Jim Curry - Home Buyers Guide V2 Book

Complete Guide To Buying A Home In Jacksonville

Jim Curry

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. DISCLAIMER AND/OR LEGAL NOTICES: While all attempts have been made to verify information provided in this publication, neither the Author nor the Publisher assumes any responsibility for errors, inaccuracies, or omissions. Any slights of people or organizations are unintentional. Th is publication is not intended for use as a source of legal or accounting advice. Th e Publisher wants to stress that the information contained herein may be subject to varying state and/ or local laws or regulations. Th e reader of this publication assumes responsibility for the use of these materials and information. Adherence to all applicable laws and regulations, including advertising and all other aspects of doing business in the United States or any other jurisdiction is the sole responsibility of the reader. Th e Author and publisher assume no responsibility or liability whatsoever on behalf of any reader of these materials. If your property is currently listed with a Realtor, please disregard this notice. It is not our intention to solicit the o ff erings of other brokers. Printed in the United States of America

Table Of Contents

1. You Hold The Power

2. Advantages Of Buying Vs. Renting

3. Get An Agent On Your Side

4. Timing Is Everything

5. What You Need Vs. What You Want 42 6. A Guide To Searching For The Right Home 50 7. Common Buyer Mistakes 58 8. Home-Buying Horror Stories 66 9. A 12-Step Guide To Buying A Home 74 10. Loan Shopping 101 92 11. Negotiation Dos And Don’ts 108 12. Home Inspections: Check It Twice 122 13. Doubts? You Can Walk Away 136

14. Home Buyer Programs

148

15. Ready, Set, Close!

158

16. Organizing Your Move

170

About Jim Curry

A ft er 25 years of working in industrial sales, Jim Curry was ready for a change. He wanted a career that would allow him to spend more time closer to home with his family . Th at’s when he found his real estate calling, and he’s been in the industry ever since. Jim enjoys helping sellers get top dollar for their homes and getting buyers into their dream homes. He currently serves Jacksonville, the Beaches, and Ponte Vedra. Jim loves t o fin d the unique attributes of each property he sells. Th is allows him to market them to the right buyers and get the highest price. Jim has extensive experience selling homes that other agents failed to sell. He received several awards with previous brokerages he worked for . Th is includes the ReMax Platinum Club and ReMax Hall of Fame. He was also a top producer with Bosshardt Realty, the largest independent brokerage in Gainesville. Jim’s life and work philosophy are based on hard work and honesty. He strives to treat his clients the way he would like to be treated. He likes to remove potential issues or roadblocks to a sale at the beginning . Th is way, he can direct his clients in the best way possible to remove any potential deal-breakers. Doing this upfront isn’t always easy, but Jim knows it produces the best results. Jim prides himself on being responsive and attentive to his clients’ needs. He enjoys following up and connecting with people who reach out to him. He says a good agent is something of a dream maker, and that’s what he strives to be for his clients.

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When he’s not working with clients, Jim and his wife work as Christian missionarie s. Th ey have traveled to India, Sri Lanka, an d Th ailand and have ambitions to travel to more to help people in need. Jim lives a happy and fu lfi lled life in Jacksonville, Florida with his wife, Liza. He has 10 children and 18 grandchildren.

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Testimonials & Reviews f or Jim Curry Here’s a list of people whom I have helped buy or sell a home, and what they said about working with me: As fir st time homebuyers my husband and I were lost attending random open houses and searching aimlessly. On our journey we were fortunate to meet Jim. Jim graciously o ff ered us lots of advice and eventually became our realtor. Jim was patient while showing us several homes and worked to accommodate my unconventional work schedule . Th anks to Jim’s persistence, knowledge, and intense work ethic we purchased our first home. — Necheon & Sophia To Jim Curry! You have been a blessing to me during the mos t diffi cult time of my life. I will be forever grateful. — Rosemarie Jim: Th ank you again for assisting us with the sale of our “Lake in the Woods” home. I know it was a challenging job (to say the least) b ut a job well done. May you and your family have a wonderful Christmas. — Sharon & John Jim cold called me during the Christmas Holidays to see if I'd be interested in listing my home, that he had a buyer who might be interested. I politely told him no, was taking a break from FSBO for the holidays. A ft er some thought, called him back and had him come talk with us. We did list with him and our home was sold less than 3 months later. He actually did have an interested buyer, worked with both parties fairly and closed the deal. We are very pleased with Jim Curry and know you will be too. — Sonia Thomas

Our house was on the market for over 1 year before Jim took on the project. Jim helped us clean up the yard and found us helpers to do landscaping and clean up. We received 4 o ff ers and Jim helped us work our way to the best one. He was relentless even a ft er the fir st contract fell through. He actively navigated the inspections and appraisals, even when the house came up a little less in the fin al appraisal. At the closing, the buyers tried to change some terms. Jim is a very nice and personable man, but he can be tough and stand his ground when it is called for. He came through for us. We always felt things were under control and were con fi dent in his guidance through what could have been a very complicated proces s. Th anks so much for your help. It really was a great privilege to have found you. —Marilyn Hennessy

