided into state and local organizations.

Is There an Advantage to Using a Realtor?
If you belong to a professional organization yourself, you know how much you benefit from the chance to keep up in your field and communicate with your colleagues. Real estate agents who join NAR reap similar benefits. While all real estate agents must pass a licensing test before they are permitted to enter practice, attaining the realtor designation adds an extra layer of certification. Realtors agree to adhere to a strict Code of Ethics and Standards of Practice which protect you as a home buyer or seller.

NAR offers additional certifications that extend beyond the realtor designation. The organization encourages it members to be strong generalists, but also to develop an area of specialty. To that end, it offers a number of designations that a member can achieve, based on the kind of property they handle most often. When you are investigating real estate agents, you can ask about these designations in addition to asking if they are NAR members. The designations that a homebuyer is most likely to be interested in are ABR (Accredited Buyer Representative), which reflects expertise in representing buyers, CRS (Certified Residential Specialist), which reflects expertise in listing and selling residential properties, and ALC (Accredited Land Consultant), which reflects expertise in dealing with undeveloped land, including individual lots.

Certified Residential Specialists have their own organization alongside NAR, the Council of Residential Specialists, with more than 30,000 members. Attaining this designation shows that a real estate agent is committed to working with homebuyers and sellers, has reached a certain volume of transactions, and has completed their education requirements.

Choosing a Realtor
Going with a real estate agent who can use the realtor designation means working with a committed professional. Once you’ve decided to work with a realtor, however, you will need to choose one, and not all realtors are created equal. The NAR and CRS websites both have search functions to help you locate their members, and this can be a place to start. Ask friends, family members and colleagues who have moved recently about their experiences with their realtors. Talk to several realtors to see who might be a good fit, and ask about the realtor’s special qualifications and experience, particularly with any special needs you might have. Ask the agent if he or she represents mostly buyers, mostly sellers, or an even split. If you’re buying, you’ll want an agent who specializes in working with buyers, and vice versa.

Be especially careful if you’re selling your home. You might be tempted to work with the realtor who quotes you the highest price for your house - but this realtor might take longer to sell your house (and at a lower price than you first talked about) than a realtor who is realistic with you from the beginning.

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Market value vs. appraised value

The difference between market value and appraised value can be easily explained with the definition of each term

Market value can be defined as the highest price a buyer is willing to pay and the lowest price a seller is willing to accept on a particular piece of property. Another definition for market value is the price a house will sell for within a certain amount of time. One more definition for market value is that it is the most probable price a particular property should sell for in a competitive and open market with all conditions for that market being met by the property, such as the buyer and seller acting on their own and the price not being affected by any undue stimulus. Market value is usually not the price the property could have been sold for, but is the price the property is sold for. Several factors influence market value. These are location to a good school district, well fitting additions to the existing house, well-maintained neighborhood, the house not being over improved or the largest house on the block, and the last is that the style of the house matches the neighborhood it is in. Other factors to consider are the motivation of the buyer and seller, how well informed both parties are, the amount of time the property has been on the market, payment arrangements, and the final price being normal, not being affected by any special or creative financing or sales concessions by any party to the sale.

Appraisal value is defined as the opinion of a qualified appraiser, based on the knowledge, experience and analysis of the property being sold. A thorough property appraisal generally scrutinizes factors that may benefit the homeowner to become acquainted with. These factors include the current market value for same type home, in same condition and in the neighborhood of the homeowner’s property. Considering fluctuations in the real estate market is important as well as the considering the demand for housing of that type at that particular moment must be another consideration.

Appraisal companies generally have access to census data for the particular area as well as the statistics regarding local home sales for the city, county and state where the property is located. These appraisal companies will also have the ability to research the previous sales as well as the tax records of the property. Having access to these records affords the appraisal company the ability to acquire all the facts pertaining to the property and consequently to present a clear value of the property. Getting a thorough appraisal offers many advantages to the seller as well as the buyer.

