Thomas Ceniglio - SAVE MONEY ON YOUR DREAM HOME

SAVE MONEY ON YOUR DREAM HOME

Thomas Ceniglio

Table Of Contents

How REALTORS® as Fiduciaries Help Home Buyers

Owning vs. Renting

Buyers' Needs and Desires

Real Estate Horror Stories To Learn From 42

Searching for the Right Home

Buying a House: Negotiation Dos and Don'ts 60

What to Know About Home Inspections

Shopping for a Home Loan

Programs For Home Buyers

10. The Closing Process

11. Organizing Your Move

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Preface When I first ventured into the real estate industry years ago, I did so with the hope of helping sellers avoid the headaches often associated with the home-selling process. In my years of experience, not only have I helped alleviate the stress of selling for numerous clients, but I’ve also accumulated years of knowledge to help them get more money for their homes in the least amount of time. I decided to share all of my expertise in one place with potential clients. And that’s why you’re receiving this book. I want to help you have the best possible home-selling experience. And by that, I mean I want you to 1. Get the most money possible for your home, 2. Sell in the least amount of time, and 3. Avoid the headaches most commonly associated with the home-selling process. Think of this book as my gift to you. It contains insider advice on the home-selling process to help you achieve your ultimate real estate goals, including: • Secret strategies to sell your home for more money • Marketing techniques employed by top agents • Advice on how to appeal to today’s buyers • And much, much more If, after reading through it, you want to hire me to help you sell your home, I’d be more than happy to meet with you to discuss a specific plan to sell your home. Happy reading!

About Tom Cenig om Ceniglio, REALTOR® The first listing that Tom sold was a unicorn of sorts. It was a log cabin kit home that was occupied by it's second owner for 10 years. The home was clean and well kept but had 10 years worth of personal decorations and stored items to use "someday". This was supposed to be the owner's forever home, it was on a large secluded road with a duck pond and surrounded by densely triple canopy forest. Well that all changed when the owner had to move to another state for employment and educational opportunities. At times the owner waivered back and forth about selling, renting, or leasing it out while they moved out of state. The thought of 2 mortgages or 1 mortgage and a rental agreement that was too far away to administer concerned the owner so they decided to sell, but for how much? Tom helped the owner, declutter, organize, yard sale, and discard as many items as possible in the few weeks before the listing went live. Tom helped stain the deck that the owner never had time to do in the past 10 years plus made several dump runs to discard any itmes that weren't sold or promised to someone. Then Tom suggested that the furniture and perosnal items be boxed up and put into pods now so that they were already set to be transported out of state. That was a huge positive because it had to be done and there wasn't a lot of time to do it after the home was sold. Tom also went throught the home and staged as much as possible to appeal to the most buyers in the market. Tom then hired a professional photographer and videographer to take drone photos of the property and also well-lit spacious photos of the home and it's unique selling features. Tom also put yard signs up every 2-3 blocks from the house in all directions until he reached the 3 major intersections of the town. Tom scheduled 2 listed the home on a Friday about noon, posted on his FaceBook, LinkedIn, Twitter, Instagram, be can either Pinterest, and Youtube channel plus his web site and the William Raveis Website. Tom spent 3 days writing the property description so

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that it identifed the unique selling factors of the home. Tom arranged and attended the Open House on Saturday from 11am to 3pm and Sunday from 10am to 4pm with offers being considered within 72 hours. Tom's client received 4 offers above the asking price and the client chose the winning offer which ended up $30,000 over the asking price. The home passed all inspections and appraised for more than the sales price. Everyone was happy on both sides of the transaction. It closed within 3 weeks and the owner exchanged keys and moved on to their new place out of state. The new owner moved in later that same day and has been enjoying the home ever since. This story perfectly sums up the kind of agent Tom Ceniglio is, and the type of agent he continuously strives to be for his clients. Tom was taught at a young age that if you want something in life, you have to work for it. So that’s what he did. And Tom worked hard. Tom was raised in Enfield, CT with 4 siblings. As a child, Tom had aspirations of being a military officer. Never in a million years did he think he'd stumble into the real estate industry, but you can’t always predict where or when you’ll discover what you’re meant to do in life. As the years went by, Tom worked his way from McDonald's to Aetna Life Insurance, never wavering in his resolve to become the best version of himself with each career move. Tom Ceniglio got into the real estate industry 2 years ago when he and his wife Bernadette decided to buy a retirement home in the Lakes Region of New Hampshire. It took 3 years to buy a home due to cash buyers, contingencies, and lack of inventory. Most homes sold within a week or two of it's original listing date. They lived about 3.5 hours drive away so that limited their ability to see many properties in a day. Tom and Bernadette decided to bid $15,000 over asking price and remodel the home

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while their children finished their last year or two of high school. They won the bid and the owners were so happy that they left most of their furniture and tools behind and the task of remodeling began and is almost complete at the time of this writing. As Tom's career advanced, Tom found his stride working with his friends and relatives of friends in his sphere of influence. Tom's an expert in Luxury Homes Certification, Vacation/ Second Homes Property Specialist, Waterfront, First-time Home Buyers, Veterans, Sustainability, and Resilence housing, Commercial Investment Real Estate CREM, Managing Maintenance Operations & Property Risk -MNT402 New Home Construction Certified.