CHAPTER 1 You Hold The Power YOU'RE READY TO BUY YOUR FIRST HOME

You’ve saved enough for a down payment, you’ve secured the fin ancing you need, you’ve researched the cities, areas, and neighborhoods to which you’d like to move, and you’ve got a good idea of what’s out there and what to expect. Now it’s just a matter of researching spe cifi c homes in your price range, hiring a real estate agent, attending a few open houses, and making a bunch of o ff ers on the homes that strike your fancy or meet most of your criteria, with fin gers crossed that the seller accepts your o ff er and you don’t end up in a bidding war. Right? Well, not exactly. Many buyers assume they are at the mercy of sellers. A ft er all, the seller is looking for the right buyer, the seller wants to score the best deal, and the seller ultimately determines whether to accept or reject your o ff er. So, the ball must be in their court, right? Let me put this to you in simple terms: You hold the power. Th at’s right, you — the buyer. Th is book, the ultimate guide to buying a home, will explain what that means, show you how to increase your buyer’s advantage, and provide insider secrets that will help you gain the upper hand and get the best deal on your home purchase. Sellers are out to impress buyers. Everything a seller does to increase their advantage in selling their home is to impress you, the buyer. It doesn’t matter if it’s a seller’s market, in which the number of people looking for a home to purchase exceeds the number of homes available, or a buyer’s market, in which there are

more homes available for sale than buyers. A major mistake both sellers and buyers make in the real estate market is assuming that a seller’s market is to the seller’s advantage and the buyer’s market is to the buyer’s advantage. Forget the market for now. Th e seller’s ultimate goal is to get you to buy their home, period. Keep the ball in your court — with a trusted, professional real estate agent to guide you through the process — and you’ll have a less stressful and more satisfying and successful home-buying experience. If you have done your research, if you are fully prepared for the process, and you’ve hired a top-notch buyer’s agent, you are well on your way. For example, if you come in con fi dent, with a strong o ff er and a mortgage pre-approval letter in hand, you’ll already stand out from all the other buyers interested in the same home and vying for the seller’s attention. YOUR POWER IN A BUYER'S MARKET Of course, it’s naturally easier to gain the upper hand in a buyer’s market, in which there are more homes available for sale than there are people looking for homes to buy. In this case the housing market is more favorable to buyers. Buyers gain ultimate negotiating power and can be much more selective about which Th ings get a bit trickier in a seller’s market, in which there are more people searching for homes than there are homes available for sale. Th is type of housing market is generally more favorable to sellers, as they tend to receive multiple o ff ers, sometimes above their asking price, and buyers can end up in bidding wars. But this doesn’t have to work to your disadvantage. Th ere are many tips and tricks you can use to not only fin d the home you want, but get 3 home they choose to purchase in the end. YOUR POWER IN A SELLER'S MARKET

a great deal on it, too. One of the key tricks to holding the upper hand in a seller’s market is knowing the best times to buy; this process will be covered more in-depth in Chapter 3. Another must-have when buying a home in a seller’s market is hiring a real estate agent to guide you through every step and stage of the home-buying process. You’ll want to hire a professional who knows the ins and outs of buying a home, someone who knows how to negotiate well on your behalf, and someone who has access to properties and property details before they even hit the market. Th is alone could be the ticket to getting you the home you want at a price you can a ff ord. BE INFORMED Regardless of the market, it’s imperative to be well-informed before going into the home-buying process. In this book, we’ll cover the following:

• Th e home-search process (Part 1) • Th e home-buying process (Part 2) • The fin al steps for closing the deal (Part 3)

Along the way, I’ll show you all the diff erent ways — the insider secrets — that you can use to gain an advantage over your competition (other buyers) and get the upper hand over the sellers of the homes in which you’re interested and the one you’ll eventually purchase. Remember: You hold the power. Keep this locked into your memory as you continue reading this book, and you’ll be well on your way to not only fin ding and purchasing the perfect home for you, but also getting the best deal possible.

CHAPTER 2 Advantages of Buying vs. Renting

Should you buy or rent a home? Th ere is no “right” answer, and what works for one person or family might not be appropriate, doable, or even desirable for another. Th ere are certainly pros and cons for both, and much of it depends on your situation, life circumstances, lifestyle , fin ances, and dreams. Owning a home has for decades been considered one of the de fin ing characteristics of the “American Dream,” demonstrating a certain level of priorities, accomplishment, success, status, security, and hard work. Not everyone owns a home and not everyone wants to — but many who don’t wish they did, or are working toward getting that piece of the Dream. Today, about two-thirds of Americans own their own home, and many more are working toward their dream of homeownership, or wish they could get there one day. Lifestyle and age are two of the biggest factors in the buy-vs-rent decision. Home buying is usually driven by household formation; for example, when couples get married, they o ft en begin with renting but start saving to buy their fir st home before deciding to start a family. Other families who rent choose to buy a home when their family expands and more children (or pets) join the family. Millennials have also reported that the primary reason for buying a home is owning a dog, as many rental properties won’t allow pets — especially dogs. Age is another factor; in general, the older you are, the more likely you are to own your own home. Currently, fewer than 40% of people younger than 35 own homes, but about 60% of people 35 6