The difference between market value and appraised value can be easily explained with the definition of each term. The market value of a home, based on the buyer, is the price the market is willing to pay for the property in question. The appraised value is the unbiased value of the property after a qualified person who is generally employed by an appraisal company, real estate company, lending institute or a bank, has completed an inspection on the property.

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Comparing neighborhoods: schools, traffic, taxes and other concerns

Issues and concerns when comparing neighborhoods, such as schools, taxes, traffic, and availability of services

Shopping for a new house or apartment can be fun and exhilarating, or extremely tiresome, as all the properties start to resemble one another after you have looked at several dozen. When this occurs, other important aspects of home hunting, which should be priorities, are oftentimes ignored; the neighborhoods themselves, and other items of issue when choosing a place to live, such as traffic issues, schools, taxes, and other properties that are adjacent or nearby. In addition, in these modern times, some issues that in the recent past, never even existed, such as accessibility to high-speed internet.

A real estate agent can help you on some of these issues, others will be affected by personal preference, and others still, will need to be investigated by you, the shopper, yourself.

Tax Issues

A real estate agent will answer tax questions, in part, but knowing if there are any pending tax milleages, or other ongoing issues, such as a new development nearby that may change the tax base, need examining. What the previous owners paid in taxes is a major part of the overall tax picture, but bear in mind, it is not the complete tax picture.

Traffic

Sometimes, traffic can be an obvious concern when house shopping. The property may be located on a busy street or near a known busy intersection. However, sometimes, the traffic issues at hand are not so obvious. The time of day that you visit a property may give a false sense of quietness, when in reality other times of the day the traffic is both heavy and loud. Inquire of the real estate agent if traffic is busy at certain times, and, before committing to a property, visit the property at different times of the day. Car and truck traffic are not always the only forms of traffic that need consideration either, nearby train tracks, flight paths of airports, and bus traffic all need consideration.

Schools

Where are they, how many, any private schools nearby, what types of transportation are offered, what, if any, special subjects do they offer, what grades do they encompass…The list of questions of inquiry into the schools that service the locale you are interested in, should be as specific as can be. If possible, visit schools that your children would attend if you were to choose a particular property. If you, as an adult, are considering going back to school or college, are there any colleges or adult education centers located within a convenient distance. Are there any residency rules required for attendance, and would you qualify if you chose a certain residence over another.

Availability of Services

High-speed internet is a convenience that many of us take for granted, yet it is not available everywhere. Many rural and urban locales do not offer any type of internet service, or if they do, it is commonly dial up.

Cable is another service that many take for granted, yet also, is not always available. Satellite service can usually fill the gaps, but even satellite does not work everywhere, or is not an option for different reasons.

Cellular phones are one more convenience of the times, and a growing portion of the population choose to use their cellular service as their main type of telephone, often because they can move, and they do not ever have to change their telephone number. Check that your current cellular service will work in the new home, and if not, will it be that big of an issue to change providers.

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Tips for seller financing

Seller financing can accelerate the sale of your home and can maximize your return on your real estate investment. Learn how to finance the sale of your home.

When selling your home, there are many ways to attract prospective buyers and to maximize your profit. One way to attract a larger pool of buyers is to offer to finance the purchase of the home yourself. While this is a potentially lucrative position, it can be wrought with perils if you aren’t careful.

First, ensure what you want to do it legal. Homes with an existing mortgage may not always be titled to the new buyer without paying off the first mortgage. As soon as the deed is titled, your existing mortgage lender may call the loan. If you cannot afford to pay off the existing mortgage and the new buyer cannot obtain financing, you could face a lawsuit. Check with the current lender if you have a mortgage to make sure you can carry a note for the new buyers.

In some cases, a lease/option is the better way to go. You are still financing the purchase of the home, and ensuring the sellers can buy the home at a reasonable price within a set period of time. The only difference is the home is not deeded to the new buyers, and part of each payment is credited toward the purchase price. This option is best exercised when the person buying your home cannot obtain traditional lending at this time. Typically, lease/options are two years in duration and afford the buyer time to build a high enough credit score to complete the purchase with traditional bank financing.