Commercial Real Estate Terminology in Practice The Process of Reconciling and Billing CAM Variance Analysis Tools 2023 Income and Expense Benchmarking 2023

Throughout Tom's career, Tom has:

• Licensed Real Estate Salesperson in CT, MA, and NH • Earned the title of REALTOR® from the National Association of Realtors, Luxury Home Specialist, Vacation/Second Home Property Specialist, Waterfront Specialist, Veteran Advocate, C2EX = Commitment to Excellence, Sustainability, workign towards Green certification, ABR certificate working towards ABR certification. • Listed a home in Colchester, CT for $495,900 and sold for $525,000 with 4 over asking price offers, within 3 days under contract, closed in 21 days. • Represented an all cash buyer that physically visited 15 homes, bid on three of them and finally won the bid for a

home in Vernon, CT that sold for $215,000 within 3 days under contract, closed in 21 days. Tom lives in Belmont, NH with his wife, their pet dog Tango, 4 cats, a desert tortoise, 2 goats, 1 rooster, 2 ducks, and 13 chickens. In his free time, he enjoys sailing, boating, volunteering, hiking, cooking, baking, fishing, rifle/shotgun target practicing, archery, reading, stargazing, and telling clean stories around the campfire. Tom Ceniglio aims to provide the highest level of service to his clients and takes deep pride in helping them achieve their real estate goals.

What Can I Do For You? I take my business and helping you succeed, very seriously. Can I show you the 90 ways I help my clients identify, negotiate and ultimately successfully close on their new home? 1. Schedule Time to Meet for a Strategy Session (15-30 minutes) 2. Prepare Guide & Educational Presentation (60 minutes) 3. Meet and Discuss Goals and Non-Negotiables (60 minutes) 4. Explain Agency Relationships (15 minutes) 5. Discuss Different Types of Financing Options (30 minutes) 6. Help Find a Mortgage Lender (30 minutes) 7. Obtain Pre-Approval Letter from Lender (90 minutes) 8. Provide Resources to Research crime in neighborhoods, school ratings, etc. (60 minutes) 9. Provide Overview of Current Market Conditions (60 minutes) 10. Explain Company's Value (45 minutes) 11. Discuss Earnest Money Deposits (30 minutes) 12. Explain Home Inspection Process (30 minutes) 13. Educate About Local Neighborhoods (60 minutes) 14. Discuss Foreclosures & Short Sales (30 minutes) 15. Gather Needs & Wants of Next Home (60 minutes) 16. Explain School Districts Effect on Home Values (30 minutes) 17. Explain Recording Devices During Showings (30 minutes) 18. Identify All Home Goals on a spreadsheet (120 minutes) 19. Create Internal File for Records (30 minutes 20. Send Homes Within Their Criteria (60 minutes) 21. Start Showing Homes as Requested (60 minutes) 22. Schedule & Organize All Showings (60 minutes) 23. Gather Showing Instructions for Each Listing (30 minutes) 24. Send Showing Schedule (15 minutes) 25. Show Up Early and Prepare First Showing (45 minutes) 26. Look for Possible Repair Issues While Showing (60 minutes) 27. Gather Feedback After Each Showing (90 minutes)

28. Update When New Homes Hit the Market (90 minutes) 29. Share Knowledge & Insight About Homes (90 minutes) 30. Guide Through Emotional Journey (90 minutes) 31. Listen & Learn at Each Showing (60 minutes) 32. Keep Records of All Showings (90 minutes) 33. Update Listing Agents with Feedback (90 minutes) 34. Discuss Homeowner's Associations (30 minutes) 35. Estimate Expected Utility Usage Costs (30 minutes) 36. Confirm Water Source and Status (90 minutes) 37. Discuss Transferable Warranties (60 minutes) 38. Explain Property Appraisal Process (60 minutes) 39. Discuss Multiple Offer Situations (60 minutes) 40. Create Practice Offer to Help Prepare (60 minutes) 41. Provide Updated Housing Market Data (60 minutes) 42. Inform Showing Activity Weekly (60 minutes) 43. Update on Any Price Drops (30 minutes) 44. Discuss MLS Data at Showings (90 minutes) 45. Find the Right Home (1000 minutes) 46. Determine Property Inclusions & Exclusions (60 minutes) 47. Prepare Sales Contract When Ready (60 minutes) 48. Educate on Sales Contract Options (60 minutes) 49. Determine Need for Lead-Based Paint Disclosure (30 minutes) 50. Explain Home Warranty Options (30 minutes) 51. Update Pre-Approval Letter with Each New Offer (45 minutes) 52. Discuss Loan Objection Deadlines (45 minutes) 53. Choose a Closing Date (45 minutes) 54. Verify Listing Data Is Correct (60 minutes) 55. Review Comps to Determine Value (90 minutes) 56. Prepare & Submit Offer to Listing Agent (90 minutes) 57. Negotiate Offer with Listing Agent (90 minutes) 58. Execute A Sales Contract & Disclosures (90 minutes) 59. Once Under Contract, Send to Escrow Company (90 minutes) 60. Coordinate Earnest Money Wire Transfer (45 minutes)