and older are homeowners, and more than 80% of people 65 years and up own homes, although nowadays, more and more people nearing or past retirement think about downsizing and selling their homes to rent instead in their golden years, to avoid the physical demands, maintenance, and obligations that come with homeownership. Young people fresh out of college and beginning their careers o ft en choose to rent so they can save up for a down payment and, in the meantime, enjoy lifestyle fl exibility, particularly if they need to move for their job, enjoy travel, and are single, with no children or pets. Which is best — buying or renting? Each has its advantages and bene fi ts, as well as disadvantages and risks, and as I’ve mentioned, the decision will depend on your particular situation. Before you decide, you need to ask yourself some questions: HOW LONG DO YOU PLAN TO STAY IN THE HOME Th is question isn’t always considered when making the decision to buy or rent, but it’s an important one. Do you move a lot? Do you travel a lot? Have you found the city, area, and neighborhood in which you’d like to stay? What about appreciation? Typically, it takes about four to seven years to “break even” on a home purchase (this means that there’s been enough appreciation to pay back the cost of the transaction and ownership). So, for example, if you’re thinking about buying a home and selling it within one to three years, it won’t be worth it. You’re better o ff renting until you know you’ll be staying put for a while longer. ARE YOU FINANCIALLY PREPARED? Homeownership is a sign ifi cant fin ancial commitment for which 7

buyers must be prepared. You’ll need to consider the overall price of the home, the down payment, closing costs, mortgage payments, maintenance costs, property taxes, homeowners’ association fees, and more. You can’t simply compare a month’s rent to a month’s mortgage payment. You must be prepared for all the costs of homeownership. • Down payment: Th e down payment refers to the lump- sum payment that funds your equity in the property . Th e amount varies, but in the U.S., 20% of the purchase price of the home is generally the norm, the preferred amount, and what will get you the best rate. • Mortgage payments: A monthly mortgage payment includes both interest as well as loan principal, and generally, any homeowner’s insurance and prorated property taxes. Some monthly mortgage payments are fix ed; others are variable, depending on the type and terms of the mortgage loan.

DO YOU NEED YOUR HOME AS A RETIREMENT PLAN INVESTMENT?

A 2015 Gallup poll reported that, for the second year in a row, Americans named real estate as the best long-term investment, more than savings accounts, stocks, and bonds. Homeownership allows you to build equity that you can liquidate in retirement for downsizing. It’s important to pay close attention to the housing market: prices can rise and fall, and the value of your home can change. ARE YOU EMOTIONALLY PREPARED? Homeownership has many advantages over renting, but it can cause stress, and you need to be emotionally prepared to handle it. Stress that’s related to owning a home can include a change 8

in fin ancial state, a change in living conditions, and a change in residence. Other elements of stress related to homeownership include life changes, such as switching careers, getting married, and having children. If your life is constantly changing and in fl ux, and you’re experiencing a lot of stress, it might be wise to postpone owning a home until things are more stable for you and your situation. ARE YOU READY FOR COMMITMENT? Yes, owning a home is a major commitment, and you must be ready for it! You’ll need to have the con fi dence to make plenty of big decisions, from choosing a real estate agent and the right neighborhood that meets your needs to picking the right home and all the “little” decisions that come along with that — furniture, appliances, paint colors, décor, etc. Commitment also means devoting time and energy to the maintenance of both your home and yard. If you are prepared, then you’ll fin d that this commitment — taking care of your important investment — is most satisfying. If you think you might be ready to take the plunge into homeownership, it’s important to understand the advantages and disadvantages of both buying and renting your home. ADVANTAGES OF BUYING YOUR HOME 1. Building equity. Every time you make a mortgage payment, you put down dollars toward equity — which means actual ownership of your home. Part of the payment goes toward interest from the loan, part toward homeowner’s insurance and property taxes, and part toward the loan principal, which represents the equity. Th e other way homeownership builds equity is that, generally, your property should appreciate in value each year, giving you the option for selling it for considerably more than you paid for it, assuming you keep up with maintenance, improvements, etc., 9

and sell at the right time. Typically, U.S. home prices appreciate nationally at an average annual rate of between 3 and 5%. Renter disadvantage: Renting does not o ff er any equity-building advantage. Your rent payments go to the landlord and not toward your property ownership, regardless of how long you live there. 2. Increasing your home’s value. As I touched on, your home’s value will increase through natural appreciation every year, but you can increase your home’s value by not only maintaining your home, but also improving upon it, such as small renovations, fin ishing a basement or adding a bathroom, improving the home’s curb appeal, and making small improvements around the home (newer appliances, a fresh coat of paint, new curtains, etc.). Renter disadvantage: If you rent your home, you will likely have limits on what you can do to improve the look of your home; in fact, you might not have permission from the landlord to make any changes. Further, any changes you might make won’t increase the value for you, but rather for the property owner. 3. Controlling housing expenses. When homeowners select a fix ed-rate 15-, 20-, 25-, or 30-year mortgage, they have the assurance that monthly mortgage payments and overall housing costs will not increase over that period. Renter disadvantage: With renting, property owners are known to increase the amount of monthly rent and other expenses you must pay annually, and sometimes randomly, without much notice. You don’t have control over this. 4. Tax advantages of homeownership. As a homeowner, you qualify for major tax bene fi ts when you buy a house, both at the time of purchase and for the duration that you own the home. Homestead exemption is one example; many states exempt all owner-occupied homes (“homesteads”) from a portion of the property tax that would normally accrue over time. 10

