Tips & Tools : real estate agent

What to do When You Can’t Afford Your Mortgage Payments

RE.com Tips & Tools — Thu, 30 Jul 2009 12:42:00 GMT

EDITOR'S NOTE: With foreclosure properties still dominating the housing landscape in the U.S., we've asked our friends at RealtyTrac® to guest author some articles to shed light on the foreclosure crisis. RealtyTrac is the most trusted source of foreclosure information in the country. We hope that the information provided here and in other articles will be beneficial to understanding, avoiding and even leveraging (as an opportunistic buyer) home foreclosures.

By James J. Saccacio, Chief Executive Officer

No one who buys a home intends to miss any mortgage payments. But unexpected life circumstances can quickly stymie the best of intentions, and homeowners can’t always prevent defaulting on their payments. If you’re one of these homeowners, it’s important that you take steps to prevent the situation from getting worse. Many homeowners fall into the traps of procrastination or overreaction, neither of which is helpful. Instead, you should adopt a measured response in which you take into consideration all the options available and act decisively before you lose your home. Below are some suggestions.

Contact your lender
Once the due date for your mortgage payment has come and gone, it’s only a matter of time before your lender knows you’re in default. But don’t wait for them to contact you; act preemptively and call them right away. If you leave it up to them, they may contact you for several months – when it will be much harder to resolve the situation. Lenders deal with defaulted customers every day, so they often can provide solid advice. And most lenders aren’t eager to expend the money and time it takes to foreclose on your home, so they’re open to other alternatives. Before you sign any agreement with your lender, have it reviewed by a real estate agent, attorney or a local housing counseling agency approved by the U. S. Department of Housing and Urban Development.

Know the deadlines
If you default on your loan and don’t work out a plan of resolution with your lender, the lender will schedule a public foreclosure auction of your property. In some states the countdown to the auction is less than a month; in other states it is more than a year. In either case it’s critical that you understand exactly how much time you have before you lose your home. A tangible deadline will help you set goals and take control of the situation. Consult RealtyTrac’s State Foreclosure Laws Summaries to find out more about the foreclosure timeline in your state.

Consider your alternatives
Homeowners in default have several viable options to stop the foreclosure process. Not all of these options will work for every homeowner, but you should consider the advantages and disadvantages of each option and determine which is best for you if you are in default.

Adjust your budget: If you haven’t done so already, take a look at where all your money is going. Look for ways to bring more money in and cut non-essential expenditures.
Restructure your payments (Forbearance): Find out if your lender can offer you a forbearance agreement that allows you to lower your monthly payments now and pay the difference when you’re back on your feet financially.
Refinance your loan: If interest rates have fallen since you last financed the home, ask your lender if they would be willing to refinance your loan so that you have lower payments.
Sell your property: Although this probably isn’t your first choice, it can allow you to walk away with any equity you’ve built and it’s a better alternative than losing your property at a public auction.
Deed your property in lieu of foreclosure: If you don’t have any equity in the property, you may choose to simply transfer ownership to the lender so that they stop the foreclosure proceedings against you.

Consult a real estate professional
Whether you decide to restructure your payments, refinance, sell or deed the property in lieu of foreclosure, you should enlist the help of a local real estate professional — such as a real estate agent or attorney — to guide you through the process. Many homeowners in default don’t have the money to pay an attorney and don’t want an agent’s commission to eat away at any profit from a home sale. But keep in mind that just an hour or two with an attorney may be sufficient to ensure that you’re avoiding any pitfalls in the process. And a good agent will give you solid advice even if you can’t afford to have them list your home. They know that if they help you out now, you’re more likely to use them the next time you buy or sell a home. And they know you’re more likely to refer them to a friend.

Be wary of scams
Some people take unfair advantage of homeowners in default. These scammers will promise to help you but will only leave you in worse shape. According to HUD, the most common scams are equity skimming and phony counseling agencies.

Equity skimming: you will be approached by someone who promises to pay off what you owe to the foreclosing lender if you hand over ownership of your property, usually through what’s called a Quit Claim Deed. Once you’re out of the house, the new owner rents it out for a few months and never pays off your mortgage, causing the lender to foreclose. You end up with a foreclosure on your credit history and with little or nothing to show for any equity you had built in the property.
Phony counseling agencies: phony counseling agencies contact homeowners in default and offer help for a fee. Once they have your money, they may not do anything for you. If they do help you, it will be by contacting your lender or suggesting that you sell your house — tasks you can do on your own.