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61. Deliver Copies to Mortgage Lender (45 minutes) 62. Obtain Copy of Sellers Disclosures (60 minutes) 63. Deliver Copies of Contract/Addendum (60 minutes) 64. Obtain A Copy of HOA Bylaws (90 minutes) 65. Keep Track of Copies for Office File (90 minutes) 66. Coordinate Inspections (90 minutes) 67. Meet Home Inspector at The Property (120 minutes) 68. Review Home Inspection (90 minutes) 69. Negotiate Inspection Objections (90 minutes) 70. Get All Agreed Upon Repair Items in Writing (60 minutes) 71. Verify any Existing Lease Agreements (90 minutes) 72. Check in With Lender To Verify Loan Status (90 minutes) 73. Check on the Appraisal Date (30 minutes) 74. Negotiate Any Unsatisfactory Appraisals (90 minutes) 75. Coordinate Closing Times & Location (90 minutes) 76. Make Sure All Documents Are Fully Signed (120 minutes) 77. Verify Escrow Company Has Everything Needed (90 minutes) 78. Reminder to Schedule Utilities Transfer (30 minutes) 79. Make Sure All Parties Are Notified of Closing Time (90 minutes) 80. Solve Any Title Problems Before Closing (90 minutes) 81. Receive and Review Closing Documents (90 minutes) 82. Review Closing Figures (120 minutes) 83. Confirm Repairs Have Been Made by Sellers (120 minutes) 84. Perform Final Walk-Through (120 minutes) 85. Resolve Any Last-Minute Issues (120 minutes) 86. Get CDA Signed by Brokerage (120 minutes) 87. Attend Closing (180 minutes) 88. Provide Home Warranty Paperwork (30 minutes) 89. Facilitate Transfer of Keys and Accessories (30 minutes) 90. Close Out File (30 minutes)

“Are you familiar with the 24 different terms that I’ll be negotiating on your behalf?

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Let’s take a minute and review… • Purchase and Sales Agreement • Earnest Money Deposit

• NHD Report Fees • City Transfer Tax • County Transfer Tax • Private Transfer Tax • HOA Transfer Fees • HOA Prep Fees

• Pest Inspection Report • Home Inspection Report • Other Inspection Reports (ie. Roof, Sewer/Septic, Rodent,

Defensible Space) • Seller Rent Back • Home Warranty

• Inspection Contingency • Appraisal Contingency • Home Repairs • Pest Clearance • Loan Contingency • Days until Close of Escrow • Appliances • Government Requirements • Notice to Perform • Liquidated Damages • Arbitration of Disputes

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CHAPTER 1 How REALTORS® as Fiduciaries Help Home Buyers

I’ll come right out at the start and tell you that I’m a REALTOR®. I've been an Eagle Scout, a Sea Scout Skipper, a college student, an Army Reserve Infantry Lieutenant, a software and insurance salesman, a boat rigger, a handyman/DIYer, a social marketer, a restaurant manager, a brother, a husband, a father, and a senior leader of the Coast Guard Auxiliary but the career as a REALTOR® has all of that beat! What is a REALTOR®? A REALTOR® is a member of NAR, National Association of REALTORS® as well as a licensed real estate professional. So, in addition to their professional license, they have taken another step in their professional endeavors to join NAR and become a REALTOR®. The term signifies a dedication to professionalism and ethical practices in the real estate industry. Beyond the duties of a real estate agent, a REALTOR® pledges to uphold integrity, honesty, and client interests through NAR Code of Ethics and complete ethics training every three years. NAR and its affiliated Institutes, Societies, and Councils offer a wide selection of real estate training options. REALTORS® have

access to exclusive resources and education, like C2EX (Commitment to Excellence), so they can offer clients an elevated level of service and commitment. REALTORS® gain networking opportunities, connecting with peers, mentors, and potential clients. Additionally, NAR advocates for favorable policies that support the real estate market, safeguarding members' interests.

7 Reasons to Work With a REALTOR®

When you're buying a home, here's what an agent who's a REALTOR® can do for you. Act as an expert guide. Buying a home typically requires a variety of forms, reports, disclosures, and other legal and financial documents. A knowledgeable real estate agent will know what's required in your market, helping you avoid delays and costly mistakes. Also, there’s a lot of jargon involved in a real estate transaction; you want to work with a professional who can speak the language. Offer objective information and opinions. A great real estate agent will guide you through the home search with an unbiased eye, helping you meet your buying objectives while staying within your budget. Agents are also a great source when you have questions about local amenities, utilities, zoning rules, contractors, and more. Give you expanded search power. You want access to the full range of opportunities. Using a cooperative system called the multiple listing service, your agent can help you evaluate all active listings that meet your criteria, alert you to listings soon to come on the market, and provide data on recent sales. Your agent can also save you time by helping you winnow away properties that are still appearing on public sites but are no longer on the market. Stand in your corner during negotiations. There are many factors up for discussion in any real estate transaction—from price to repairs to possession date. A real estate professional