Further, homeownership entitles you to certain federal tax deductions, such as claiming your property taxes and mortgage interest paid, o ff setting your annual income tax burden. You can also claim any mortgage discount points on the loan; these points are equal to 1% of your mortgage and involve prepaid interest. Th ey are tax deductible and can reduce your total mortgage payment. Renter disadvantage: If you rent your home, you might be able to claim the rent you paid for the year on your income tax, but the tax bene fi ts end there. Renters aren’t eligible for housing-related federal tax credits or deductions. 5. Lower mortgage rates. Currently, in today’s market, interest rates have fallen and are on the lower side, making it easier to purchase and own your own home than it was years ago. Bear in mind that interest rates are variable and rise and fall, so as part of your home-search process and getting approved for a mortgage, keep an eye out for low rates and try to lock that in with a fix ed rate. Renter disadvantage: With renting, landlords set the price, which o ft en increase annually. You don’t have the option of locking in a fix ed rate for the duration of your mortgage. In fact, in many states, average mortgage monthly payments can be lower than typical rent amounts. 6. Creative freedom. One major advantage to owning your home is that you have creative license to make almost any kinds of changes or improvements that you’d like, provided they don’t violate codes or bylaws. Change the colors of the walls with fresh paint, fin ish a basement, add a closet, expand your bathroom, build a deck, renovate your background — you have the freedom to make your home truly yours with homeownership.

Renter disadvantage: Renting a home puts many more limitations on what you can do — if anything — to change or improve the look of your home. Structural and even decorative improvement decisions belong to the property owner and you’ll need to obtain special permission to make any changes, even painting. 7. Community and roots. Homeowners generally stay in their homes longer than renters do (many tend to think of homeownership as more permanent and renting as temporary), and are therefore more likely to get to know their neighbors, feel a part of a community, join associations or committees, host get- togethers, and volunteer. Renter disadvantage: Renters are much less likely to do these things, as they o ft en view their situation as temporary. DISADVANTAGES OF BUYING A HOME Yes, there are downsides to homeownership — some that buyers aren’t aware of, or don’t think of, and others that can scare people away from making the plunge into homeownership. 1. Maintenance. Perhaps the homeowner’s biggest disadvantage is the renter’s biggest advantage: maintenance. Of course, if you purchase a home, it generally includes homeowner’s insurance, which includes disasters, fl ooding, and protection against the ft . But generally, your everyday maintenance items come out of your pocket as a homeowner. Maintenance and repair can be as simple as redoing your baseboards or replacing a window, or as extensive (and expensive) as replacing a plumbing system or furnace. Th e expense will vary from home to home, and from year to year; however, generally, you can expect to pay about 1% of the value of your home annually toward these expenses. Don’t forget about your property too — basic gardening, lawn care, landscaping, spring and fall 12

cleanup, and snow removal all need to be taken care of by you. Renter advantage: If you rent, you don’t need to worry about any of these maintenance- and repair-related expenses. Admittedly, this is a major advantage over owning a home. Th ese obligations belong to the property owner/landlord, whether an appliance shuts down or your sink is leaking. Also, you won’t have any lawn or grounds care obligations. However, be prepared to wait for something to be fix ed. Even if you don’t have to foot the bill, there’s a chance that there’s a waiting list of repairs that need to be made for other tenan ts fir st. 2. Upfront and closing costs. Buying a home involves many upfront and closing costs, including earnest money, down payment, home inspection and appraisal, fir st year’s homeowner’s insurance, property taxes, real estate agent commission, attorney’s fees; the list goes on. Some buyers think only about the purchase price, down payment, and monthly mortgage payments and forget about these other important fees. Renter advantage: Renters don’t need to worry about upfront and closing costs; they just need to go through the application and approval process and be able to pay their monthly rent. 3. Relocation In fl exibility: Once you’ve purchased a home, it becomes trickier (and a lengthier, more complicated process) to sell and move than it is to break a rental lease. You need to prepare your home for showings, remove all your clutter and start packing, fin d a new place to live while putting your home on the market for a hopefully quick sale, and deal with potential issues like paying the mortgage while waiting for your home to sell. Renter advantage: Depending on the situation and contract you have with the landlord, moving — whether for work, travel, or family obligations — simply requires giving s uffi cient notice so you won’t be penalized. If you need to relocate before your lease 13