If you do not have an existing mortgage or are cleared by the current holder of your mortgage to complete the transaction, you will still want to secure a significant down payment. Pull a credit report on the prospective buyers. If their score is particularly low, ask why. Ask for a higher down payment the lower the score goes. The higher the down payment, the less risk you take in offering to hold the mortgage. Down payments are not refundable, and if your buyer walks away, he loses his investment. A struggling family is a lot less likely to leave behind a $15,000 deposit than a $1,500 one.

Review the published mortgage rates before deciding how much interest to charge. Excellent credit scores afford more consideration than poor ones. Bad credit lenders often charge in excess of 13% for the mortgages they write. Next, determine the duration of the loan. You can decide to carry the mortgage as long as you wish. Many people are comfortable with a 30 year note, though you may not want to wait 30 years to fully cash out from your property. Mortgages are amortized over a set period of time. You can carry a mortgage for one, two, five, ten or twenty years or anything in between and base it on a 30-year amortization schedule. This provides you with the highest rate of interest return while lowering the borrower’s monthly payment.

You will use a title company to record the transfer of the deed in most cases. You may also wish to have the title company collect the monthly payments from your borrower and to disperse the monthly payments in accordance with your wishes. They assume the responsibility of reporting the loan to the credit agencies and for ensuring the interest is calculated correctly. This is especially helpful come tax time when your buyers may want to write off their interest. They also prepare the W-9 form you will need to attach to your tax return to report your interest as earnings.

You need to ensure the title company records the mortgage on the property properly, and secures a lien against the property in the event the buyers stop making their payments. Foreclosing on a property can be difficult and can take a long time to complete. During that time, your buyers can cause a lot of damage. Take out an insurance policy to guard against this type of damage in the event you need to foreclose on the property.

You may wish to consult with a lawyer to have the loan documents created. Many lawyers will be able to insert clauses that will help you recoup some of your losses in the event you need to foreclose on the property. Consider adding rules about the way the buyers shall maintain the property until bank financing is secured. This helps to ensure the property is kept in good shape while the buyers occupy it. By maintaining the property’s value, it makes certain you can sell your property with a minimal amount of effort to a new buyer in the event the current buyer’s deal falls through.

Offering seller financing can be a lucrative way to increase your net worth if you follow these tips.

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Real estate tips: determining property value

The ability to assess property values is not just for professionals, research and comparison of recent sales will allow you to develop house valuation acumen.

Maybe it is time to buy a house or maybe you are considering selling or refinancing one you already own. Chances are you have been keeping an eye on the real estate market and what is available. If that is the case, congratulations! You’ve taken the first step towards determining the market value of your current or future home! However, the work does not stop with merely knowing recent sales in your area. Quite a lot goes into determining the actual value of any home. Square footage, special features, neighborhood, age, and condition are among the many things appraisers consider when establishing the value of a home. That said, you do not have to be an appraiser to gain insight into the value of a particular property. The best way to achieve a basic skill in determining the value of any home is through researching and comparing homes that have recently sold.

Realtors have at their fingertips current home listings as well as recent sales. They, and mortgage companies, refer to homes sold within two miles and 6 months of a home in question as “comps”. So, how important is a comp, or comparable listing, to your research? Well, suppose you are interested in buying a 4 bedroom, 2 bath home that is listed at $225,000. How do you know if it is a fair value? A good place to start is to compare it with recent comps of similar size. Is the list price in line with recent sales? What should you think if that amount is $15,000 more than another 4 bedroom, 2 bath that sold two weeks ago not two streets over? Is the seller asking too much? Not necessarily. Now is the time to look more closely at comparable home sales and take note of any differences between the house in question and the closest comps. For instance, does the more expensive property have special features? Is the lot especially large? Does it have more square feet, extra buildings, or a pool? If so, the asking price may be more than justified. In order to know how much those extras add to the value of a property you may need to move beyond what you can glean from public information sources and start creating comps of your own. In other words, if you are serious about getting a good idea of property values, you would be well advised to learn as much as you can about homes currently on the market. Start by compiling detailed records about those properties. If a basic 3 bedroom, 2 bath house on an average sized lot sells for $185,000, but the same model house on a lot twice the average size recently sold for $195,000 you can be fairly certain that an extremely large lot adds $10,000 to the value of a home in that neighborhood. Comparing recent sales of similar homes and listing their attributes versus their sales price can help you come up with a good idea of the basic value of certain property characteristics. This may entail much more effort than merely scanning the Sunday paper and using a search engine designed to find recent sales in your area. So, be prepared to not only keep up with online listings, but also to visit open houses, take notes, and follow up on sales prices. Still, keep in mind that even your estimates based on this information are only as good as the amount of time that has elapsed since you gathered your facts.