who’s representing you will look at the transaction from your perspective, helping you negotiate a purchase agreement that meets your needs and allows you to do due diligence before you’re bound to the purchase. Ensure an up-to-date experience. Most people buy only a few homes in a lifetime, usually with quite a few years between purchases. Even if you’ve bought a home before, laws and regulations change. Real estate practitioners may handle hundreds or thousands of transactions over the course of their career. Be your rock during emotional moments. A home is so much more than four walls and a roof. And for most buyers, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on the issues most important to you when emotions threaten to sink an otherwise sound transaction. Provide fair and ethical treatmen When you're interviewing agents, ask if they're a REALTOR®, a member of the National Association of REALTORS®. Every member must adhere to the REALTOR® Code of Ethics, which is based on professionalism, serving the interests of clients, and protecting the public. Excerpt from https://www.nar.realtor/about-nar/when-is-a-real- estate-agent-a-realtor Nice to meet you! I’m not going to sell you anything, but I’m pleased to be of service to you. I strongly believe that the best investment you can make is by investing in yourself. I also believe that with the right tools, training, skills, attitude, motivation, and time...you can do anything! My REALTOR® services are not free nor cheap. My advice and experience has developed over time with tests, trials and tribulations. Emotional stories of high success and low disappointments. As a REALTOR® I will save you time, money, anguish, effort and worry. If my fee seems expensive perhaps I have not told you all of the services I am providing to my clients. Fees are negotiable. But I cannot work with a client without a written agreement. Far

too many agents without a signed written agreement have shown homes, spent money on fuel and lost out on dinner with their family so that a person that's just looking at homes to see what's out there. Also, a client without a signed agreement cannot rely on the agent to continue to represent them or give them property advice. They're just acquaintances without a written agreement. There are typically three ways a Realtor/real estate agent for buyers are paid. Three options

1. Single party (home) agreement 2. A Non exclusive buyer agreement. 3. Exclusive buyer representation agreement.

Buyer's Agent Compensation:

(1) The last 30 years or so the Owner/Seller of the home paid the Buyer's Agent a percentage of the total sale (commission fee i.e. 1.5%, 2%, 2.5%, 3.25%) to bring them a willing, able, and qualified buyer interested in buying their home. (2) Recently, some large national brokerages were sued for setting commission fees that might influence what homes a buyer was shown or not shown. Possibly unfairly inflating the prices of homes in order to accommodate an agent's commission. As an example, if the brokerage set the commissions for the transaction for 6% the listing agent might decide that the home "sells itself ", or will be easy to sell so they offer the buyer's agent only 1 or 2% of the sales price and they keep the rest. A home that is hard to sell might be offered a buyer's agent commission of 3 or 4% theorizing that agents would be more likely to suggest that home to their buyers over other properties with lower commission splits. (3)A Buyer can pay the Buyer's Agent directly. Much like a CPA, Lawyer, Physician, Financial Advisor, the client pays the professional a fee for their advice, access to their knowledge,

training, and products or services. So, I’m not looking to part you from your money. Instead, I’m giving you the benefits of experience and advice I have gleaned throughout my career selling houses and being in real estate transactions — for both sellers and buyers. If you want me to help you find a house, we can talk. Call me if you need me at 603-800-9275. Technology has changed the way homes are sought and bought today, how has Artificial Intelligence (AI) affected your life so far? Most buyers do a Google search and are first introduced to homes they may eventually consider to view via the internet, through Zillow, Trulia, Yahoo! Homes, Realtor.com, Redfin or one of hundreds of other real estate websites, but in 82% of the cases they will probably use a REALTOR®. With the internet and real estate apps available to many Americans, selling a home has become just another thing you can do with the click of a button. A far cry from the old days of putting up a yard sign or placing an ad in the local newspaper. But according to the National Association of Realtors®’ (NAR) 2023 Profile of Home Buyers and Sellers, people selling their own homes, known as “for-sale-by-owner” (FSBO) sellers, is at an all-time low at 7% of recent home sales. A big reason for the increase in real estate agent use is the rollercoaster that is the housing market of the past two years. Between higher loan rates, a short-lived cooling of home prices and a shortage of homes that’s now driving up prices, there is a lot of uncertainty to navigate alone. “It has freaked out consumers,” Jessica Lautz, Deputy Chief Economist and Vice President of Research at NAR, told Moneywise. Though that hasn’t stopped people from buying homes. “It still is a seller’s market,” she said. Around 89% of sellers recently sold their home through a real estate agent or broker, which is up 2 percentage points since last year, according to the 2023 NAR report. The frequent hiring of real estate agents is a reflection of the heavy lifting required in the complicated and stressful process of selling a home, according to Lautz. “Sellers

are relying on their agent to tell them: What can I price my home? How can I attract a buyer? How should I fix up my home for sale?” she said. excerpt from https://www.nar.realtor/newsroom/ in-the-news/are-real-estate-agents-really-worth-the-money- they-charge