is up, you also have the option of subletting to another tenant to cover your rent and o ff set that cost. Selling a home within a short time frame is usually much more complicated, time-consuming, and risky. 4. Potential fin ancial loss. I’ve mentioned before that homeownership builds equity over time; however, equity doesn’t necessarily equal pro fi t. Some homes do depreciate in value over time, putting you at risk of a loss when you sell your home. Renter advantage: As a renter, you don’t need to worry about the housing market and whether home values in your area are fl uctuating, remaining stagnant, or decreasing. It’s not your problem, but for a homeowner who’s trying to sell, it is. Now that you have read and understand the main advantages and disadvantages of buying vs. renting a home, you are better equipped to make a decision. Th ere is much to consider when deciding to buy a home. But where to start? I suggest that you start by making a pros and cons list of buying vs. renting, a list that’s unique to your own personal needs and situation. Seeing the advantages and disadvantages, the bene fi ts and risks written down right in front of you can help you to really gauge the situation, see what the best course of action is, and what to do going forward. Many renters are nervous about the home-buying process, and because it seems too overwhelming and daunting, they choose to avoid the “risk” and stick with the familiar and keep renting. A ft er all, choosing to purchase a home is a big decision, and a major investment, and likely to be the most sign ifi cant purchase of your life. However, this doesn’t need to scare you away. All you need is to make sure you’re ready. Switching from renting to 14

homeownership comes with challenges, but also many, many rewards. It’s an exciting and amazing decision, one that you won’t regret, but one that requires sign ifi cant preparation. If you don’t think you’re quite ready to buy your fir st home, start by fig uring out what you can do to get yourself there. A little preparation goes a long way! Th ere are several steps you can take to get you started on your journey to purchasing a home. • Improve your credit score. • Start saving up for a down payment and closing costs. • Build up your savings account. • Research recent home sales in your area/neighborhood, and see what options are available as well as what you might be able to a ff ord. Note: If you currently own a home, consider upgrades that could net you a positive return on investment when you do decide to sell your home. STEP 1: IMPROVE YOUR CREDIT SCORE First, you must improve your credit score if you hope to get a mortgage loan to purchase your home. Th e higher your credit score rating, the better deals you’ll be able to grab. With a credit score of “below 660 or 680, you’re either going to have pay sizable fees or a higher down payment,” says Barry Zigas, director of housing policy for the Consumer Federation of America, as reported on Bankrate.com. A credit rating of 750 and higher will give you the best rates on the market, but 700 and up will still help yo u fin d a good deal. Access your credit report to see where you’re at. Settle any

outstanding debts. Research what you can to improve your score. Don’t apply for any new credit for a full year before you decide to apply for a mortgage. STEP 2: SAVE FOR A DOWN PAYMENT (AND CLOSING COSTS) Once you’ve started working on improving your credit score, you need to start saving for a down payment, as well as closing costs, which some buyers forget about. According to Bankrate.com, you’ll need to save between 3 and 20% of the total purchase price for a down payment. Your credit history and loan terms determine how much you’ll need. Twenty percent is standard, but an FHA (Federal Housing Administration) loan can be as low as 3.5%, with a minimum credit score of 580. Further, Department of Veterans A ff airs loans require zero down payment. As for closing costs, according to Bankrate’s latest survey, the national average for closing costs for a $200,000 mortgage is $2,084. Expect to save at least 10% of your mortgage for these fees. Don’t let these numbers get you down. Start saving and do some research, because you can fin d down payment assistance online, and it’s more readily available for fir st-time home buyers. If you’re searching for your fir st home in a buyer’s market, you can also likely have the seller pay a portion of the closing costs as part of your negotiations. STEP 3: BUILD UP YOUR SAVINGS ACCOUNT Don’t forget to build up your regular savings account — not just for a down payment, but for a little “cushion.” Th is will not only improve your chances of being approved for a loan — lenders like to see that you have money set aside and aren’t just living from 16

paycheck to paycheck — but will also ensure that you can pay your mortgage in case of job loss or major unexpected expense. A savings account can also help with maintenance and repair costs on your home. According to Bankrate.com, “a good rule of thumb is to assume that you’ll spend 2.5 to 3% of your home’s value each year on upkeep and repairs. If you buy a $250,000 home, aim to save $520 to $625 per month.

STEP 4: RESEARCH HOME SALES AND WHAT YOU CAN AFFORD

Do some research into recent home sales in the area in which you’re interested in buying a home. Find the average price, the highest prices, and the lowest prices. Look into how long they’ve been on the market. Determine what you want in a home (e.g., number of bedrooms/bathrooms, a garage, a yard, a basement, etc.) and what you can a ff ord. You can fig ure out how much you can a ff ord using online calculators that consider man y diff erent variables. In general, when it comes to conventional loans, expenses related to your home should never exceed 28% of your gross monthly income, says Susan T iff any, a retired director of Personal Finance Publications for Adults for CUNA (Credit Union National

Association). (source: Bankrate.com). HOW TO GAIN AN ADVANTAGE:

While there are many bene fi ts to renting a place over buying your own home, the advantages of owning outweigh the advantages of renting. Renting is sometimes the necessary choice, depending on your situation and needs, but it’s generally considered a short- term housing solution.

Th e bottom line is that in the long run, owning your home has more advantages than renting one. It’s in your best interest to take the plunge and begin the home-buying process, as daunting as it may seem a t fir st. I promise it will be worth it; there’s an intangible satisfaction that comes with owning your own home, a sense of accomplishment and independence, and with the right real estate agent at your side, you can be sure you will fin d the best home for you at a great price. Th e key is to be prepared, and if you’re not, then fig ure out what you need to do to get there. Hopefully this chapter helped you to get an idea of the bene fi ts of homeownership and how you need to prepare. Keep on reading to discover more insider secrets to buying a home and making the experience as smooth and successful as possible.