On its website, HUD suggests the following precautions to avoid scams:

Don’t sign any papers you don’t fully understand.
Make sure you get all “promises” in writing.
Beware of any contract of sale or loan assumption where you are not formally released from liability for your mortgage debt.
Check with a lawyer or your mortgage company before entering into any deal involving your home.
If you’re selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer by contacting the state’s Attorney General, State Real Estate Commission or the local District Attorney.

If you find yourself unable to make your monthly mortgage payments, the key is to take control of the situation by knowing all your options and acting decisively to stop the foreclosure. That will allow you to make the best out of a difficult situation.

Five Tips for Buying a Foreclosure Property Below Market Value

RE.com Tips & Tools — Mon, 27 Jul 2009 15:16:00 GMT

By Jim Saccacio, RealtyTrac Chief Executive Officer

If you feel like the escalating costs of real estate have priced you out of the market, think again. It may be time to investigate the vast opportunities available in the foreclosures market.

For people willing to do a bit of homework, the foreclosure market offers some of the best opportunities available in real estate today. Experts point toward significant growth in available foreclosure properties, so there’s never been a better time to line up your resources and educate yourself about this previously hidden market. It’s not unusual to save from 10 to 30 percent of the market value on a foreclosure property, and certain properties offer savings of 50 percent or more! There really are bargains out there. You just have to know where to look.

Web-based services such as RealtyTrac give consumers access to foreclosure and pre-foreclosure information that was previously available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal. RealtyTrac, which provides all the foreclosure data for both MSN House and Home and Yahoo! Real Estate, has already compiled a list of over 550,000 foreclosure properties across the country.

The keys to a successful foreclosure property purchase are diligence and patience, along with taking an educated approach to investing in this market. RealtyTrac CEO Jim Saccacio offers five tips to help you close a deal on a foreclosure property:

1. Learn about the different types of properties and the foreclosure process.
Not all foreclosures are the same! You need to educate yourself on the difference between the three basic types of properties, including notice-of-default (NOD), notice of trustee sale (NTS), and real-estate-owned REO, as well as the positive and negative aspects of buying at each stage of the foreclosure cycle.

As a rule of thumb, the best savings can be made at the pre-foreclosure stage, where home owners can avoid a foreclosure and lenders can save the time and cost involved in going through the process. Another critical point in the process is immediately prior to the auction date, when all parties might be most open to a last-minute solution.

2. Secure financing early
It’s important for a buyer to be pre-qualified before engaging in discussions with a seller. This ensures that the buyer is in a financial position to purchase the property, and is in the strongest possible position to negotiate.

3. Engage a real estate agent as a “buyer’s representative”
There’s a distinct difference between a buyer’s and a seller’s representative. Buyer’s representatives have the home buyer’s interests at heart, and are charged with finding the right property and negotiating the best price for their clients. Picking the right real estate agent will make your life much easier. Ideally, select an agent who specializes in the foreclosures market and has specific experience in REO properties.

4. Do your homework
Purchasing foreclosure properties is somewhat more risky than buying traditional real estate properties. But, with that risk comes reward in the form of much higher potential savings. With the right examination and due diligence, buyers can significantly reduce the risks. As with any purchase, timing is everything! But, it makes sense to give any property under consideration a thorough examination, including determining its condition and value, finding out the amount in default and the remaining loan balance, and running a legal investing report to make sure the property is free of any financial liabilities. Of course, it never hurts to foster a positive relationship with the seller!

5. Make a realistic offer
If you want to be taken seriously as a buyer, you must be realistic when preparing an offer. Lenders aren’t likely to give properties away, particularly in a real estate market where prices continue to rise. Additionally, homeowners in financial distress may be difficult to deal with, particularly early in the foreclosure process. An educated buyer—one who knows how much is owed on the property and what its market value is—can usually come up with a realistic offer; one that offers significant savings, while meeting the requirements of the lender.

RealEstate.com expands to 1,200 agents, plans further growth

Bru5W — Fri, 15 May 2009 18:08:00 GMT

Real Estate Broker's Insider, Jeff Ostrowski, May 2009 issue

RealEstate.com, Realtors is the rare brokerage that closed more deals and generated more commissions in the fourth quarter of 2008 than in the fourth quarter of 2007.

The company says its closings spiked 55 percent over the year as RealEstate.com embarked on an aggressive strategy of recruiting agents and buying companies.