WHY HOME BUYERS NEED A REAL ES UYERS NEED A REAL ESTATE AGENT

On most home sales, there is a listing agent (the agent engaged by the seller to sell the property) and a selling agent (the agent who introduces the eventual buyer into the transaction). The selling agent is sometimes called the “buyer’s agent” because he or she is often working on a certain buyer’s behalf, and it’s easier than explaining that the selling agent is not the listing agent but really the buyer’s agent. There are some real estate agents that market themselves as “buyer’s agents,” “exclusive buyer’s agents,” or “buyer’s representatives.” These real estate agents have chosen to make a business of finding homes for prospective buyers and handling the negotiations and transactions attendant to the purchase. These agents want to accentuate the reasons a buyer shouldn’t go directly to the listing agent when they purchase real estate. A buyer who goes directly to the listing agent and allows that agent to “manage” both sides of the transaction is dealing with an agent who has conflicting responsibilities. Their job is to get a good price for the seller, and they might not zealously represent the interests of the buyer. Those who market themselves as buyer’s agents indicate they’re only working for the buyer in a real estate transaction. The buyer’s agent's commission is paid by the seller, with rare exceptions. They either get paid directly by the seller or set up the transaction so that the seller provides a “credit” to the buyer for how much the real estate commission is — then the buyer pays

the commission. A maxim in real estate is, “No matter how it’s set up, the buyer still walks away with the house and the seller still walks away with ~94% of the purchase price.”

MORE ACCESS TO THE REAL ES O THE REAL ESTATE MARKE TE MARKET

A real estate agent will have better access to the market and a special knowledge of local conditions. The agent is a full-time liaison between sellers and buyers. An agent will have ready access to other properties listed by other agents. Buyers’ and sellers’ agents know how to put a real estate deal together. A real estate agent will track down homes that meet your criteria, contact sellers’ agents, and secure appointments for viewing the homes. On their own, buyers have a more difficult time with these things. This is even more so the case when a buyer is moving due to relocation or employment opportunity and does not engage a buyer’s agent to handle matters.

NEGOTIATING IS HARDER ON YOUR OWN

How did you do at the last tag/yard/garage sale that you held? Did you enjoy haggling with your nosy neighbors for 25 cents on something that cost you over $100? Did you feel insulted when someone didn't like your taste in art, music, or clothing? You were emotionally involved in the sale, it was in your driveway or garage...that's pretty personal in my opinion. A real estate agent will keep the transaction “at arm’s length,” such that personalities and emotions do not become involved. Price negotiations take a special skill and understanding of the psychology of offering and counter-offering. Agents keep a perspective about the transaction that is dispassionate and rational. For example, a buyer (you) might like a home but despise its wood-paneled walls, shag carpet, and

lurid orange kitchen. When you work with an agent, you can express your opinions on the current owner’s decorating skills and complain about how much it will cost to upgrade the home without insulting the owner. Your agent will translate that to the seller — that you like the property but can see that you will have to spend money and time decorating the home in your style, and would offer that much less.

CONTRACTUALLY SPEAKING…

There are many contracts and documents involved in purchasing a house. The stack is more than an inch thick. Unless you’re a real estate lawyer or title agent, these documents will be foreign to you. The documents change as the laws change so they must be updated and reviewed constantly. Yet, they require detailed and accurate completions. Buying a property is not necessarily a “fill-in-the-blanks” transaction. One mistake, let’s say in title work, "a misspelled name/address or a transposed number could haunt the buyer well down the line after purchase. This very situation happened. A property that sat on a double lot was put on the market. The neighbor bought it to carve off a bit of the second lot to expand his own yard. The seller then put the home back on the market, and it sold. Months later, through a property tax notification, it came out that, in preparing new deeds for the properties, the expanded yard area was correctly in the name of the neighbor; however, the house had been transferred to the home buyer. The new homeowner now owned both houses, and the neighbor owned his expanded driveway and yard. Fortunately, they were good neighbors and settled the matter with a few signatures.

A real estate agent deals regularly with these contracts,

conditions, and unexpected situations and is familiar with which conditions should be used, when they can safely be removed, and how to use the contract to protect you.

YOU WON'T NECESSARIL N'T NECESSARILY SAVE MONEY

The point of not using a real estate agent would be to save money, right? Otherwise, why would someone turn down professional assistance in finding a home? However, it’s unlikely that both the buyer and the seller will reap the benefits of not paying real estate agent commissions. It works like this: An owner selling on his own/for sale by owner (FSBO) will price the house based on the sale prices of other comparable properties in the area. Many of these properties will be sold with the help of an agent; therefore, the seller profits in getting to keep the percentage of the home’s sale price that might otherwise be paid to the real estate agent (usually 6%). Buyers looking to purchase a home sold by owner without an agent may believe they can save money on the home by not having an agent involved, and so they look solely at FSBO houses. They might expect money to be saved and make an offer accordingly. Unless the buyer and seller agree to split the savings, they can’t both save the commission — and that’s if the listing price was not already lowered near the commission amount to make it more market-attractive. Here’s a short list of the advantages that using a real estate agent can bring to your buying experience:

• Education and experience • Neighborhood knowledge • Price guidance • Market conditions information

• Negotiation skills and confidentiality • The ability to handle paperwork • The ability to handle closing questions • Relationships for Future Business

In contrast, buyer’s agents work on commission, which is contracted in the listing agreement. When a buyer’s agent brings the buyer, the listing agent must split the contracted commission with the buyer’s agent.