CHAPTER 3 Get an Agent on Your Side

Now that you’ve seen the advantages of owning your own home vs. renting, and you understand the steps you need to take to get to your dream of homeownership, it’s time to appreciate how real estate agents help buyers, and help you gain an advantage when

home shopping and buying. WHY IS THIS IMPORTANT?

Th e fact is that many buyers question whether using a real estate is really necessary or bene fi cial, and wonder if the expense (i.e., the commission) is worth it. Yes, it’s true that the do-it-yourself option can technically save you the commission fee, but for the majority of home buyers, who don’t truly understand the ins and outs of real estate, going the DIY route can actually be more expensive in the long run, not to mention making the entire home search and home-buying experience longer, more stressful, and more complicated. A professional real estate agent gives you the ultimate advantage as a buyer. He or she can make all the diff erence in helping you fin d the right home, negotiate a fantastic deal that essentially negates the commission fee, and navigate the complicated parts of the home-buying process. Buyers have little risk when working side- by-side with an experienced agent. I recommend hiring an agent — but the right agent. Someone inexperienced, someone who doesn’t seem like they’re on your side but are in it for themselves, or someone who has more experience working with sellers will not meet your needs, and could cost you in the end. Th e agent’s commission is a cost, yes,

but is well worth it, and in most cases, is paid out of the fin al sale price rather than out of your own pocket. So yes, hire a real estate agent, but the right agent — someone who’s on your side and will guide you every step of the way toward homeownership and a satisfying and successful home-buying experience. First, let’s get the technical jargon out of the way. Who is a real Th e short answer is that a real estate agent is someone who is licensed and cert ifi ed to list and sell real estate, not limited to homes but including multi-family properties as well as commercial and industrial buildings. It’s also important to note that a real estate agent is not necessarily a Realtor®, who is a recognized member of the National Association of REALTORS® (NAR). So, while all Realtors® are real estate agents, not all agents are Realtors®. estate agent and what do they do? WHO IS A REAL ESTATE AGENT? Th e real estate agent who represents a buyer and works on their behalf to help them fin d and purchase a home is called a buyer’s agent (whereas seller’s agents, or listing agents, help people sell their homes). All “listing agents” represent sellers, but agents who don’t have what’s called buyer-agency agreements with potential buyers are technically working on behalf of the seller, even if they’re showing homes to those potential buyers. Th ey must work to negotiate the best possible price for the seller. Buyer’s agents work on commission, as detailed in their contracts and the listing agreement. When a buyer’s agent brings the buyer along, the listing agent must split the contracted commission with the buyer’s agent. 21

ADVANTAGES AND BENEFITS OF USING AN AGENT Below is a short list of advantages of using a buyer’s agent:

• Education and experience • Neighborhood knowledge • Market conditions knowledge • Price guidance • Acting as b uff ers • Professional networking • Negotiation skills • Handling paperwork • Answering questions a ft er closing • Developing relationships for future business

While this represents a basic list of the bene fi ts of hiring a professional real estate agent, let’s dig a little deeper into some of the major bene fi ts of retaining the services of an agent. SAVING MONEY IS NOT LIKELY Despite what many new buyers assume, skipping out on hiring a real estate agent is no guarantee that you’ll save money by avoiding paying the commission fee. Th e point of not using the professional services of an experienced real estate agent is usually to save money, but the truth is that do-it-yourself buyers rarely get the deal they’re a ft er without an agent by their side, and end up paying more in the long run. Some buyers even expect, rather than just hope, to save money, and make an o ff er on a home accordingly. However, unless both the buyer and the seller agree to split the savings, then they can’t both save on the commission. REAL ESTATE MARKET KNOWLEDGE AND ACCESS

Quite frankly, a real estate agent knows more about the real estate market than you do. You might have some knowledge, and have even done your due diligence with extensive research. However, real estate agents are spe cifi cally trained to understand all the ins and outs of the real estate market — it’s literally their specialty. Just like mechanics know more about automobile repair than the average person, and doctors have more medical knowledge than their average patients, real estate agents will know more about the housing market. Th ey even have particular knowledge of local neighborhoods and conditions. An agent will also have better access to the housing market, because that’s the fi eld in which he/she works and because he/she works as a full-time liaison between buyers and sellers. Buyer’s and seller’s agents know how to put good deals together for the bene fi t of their clients. An agent will also have readily available access to other properties listed by other agents, and can track down homes that meet your criteria, contact the listing agents, and secure appointments for viewing the homes. Navigating all this on your own is much more complicated and diffi cult, and will also take a lot longer without an experienced agent on your side. NEGOTIATION EXPERTISE Even if you’re well known by family, friends, and colleagues as an expert negotiator, when it comes to negotiating for home prices it’s a whole diff erent ball game. Th is is where the negotiation skills of a real estate agent come in handy. Sometimes, the home search and home-buying process can become emotional and even heated, but a real estate agent knows how to keep the transaction dispassionate and “at arm’s length,” so to speak, in order to keep clashing personalities, emotions, frustrations, and arguments at 23