Launched in March 2006, RealEstate.com, Realtors now has 1,200 agents in 20 markets. It aims to continue that growth. “Our company is starting in one of the worst real estate economies in our lifetime,” says Victor Vaca, national vice president of sales at RealEstate.com.

To keep growing, RealEstate.com, a division of Charlotte-based Tree.com, has built a call center recruiting team, Vaca says. The company has bought lists of agents from multiple listing services, and its recruiters are calling agents to pitch the business model.

A primary selling point: The leads generated by the popular RealEstate.com site. In March, it ranked 20th among Hitwise’s list of the most popular real estate websites. Vaca’s pitch: “Say you’re doing 10 deals a year. Imagine doing all the deals you’re doing now, and we can feed you another five to 10 transactions a year.”

To generate leads, Vaca says, RealEstate.com is spending “a ton” on search engine marketing and search engine optimization. A typical RE/MAX agent, Vaca says, might spend $40,000 to $60,000 a year to generate online leads, RealEstate.com is doing the lead generation for them.

“We are going to fight this very expensive battle,” he says. Agents do pay for the leads. For closed transactions where the lead came from RealEstate.com, the agent pays a 35 percent “success fee.” Even so, Vaca says, it’s not all about the leads. “You don’t come here for the leads. You come here for the leadership,” Vaca says. RealEstate.com brokers train agents how to respond to leads and how to build up their repeat and referral business.

But responding to leads is a key part of the business model. A consumer who makes a request on RealEstate.com can be on the phone with the call center in seconds, and

on the line with an agent in a couple minutes, Vaca says. “We want to provide a worldclass consumer experience to the customer that’s on the phone,” he says.

Leads are doled out based on where an agent does business and also based on the agent’s success in converting leads. Vaca admits the demands of responding instantly to leads can be grueling, so agents are able to call time-out. If an agent will be out with a client or dining with her family, she can hit an online “pause” button that means leads won’t come to her for a time.

But in a slow market, agents find RealEstate.com’s lead machine a boon rather than a burden. “They love having leads delivered to their cell phones,” Vaca says. RealEstate.com has grown not only through recruiting but also through acquisitions. Its most recent deal, announced in late 2008, was for Tampa, FL-based New Homes Realty Inc., which had 200 agents and brokers.

In 2007, RealEstate.com bought Distinctive Homes and Land of Tucson, AZ, and it also took over a brokerage in Salt Lake City. RealEstate.com has kept many of the agents after mergers, in part by keeping on a manager from the acquired company. “Trying to keep that family whole is important,” Vaca says. RealEstate.com has offices from New England to Southern California, but Vaca notes that the company isn’t investing much in office space. Its Los Angeles office reaches through Central California because most of the agents work from home.

“We opened with 3,000- to 4,000-square-foot offices, but we can function with half that space or less,” Vaca says. “We have a very efficient, very scalable operation.”

Contact: Victor Vaca, RealEstate.com, Realtors, www.realestate.com.

How Real Estate Agents Get Paid

RE.com Tips & Tools — Wed, 30 May 2007 17:15:00 GMT

Commissions are divided between brokers, then again between brokers and agents.

Home buyers rarely concern themselves with how real estate agents get paid for their services. Yet it behooves buyers to take an interest in this subject since the money they bring to the deal is used to pay the brokers’ commissions.

Listing, cooperating brokers split commission

Typically, home sellers pay the listing broker a percentage of the sale price. The commission isn’t set by law, but rather is negotiable between the broker and seller. The broker may be an individual or a brokerage company represented by an agent. The listing broker then offers a share of the commission through the multiple-listing service, or MLS, to cooperating brokers who may bring a buyer to the transaction. The cooperating broker’s share is often, but not always, 50 percent of the commission. State law may require the listing broker to tell the seller how much the cooperating brokers have been offered.

(Not sure what a cooperating or listing broker is? Read Who’s Who in a Real Estate Deal.)

If no cooperating broker is involved in the transaction, the commission belongs entirely to the listing broker. A transaction wouldn’t have a cooperating broker if the buyer was unrepresented, the listing broker represented both the seller and the buyer, or the listing agent acted as a facilitator who represented neither the buyer nor seller.