HOW TO CHOOSE THE BEST AGENT FOR YOUR NEEDS UR NEEDS

You might feel the urge to pick the first real estate agent who appeals to or approaches you, but that’s something to avoid. As with any professional, there are degrees of professionalism, dedication, and experience. The “wow factor” will simply wear off. Meet with prospective buyer's agents in their offices. A good buyer’s agent will want to know whether you’re preapproved for a loan by a financer, what kind, and the terms of the loan you’re getting. If you're a cash buyer you will need proof of funds from your bank that shows your funds are liquid and accessible quickly. They should spend adequate time to discover what you’re looking for in a house. They should listen more and ask questions for clarification. Watch to see if the agent makes notes. If the agent doesn’t broach the topic, ask for an explanation of his understanding of agency relationships and obligations to you. The law requires agents to explain whether they’ll be working for the buyer or the seller whenever they have substantive contact with a customer or prospective client. If the agent doesn’t offer you a buyer’s agency agreement, that agent is representing the seller, not you. If the agent can’t explain agency concepts to you,

then move to the next agent.

Be sure that the agent will be showing you all listings or properties on the market that meet your requirements, and not only listings that are handled in-house. Buyer’s agents have the legal duty to put the buyer’s needs ahead of their own. Even when an agent will be paid more for selling an in-house listing, they must inform you about other available, suitable listings and take you to see viable prospects. A good buyer’s agent will provide a home-buying education. The listing agent will point out all the features of a home; a good buyer’s agent will point to the faults — or advise when they can be overlooked. Competent buyer’s agents help their buyers to think clearly as the home-buying process unfolds. For example, if a house is a good buy, a buyer’s agent might suggest looking past the dated bathroom and kitchen and look at the space above the garage that will make the perfect art studio you desire. Likewise, a cute house with all the amenities but with knob-and-tube wiring or a 40-year-old roof might not be worth the asking price. According to the San Francisco Chronicle’s Home Guide, if you decide to buy with the intention of building an addition, the agent should advise you to check the zoning before making an offer. Agree to sign a buyer’s agency agreement after you have met with an agent. Some people sign an agency agreement after attending a showing given by the agent. Working with a seller’s agent is a mistake, according to an article by Amy Fontinelle of Forbes’ Investopedia. Any information you reveal will become leverage that the seller can use in a purchase negotiation. A buyer’s agent is legally required to maintain your confidentiality, disclose material facts to you, and maintain loyalty to you. These are fiduciary duties.

RESEARCH LICENSING

Your state will have a license board for all active Realtors® and agents, which you can easily access. You will also be able to see their contact information, disciplinary actions, complaints, or any other information that you’ll need to help influence your decision — especially since most of the information is now posted online.

GIVE THE “WHAT ELSE” TEST

A good agent will know about all the other properties for sale in the area. Also, a good agent always does their research regarding the events in the current market, and those homes that are out there for the taking. In short, you want an agent who’s an expert of the current market, and someone who always stays on top of things.

RESEARCH THEIR BUSINESS ACTIVITY

Learning the type of market presence that a real estate agent has is the best way to figure them out. Ideally, you’re going to want an agent who specializes in one or two real estate markets, and who understands which types of homes and amenities are available within your price range. You can unearth this information by asking them or by asking the state licensing authority if you’re not comfortable with asking the agent directly. You’re better off with an agent who’s engaged actively in one area and price range — e.g., residential homes around the $200,000 to $250,000 range or the $400,000 and up range.

GOING THE BUYER'S AGENT ROUTE

So, you’re ready to take the plunge and look for a place to call “home.” To get the most out of it, use a buyer’s agent to avoid a

flurry of paperwork, stampedes of buyers competing for the same property, and other challenges. Home buying can be exciting and exhilarating, but it can also be complex and stressful — which is why having a pro by your side can make an enormous difference. As discussed, you’ve probably heard of buyer’s agents, seller’s agents, listing agents, and so on. You’re a buyer, so what’s a buyer’s agent? True to the name, buyer’s agents assist home buyers every step of the way; they can also save you both time and money on the road to homeownership. When you find the right one for you, these real estate agents will work day and night to ensure all your needs and requirements are met when it comes to finding the right home.

WHAT BUYER'S AGENTS DO FOR YOU

Your buyer’s agent will have a vast knowledge of the current real estate market for the area, which will include neighborhood amenities and conditions, the law, zoning issues, price trends, negotiations, taxes, financing, and insurance. Once you meet with the buyer’s agent, they’ll generally help you determine your needs and wants when it comes to finding a home and a neighborhood. The agent will teach you what you can afford, help you set a budget, provide some insight on the current conditions of the market, and explain what you should expect while shopping for a home. During the shopping period, you’ll meet with your agent for tours of homes in which you might be interested. They will give your insight into the floor plans, the home’s pertinent selling points, and the overall crime rate of that neighborhood. They will also give you the rundown for local activities, restaurants, shopping centers, and schools nearby.

Your agent is responsible for ensuring inspections of the homes are complete, as well as the disclosures therein. They’re also in charge of ensuring coordination and completion is done through the roof inspector, attorneys, lenders, and all other professionals involved with the purchase of the home. If bargains need to be made over the price, you won’t have to negotiate yourself. Your buyer’s agent will do that for you, along with signing the final closing documents. They will be present whenever there are documents to go through and sign.