bay. Negotiating the price of a home takes a certain specialized skill set as well as the understanding of the psychology of negotiation and bargaining, of o ff ers and countero ff ers. For example, let’s say that you, the buyer, are interested in a certain home, but absolutely despise its outdated look, with wallpaper and old carpet in some of the rooms, as well as cringy color choices. You might have a hard time keeping this disdain to yourself, whether out loud or on your face, especially if you tend to be quite honest and blunt rather than subtle. However, if you work with an agent, you can safely and comfortably rant to the agent, privately, about those items you absolutely hate and vent about how much it will cost to improve the home — all without insulting the owner Th ere are many — probably more than you’d like — diff erent contracts and documents involved in a home sale and purchase. Unless you’re a real estate agent yourself, or even a real estate attorney, these documents will most likely be foreign to you. However, they are still necessary and require very detailed and accurate completion. It’s not a simple “ fi ll-in-the-blanks” process with random signatures here and there. Th ere is extensive documentation involved, and needless mistakes can really hurt you or haunt you down the road. Th e good news? Real estate agents are trained to deal with contracts, terms, conditions, and other types of documents and paperwork, and will work on your behalf to make sure all the proper Ts are crossed and Is are dotted. An agent will be familiar with which particular conditions should be used, when they can be safely removed, and how to use the contract to protect yourself. and potentially missing out on a sale. CONTRACTS AND DOCUMENTS

HOW TO GAIN AN ADVANTAGE: You can gain the advantage simply by hiring a real estate agent. Th e bottom line is that you have nothing to lose by working with a good real estate agent. Th ere is little risk involved, the cost is worth it, as an agent can help you fin d a great deal on your home — with a far better chance than doing it on your own. Having a professional real estate on your side throughout the home search and home-buying process is one of the best ways to gain an advantage. A great agent will remind you that you have the power and the upper hand, and will guide you along the way. But fir st you need to fin d a great real estate agent — something that will take some research, time, and energy. HOW TO HIRE A GOOD AGENT: DO YOUR RESEARCH! A good agent will have specialized knowledge of homes in your areas of interest. Th ey will be informed of everything you need to know about the property. How do you hire a good agent who meets all the criteria and has the right qualities to fin d you the house you want? It really isn’t too terribly diffi cult to fin d a local real estate agent — many plaster their faces and contact information onto sponsored public benches, public buses, and yard signs, not to mention direct mail brochures or postcards as well as online ads everywhere. You need to do your research so that you can cut through all the advertising hype and fin d the right agent for you. Th at’s not to say it’s an easy task, however! You’ll need to do research on real estate agents in your area. For example, you’ll need to fin d agents who are experts in their fi elds, have plenty of experience working with buyers spe cifi cally, have an excellent track record with recommendations and positive reviews, etc.

Here are some top tips you can use/follow to help you fin d a great buyer’s agent. TIPS TO PICKING A GREAT REAL ESTATE AGENT • Contact and interview. • Find an agent with knowledge of the area. • Research the agent’s level of experience. • Choose an agent with the right credentials. • Look at the agent’s recent home sales and current listings. • Reach out to the agent’s recent clients. Tip 1: Contact and Interview Th e fir st step to fin ding and hiring the right real estate agent is to actually contact one. You can do some research online, but it’s not hard to fin d local agents just by going for a walk or taking a drive or the bus in your neighborhood. Real estate agents get clients through successful sales and client referrals, but also through advertising, as mentioned above (public spaces, direct mail, online, etc.). So, you need to start out by contacting one. Don’t worry, even if you are, real estate agents are not shy and do not hide their lights under bushels. One way to fin d a good local agent is to simply drive around your areas of choice looking at the “for sale” signs. Who is the agent selling them? Better yet, which agents have the most “Sold” signs in the neighborhood? Once you’ve got a decent list in hand, you are ready to start contacting them. You can start by simply mentioning you are looking to buy your fir st home, and you’d like to retain the services of a qua lifi ed and experienced real estate agent. Of course, their responses are

probably going to be similar, such as “I’m glad you called; I’m just the person who can help you with your needs!” or “You called the right number! I’m happy to help you fin d the perfect home for you and snag you a fantastic deal!” Th is is when you mention that you’re happy to interview them, as you are considering various prospects (which you are). Conducting an interview with locally available real estate agents will most certainly help you fin d the one that’s right for you. Th e purpose of the interview is to check the qualities of the agent and see if they’re the right fi t. Th is includes everything from personality, behavior, work ethic, and reliability to professional credentials, experience, housing market knowledge, and positive feedback from clients. One simple way to review everything before o ffi cially hiring an agent is checking these things: • Previous deals (portfolio) • Working hours, capabilities, skills, motivation, ideas, and loyalty • Ethical exam cert ifi cations Don’t rush through the interview process. You need to fin d the agent that’s right for you! Here are some traits to look for in an agent. He or she should be: • Connected: Does the agent have the appropriate contacts to help you in each phase of the home-buying process? A network of connections should include home inspectors, home appraisers, high-quality service people, other brokers, and county o ffi cials. • Current: Is the agent up-to-date with the latest housing trends so he/she can serve you e ff ectively?