Timing in the real estate market can have a tremendous effect on home values. Prices tend to be higher in the summertime because there exists a preference to move during that season. The weather tends to be warmer and parents appreciate the benefits of not changing their child’s school during the academic year. Since demand is greater, prices are usually higher. The reverse is true for the wintertime. Houses may remain on the market longer and the sales price may be lower than expected. In short, comparing sales of homes in opposite seasons could lead to a slightly skewered determination of value. Also, season aside, a lot can change in six months. Major employers can cut employees or add more jobs and that directly affects the demand and, hence, value of property in a relatively short amount of time. In other words, it is smart to gather information, but do not forget to take into account the larger picture of season and events when seeking to apply it to home valuation. This especially holds true if the house market is hot. During times of particularly high demand and low supply, home values can double within a year. This is a glorious time for a home seller, but a very dangerous time for a homebuyer. Home prices tend to inflate rapidly as bidding wars ensue. Tensions may run high as buyers, eager to snatch up the house of their choice, get caught up in the chase and try to out do their competitors. When that happens, it can be very difficult to assess the real value of a home. When what was worth $175,000 three months ago is now valued at $200,000, what will it be next week? An even more frightening question for the buyer (and any potential lenders) is whether or not rapidly elevated values are genuine. Will they hold if the supply increases? Will they plummet if one business eliminates jobs? Even armed with the best knowledge, a seller is well advised to consider carefully the long-term stability of prices before jumping into an intense market. If you have any doubts about what decision to make, consult several professionals and get their take on the longevity of recent prices. They make it their business to cultivate contacts that will provide them with information regarding future plans that may impact the real estate market. Generally speaking though, unless you plan on investing in multiple properties or the market is unusually fast paced, you can get a pretty good idea of property values without the assistance of a professional.

Whatever your real estate goal, understanding property values can be done by anyone from a housewife to a retiree. Even just by keeping track of recent sales and noting the value of different amenities, you can build up a storehouse of knowledge with which to ascertain the value of other comparable properties. The caveat is that you must know how and when to apply your newfound skill. Even though you may develop a valuation sense that is always right on the money, some real estate markets demand the expertise of a skilled professional. Yet, that does not mean you should not arm yourself with all the information you can gather. Having a feel for the market will allow you to be more comfortable in the choices you make and, if necessary, more easily justify the value of a house in the face of a recalcitrant lender. Knowledge is, as the saying goes, power and that definitely holds true when it comes to the home valuation process.


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Pros and cons of buying foreclosures

Learn what a foreclosure is and if buying foreclosed property can be a wise investment. Information on buying properties.

Buying foreclosed real estate can be quite risky, but it can have its rewards too. If all goes well, you can have a home that was purchased at possibly 25% less than its market value. That means you can put money into the property, and still be ahead. If you do not do your homework though, the property that you purchased can become a thorn in your side.

What is foreclosure?

When you borrow money from a bank to purchase a piece of property, you sign an agreement saying that you promise to pay that money back. The bank will set up a monthly payment schedule to repay the money borrowed. If you fail to keep your promise, the bank can begin foreclosing on your property. This means that eventually, the bank gets the property back. Once the bank takes back the property, it then goes for auction. The highest bidder gets the property.