DUAL AGENCY: THE BASICS

A “dual agency” relationship occurs when a buyer is being represented by a brokerage firm that controls the listing. Once an agent represents both the seller and the buyer within the same transaction, the situation is known as “dual agency.” In multiple states, this is illegal because of the conflicts of interest that can arise regarding the broker. All agents hold the same responsibility, which is to inform their clients of all potential risks that could arise due to conflicts of interest. Legally, agents are not allowed to work on both sides of any transaction without consent from the clients. If you’re selling your home and you don’t want your agent to also work with the buyer of your home, it’s your right to say so in the listing agreement. This is also true for buyers. A buyer can get out of an agreement with an agent if they are interested in purchasing a home their agent is listing.

When it comes to dual agency, there are definite advantages for the seller.

• Trust has already been gained with your listing agent, so representation for the buyer has been established. • Your agent brought you the buyer knowing that you’re selling, even if your property has not yet hit the market. • Your listing agent will have already covered and researched your neighborhood’s market to gain buyer inquiries, which means your agent will be working from all sides of the deal to sell your house faster, and with more incentive. • Your agent works together with corporate relocation buyers who need to find a house quickly, and they will ensure it’s your house that’s bought. There are also cons for the seller when it comes to dual agency, and they are: • You can’t be advised by your agent as thoroughly when they must act as a dual agent because impartial facilitation is required. • Your listing agent is not allowed to negotiate the best or highest price for you if also negotiating both the best and lowest terms for the buyer. • Earning a full commission, if the opportunity arises, may tempt the agent to coerce a deal that you might not accept otherwise. • Your agent may inhibit all access to your listing through buyers with agents. To avoid surprises or missteps in a dual agency sale, always ensure you have clarified important details with your agent ahead of time. You can do this by using an exclusive buyer agency agreement, or a listing agreement.

HOW REAL ESTATE AGENTS ARE PAID

The National Association of Realtors® 2021 Profile of Home Buyers and Sellers states approximately 8% of homeowners opted to put their homes up for sale in 2021 without using a real estate agent or Realtor®. A handful of For Sale By Owner (FSBO) transactions dealt with sellers and buyers who previously knew each other or were directly related; Real estate agents and Realtors® — unlike professionals in different categories who bill by hourly rates or earn a salary — get paid through a transaction (commission) at the end of each sale. For example, if an agent has worked with a seller or a buyer for months, they don’t get paid for the time spent if there is no transaction during that period. Agents receive a commission once the transaction goes through to settlement (closes) based on the selling price of the home. At that point, the commission is earned. The commission itself is negotiated — in most cases, between the seller and the agent. Essentially, the listing agent and the buyer’s agent will split the commission. That can bring forth some issues. For example, sometimes the split might not be negotiated evenly. A seller could have agreed to pay a commission of 5.5% that, if further divided, the buyer’s agent would receive 2.5% while the listing agent receives 3% of the commission. Even though some agents are associate brokers, or brokers in general, all commission payments are instructed to go through

to the broker who’s managing the brokerage where the agent is working. From there, the commission is then split to the agent and the broker, according to the agreement that’s been made. The split will vary; sometimes, newer agents will earn a small portion of the commission compared to the experienced or successful agents who generally sell more expensive properties or homes.

PAYING THE COMMISSION ITSELF

The overall commission is paid for at the settlement period by the seller. The fee is taken from the proceeds of the sale of the home or the property. However, the buyers pay the commission because they’re literally paying to purchase the house, while the sellers take the commission for the agent into account during the process of determining the price for the listing. From there, the commission is then divided during the settlement process between the buyer’s agent brokerage and the listing agent’s brokerage. Afterward, the agents who made the real estate sale are then paid their split % by their brokers.

CHAPTER 2 Owning vs. Renting

Owning your own home might be one of the defining qualities of the “American Dream:” the set of ideals that includes opportunity for prosperity and success and an upward social mobility for the family and children, achieved through hard work. Home ownership is surely ingrained as one of the strongest representations of that vision — 66% of Americans own their own home, and more hope they will or wish they did. Something about home ownership plucks a strong chord with Americans. Financial security, permanency, status, and pride are values many of us seek. Lifestyle plays a big role in the decision to own versus rent. Home buying is most often driven by household formation, such as marriage and growing a family. Less than 40% of people under 35 years old own homes, 60% of people over 35 years old own homes, and more than 80% of people 65 years old or over own homes. Interestingly, for the millennial generation, the primary reason for buying a home? Owning a dog. The U.S. homeownership rate has fluctuated between 62% and 70% since the 1950s. Most young people begin their independent lives renting an apartment, maximizing lifestyle flexibility and minimizing the hefty upfront costs associated with purchasing a home. As they build careers, save money, and start families, many choose to buy a home, recognizing that home ownership, as opposed to rental living, is more appropriate to their growing family needs. At the other end of the age spectrum are homeowners nearing 20

retirement who may desire to sell their homes, downsize, avoid the maintenance and other obligations, and go back to renting.

WHICH IS BEST?