• Honest: Does the agent have a good, honest reputation? Real estate agents build their reputation on high standards of business practices. • Knowledgeable: Is the agent familiar with the current housing market and able to help with price issues strategically? How well does the agent know the area/ neighborhood? • Organized: How organized is the agent? An agent must pay close attention to your spe cifi c needs, and be quick to follow leads and communicate with you and others involved. • Passionate: Is the agent passionate about real estate and does he/she love the job? You want someone who will work harder and longer for you, producing better results than someone who simply treats their job like a hobby or just a way to earn extra income. • Personable: How friendly is the agent? Agents sincerely interested in helping you will “go the extra mile with a smile.” • Self-motivated: How motivated is the agent? Real estate agents are commission-only, and those who are successful are self-motivated to work hard because what bene fi ts their clients also bene fi ts them. • Tech-savvy: Is the agent up-to-date and familiar with the latest technology for marketing homes, including a personal website, social media setup, user-friendly home search options, and quality presentations online with high- resolution images of homes, accompanied by videos and slideshows? You don’t want to work with someone who’s behind the times. • Tenacious: How strong is the agent’s work ethic?

Successful agents are e ffi cient and take advantage of any time-saving tools that help sell your home, yet won’t be put o ff b y a long hunt. Tip 2: Find an Agent with Knowledge of the Area If the agent you’re considering hiring isn’t familiar with the area where you’d like to move, then you need to move on. A good real estate agent absolutely must be familiar with the area, including what the neighborhood is like, the ins and outs, the ups and downs, and especially about other properties in the area that a) have recently sold; and b) are currently available for sale. Even better, the agent should have knowledge about each particular property in the area that’s on the market. If he or she can o ff er spe cifi c details on these properties, then you know the agent is familiar with the area and can help you fin d not only a home that you’d like, but also help you snag a great deal. You de fin itely want to hire an agent who’s on top of the market. Tip 3: Research the Agent’s Level of Experience Even though it’s true that in the professional world, everyone needs to start somewhere, you will want the con fi dence that can only come if you’re working alongside a veteran experienced real estate agent. If this important matter hasn’t already come up in your initial contact and interview, just ask the agent directly. Th ere’s no shame in asking something that will have a big impact on your decision and your future homeownership experience. If you suspect the agent you’re considering isn’t as experienced as they let on, you can contact your state licensing authority, and generally they can tell you exactly how long an agent has been in business.

“If they haven’t been in business fi ve years, they’re learning on you and that’s not good,” says Robert Irwin, author of Tips & Traps for Negotiating Real Estate (Bankrate). Ultimately, the agent you want on your side is someone who is actively engaged in your particular area of interest and within your price range, and someone who can actually demonstrate

knowledge of the area and homes you can a ff ord. Tip 4: Choose an Agent with the Right Credentials

Just because someone says they’re a real estate agent doesn’t mean they possess the right credentials and qua lifi cations. Th ink about it. You wouldn’t hire an electrician without checking their credentials and qua lifi cations, would you? What about doctors? Th ey have their credentials and qua lifi cations displayed on their walls for all patients to view. In the same way, you should make sure your potential buyer’s agent has the licenses and cert ifi cations required for them to work as a qua lifi ed real estate agent. Some agents even get additional specialized training to add to their names. Some of the most common designations include: • CRS (Cert ifi ed Residential Specialist): Completed additional training in handling residential real estate. • ABR (Accredited Buyer’s Representative): Completed additional education in representing buyers in transactions. • SRES (Seniors Real Estate Specialist): Completed training aimed at helping buyers and sellers in the 50-plus age range. As mentioned above, a real estate agent can also be a Realtor®, which means he/she is an o ffi cial member of the NAR (National 30

Association of REALTORS®). Tip 5: Look at the Agent’s Recent Home Sales and Current Listings Look at their recent home sales. How successful have they been? Do they specialize in the type of home you’re interested in purchasing? Th is is key, because their successful track record in home sales and specialization means that there’s a good chance that they’ll have plenty of properties for you to look at, as well as get you an “in” with the sellers to negotiate a great deal for your home purchase. Check out an agent’s listings online, says Stephen Brobeck, director of the Consumer Federation of America (Bankrate). Some spe cifi c places you can look include the real estate agency’s website as well as Realtor.com. On such sites, you can use a searchable online database of properties available. Adept and tech-savvy agents will list their sales and information online because they know that most buyers start their search online. When you view an agent’s listings, look at how closely they mirror the type of property you wish to purchase, including area/ neighborhood as well as price range. Tip 6: Reach Out to the Agent’s Recent Clients Both excellent and less-than-stellar real estate agents will receive plenty of feedback and reviews; however, not all will have recommendations or referrals. You want the latter. Look into any recommendations and positive reviews. You can research them yourself, or simply ask the agent to provide a list of what they have listed and sold within in the past year, with the accompanying contact information. Contact the reviewers if you can, so you can get a clearer picture of who the agent is and how they work. Ask the reviewers what it was like working with the 31

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