One would assume that when a property is foreclosed on that it is now “free and clear” of all liens. That is not so. When the bank takes back the property, they do nothing to improve the property, and the property is sold “as is”. That means if it is rental, the tenants may not be evicted and may have tenant’s rights. That means if you want to evict them, you may need to pay the legal expenses in order to do so. Property taxes are another issue. If the homeowner has defaulted on their mortgage, most likely their real estate taxes are delinquent. Most banks require homeowners to escrow their real estate taxes, which a portion is incorporated in the mortgage payment, so if the monthly mortgage payments have not been kept up to date, chances are the taxes have not been either.

You will need to consider other creditors that may not have been paid for an outstanding debt and my have filed a lien against the property in order to hopefully, someday receive payment. Filing a lien on a piece of property is an assurance to the creditor for payment. If the homeowner ever sells the property, the lien will need to be paid in order to be sold “free and clear”. A creditor may have missed the boat by not filing a lien against the property prior to the notice of foreclosure and will file it anyways. They may not have a legal right to their debt; however this may cause a “cloud” on the title.

Buying a foreclosed piece of property can be a very wise investment. In fact there are individuals and companies that make a very modest income by doing just that. So be prepared for the competition that awaits you. Before you make a bid on a piece of property, do some homework first. Go to your local county courthouse and do a quick title search. Check to see how many mortgages and/or liens may be filed against the property, as well as any docketed judgments against the owner(s); and check to see if the property taxes are current. With interest rates at record lows, buying a piece of property well below its market value, that appreciates annually, can be a sound investment; and knowing all the information that is available to you, can lead you down the path to homeownership with peace of mind.


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Real estate tips: choosing a good home inspector

Having a home inspection done can give a buyer peace of mind knowing that the house is is buying is structurally, mechanically, and electrically sound.

A home inspector is a certified inspection contractor that examines a house on your behalf for structural, mechanical, and electrical problems before you buy it. These inspections aren’t required in all states, but it’s a good idea to know what may be wrong with the house that the naked eye just can’t see. Having a very meticulous and unbiased home inspector is very important for the buyer, so he or she can get an educated opinion of the general integrity of the structure.

To find a good home inspector you should ask your mortgage broker for some names and numbers of home inspectors their clients have used in the past. If they don’t have any ideas, asking your real estate agent is a good idea. Real estate agents usually develop a relationship with home inspectors, which can be beneficial to the homebuyer. If you aren’t working with a realtor, home inspectors should be easy enough to find in your local phonebook. It doesn’t matter how you find your home inspector--you should check his or her credentials and be sure he is certified by one of the inspection trade organizations such as American Society of Home Inspectors. Inspectors certified by this organization have proven their skills in the various areas of mechanical, structural, and electrical inspections. Also, home inspectors should happily provide references upon request so that you may contact previous customers and inquire about their satisfaction.

When your home inspector comes to the property, it will probably take a couple hours or more, depending on the property size. Everything will be examined: water will be run to check plumbing, the breaker boxes will be checked, heaters and air conditioners will be tested, and the structural integrity of the foundation, supporting walls, and roof will be closely examined. Every aspect of the house will be put under a magnifying glass and any current or potential problems will be recorded. Then, armed with a full inspection report a potential buyer can decide if they are prepared to deal with any problems, or request that the seller make some repairs. Usually, the seller is willing to contribute to any major repairs, but if they aren’t, the seller needs to be prepared to either foot the bill or decide not to purchase the house.

A home inspection usually costs from two hundred to five hundred dollars, depending on the square footage of the house. If there are problems that need to be remedied and retested, most inspectors will come out again for just a fraction of the original charge to issue a clear report. The cost may seem a bit steep, but when you consider the money it could cost you in future repairs, it’s more than worth the expense.

A home inspector can really give you peace of mind when it comes to buying a new home. Buying a home is the largest debt most people will ever enter into; you want to make sure you are doing it in the most responsible manner. And, knowing what is going on behind the paint, under the foundation, and inside of the walls is responsible. Find a good home inspector, and get an inspection done for your peace of mind.

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