Is it better to rent or buy a home? Most adults ask themselves this at some point as they form their goals and plan for the years ahead. Before you answer the question, here are some things to ask yourself. Owning and renting each have their advantages, but what’s best for you depends on your circumstances. What will be the duration of your stay in the home? Each market is different, but whether the time you plan to spend in the house warrants its purchase is possible to predict. In general terms, it takes four to seven years to break even on a home (i.e., where there has been enough appreciation to pay back the cost of the transaction and cost of ownership). If you’re thinking about buying a home and selling it in two years, buying is very unlikely to be cheaper than renting. Do you think of or need your house as an investment in your retirement plan? Americans are used to their homes being a store for wealth to liquidate in retirement when downsizing their lifestyle. According to Jacob Passy, a recent study from the Federal Reserve Bank of New York examined consumer preferences toward being a homeowner and how their perceptions have changed over the course of the COVID-19 pandemic. Survey participants were asked to rate which was the better investment—a home or stocks. The results showed that over 90% of the respondents preferred owning their residence rather than investing in the stock market. Majority of the survey participants also favored the idea of being a landlord to buying stocks, with more than 50% of the participating households preferring to own a rental property.

Are you financially ready? Owning a home is a financial

commitment that requires planning how home ownership fits into where your life is headed. Ask yourself what your budget is and if either buying or renting would require you to stretch your finances. Crunch all the numbers. A frequent mistake of first-time home buyers is comparing a month’s rent to a month’s mortgage payment. Many people don’t have all the numbers. There are many additional fees necessary to include to make a fair comparison: principal interest, property taxes, property insurance, homeowners’ association (HOA) fees, and ongoing maintenance. Are you prepared for the down payment? This is the lump sum payment that funds your equity in the property (how much of the property you actually own). Down payments vary; 20% is preferred and gets the best rates. There are some loans that allow down payments as low as 3%. Sometimes relatives help with the down payment. If you have a choice, take a gift rather than a loan because lenders will add the loan debt to other monthly obligations and potential mortgage payments to determine your debt-to-income ratio, which generally can’t top 43% to qualify for a home loan. Can you afford the monthly mortgage and its components? Generally, a mortgage includes loan principal and interest (both amortized over the life of the loan) plus homeowner’s insurance and property taxes (prorated). These items can affect the monthly loan-only payment by several hundred dollars. Are you emotionally ready? Can you handle the stress? A big factor to consider when buying a home is stress. The Holmes and Rahe Stress Scale, a landmark stress study, ranks many events that go along with buying a home in the top 43 most stressful circumstances in life. Four events are specifically home-related: change in financial state (No. 16), large mortgage or loan (No. 20), change in living conditions (No. 28), and change in residence (No. 32). If someone has recently made other life changes, such

as marriage (No. 7), switching careers (No. 18), or having a child (No. 14), it might be wise to postpone buying a home. Stress overload can lead to missed payments, which can result in destroyed credit or even losing the home. It’s better to rent if your life is in flux and then buy when your stress levels are lower. Are you ready for commitment? Are you ready to make lots of decisions, from picking a real estate agent to picking paint colors? Are you confident enough to choose a neighborhood where you believe home values will continue to appreciate and that will serve your needs (i.e., proximity to schools, shopping, recreation, etc.)? Are you ready for devoting the time and attention to maintaining a home (i.e., leaf-raking, grass-cutting, appliance maintenance and repair, etc.)? Taking care of your biggest investment can be gratifying, but only if you’re ready.

ADVANTAGES OF BUYING YOUR HOME

Control over housing expense. By selecting a fixed-rate 15-, 20-, 25-, or 30-year mortgage, the homeowner has assurance that housing costs won’t increase over the period, and, in fact, will be eliminated at the end of the term (subject to refinancing). You build equity. Some of each monthly mortgage payment goes toward the loan’s interest. Other portions may go to homeowner’s insurance and county taxes. The remainder pays down the loan principal. Every dollar put toward your loan’s principal represents a dollar of equity — actual ownership of the property. Further, the property should appreciate in value each year, further adding to equity (what the house could be sold for versus what is owed on it). Discounting certain blip periods, such as the 2006 housing bubble burst, home prices in the U.S. appreciate nationally at an average annual rate between 3% and 5%. Remember, though, home value appreciation in different metro areas can appreciate at markedly different rates than the national average.

Improvements increase your home’s value. A homeowner can also increase a home’s value through home improvements, thus both making your home more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and appeal, while potentially boosting its value. Tax advantages of home ownership. There are significant tax benefits associated with buying a house, both at the time of purchase and for the duration of time you own the home: • Homestead exemption. Many states exempt owner- occupied homes (homesteads) from a portion of the property tax amount that would normally accrue. For instance, Louisiana exempts the first $75,000 of a home’s value from property tax assessments, so a $200,000 home in New Orleans is taxed as if it were worth $125,000. • Federal tax deductions. When you’re looking to purchase a home, it’s important to understand what can be deducted on your tax return and what can’t. Property taxes and interest paid on your mortgage can be deducted if you itemize your federal income taxes, which can reduce your income tax burden. Many home buyers, unfortunately, overlook the effect of mortgage interest on their federal income tax payments. Mortgage interest can be a powerful financial planning tool. Calculate the amount of mortgage interest deductions you are eligible for, and include that in your annual financial planning. Then, make a point of checking Internal Revenue Service (IRS) Form 1098, which you’ll receive from your lender at the end of the year. This form shows the amount of

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