Broker, agent split commission again

The listing and cooperating brokers then split their share of the commission again with the agents or salespeople who work for them. If the agent were also the broker (e.g., in a one-person brokerage company), there would be no split. Commission splits between brokers and agents can be any amount, though new agents often receive 50 percent, and splits less than that are unusual. An experienced agent might earn any amount from 60 percent to 97 percent or work on a sliding scale in which the percentage increases as the agent closes more business. Some agents earn 100 percent of the commission and pay fees to the broker in lieu of a split arrangement. Buyers and sellers normally aren’t privy to commission splits. In most states, it’s legal for the buyer to receive a rebate from the cooperating broker’s share of the commission. The rebate might be a credit at closing, a gift card or some other form of compensation.

Other options for sellers, buyers

The MLS explains why cooperating brokers rarely show homes that are for sale by owner. Since those homes, known as FSBOs, aren’t listed with a broker, there is no offer of compensation and thus the cooperating broker wouldn’t be paid for the sale of the home, except perhaps by the seller or buyer directly.

Buyers can choose to offer compensation directly to an exclusive buyer’s broker. This type of arrangement is uncommon, however, in part because a buyer who didn’t purchase a house could still become obligated to pay the broker for his or her services in some circumstances.

Unhappy With Your Real Estate Agent?

RE.com Tips & Tools — Thu, 22 Mar 2007 15:11:00 GMT

Before you consider "firing" your agent, honestly determine why you're dissatisfied.

If you signed a listing contract but are unhappy with your agent’s performance, it may be because:

• Your home is not selling as quickly as you’d hoped
It could be that you had unrealistic expectations. While some homes do sell in a few days, many more are up for sale for weeks and often months. This may reflect a tepid market or a glut of homes for sale in a particular neighborhood but, more often than not, it signals overpricing.

“If your house is not selling, be honest with yourself,” says Eric Cunliffe, senior vice president and general manager of the RealEstate.com Broker Network. “Did you force your agent into a higher price than they recommended?” Ensure that the competitive market analysis (CMA) that your agent prepared jibes with your asking price.

And while you’re being brutally honest, remember those interior and exterior “curb appeal” touch-ups your agent suggested but you were just too busy to finish? “The agent is the expert,” says Cunliffe. “Get those little jobs -- like brightening up the front porch or cleaning the windows -- done and out of the way.”

• Your agent is not fulfilling his or her obligations
A truly negligent agent is certainly the exception, not the rule. When you sign a listing contract, you can expect an agent to perform a number of standard marketing efforts. These include activities such as putting up a “For Sale” sign in your yard, listing your home in the Multiple Listing Service (MLS), holding open houses (for both prospective buyers and other agents), advertising and arranging showings.

If your agent does not properly market your home, complain to the managing broker of the firm he or she represents and request another agent -- assuming your contract is with the firm, not the agent. If it’s with the agent and you’re insistent on terminating the contract, you may legally have to prove your agent’s lack of “due diligence” in carrying out accepted marketing procedures, At this point, you may want to consult a real estate lawyer and, if he or she is a licensed REALTOR®, report the person to the National Association of REALTORS®.

To protect yourself in the future
To protect yourself from getting stuck with a lax agent or someone whose personality doesn’t fit your own, your best bet is to sign a listing agreement with a firm, not an individual, and restrict it to a 90-day term. If you and your agent are on the same page, you can always renew your listing agreement. If you’re not satisfied, a shorter agreement term gives you an “out” and a little less stress on the path to selling your home.

How to Resolve Disputes with Your Home Builder

RE.com Tips & Tools — Thu, 15 Feb 2007 18:51:00 GMT

Knowing how to handle disputes with your home builder can help ensure problems don't result in costly delays.

Despite the best-laid plans, problems can inevitably happen in new construction. The wrong sink can be ordered. Your living room walls may end up being painted a different shade from the one you asked for. There are many things that can go wrong. The important thing is to ensure such situations get corrected quickly so that they don’t escalate and delay the closing of your home.

Keep in contact with the builder

Throughout the building process, you should be in constant communication with your home builder. Go to the construction site if possible and see if you can walk through the house. If you notice any mistakes, contact your home builder immediately to request that they be corrected.

Work with your real estate agent

If you are working with a real estate agent, this can be an advantage in handling disputes with your home builder. Your agent is a professional who is used to negotiations and has probably dealt with new construction before. You can therefore ask your agent to call your builder on your behalf.

Hold funds in escrow

If the issue still can’t be resolved after both you and your agent have had a discussion with your builder, you do have another option. The funds for the purchase of your home can be held in an escrow account until there is a satisfactory conclusion. Unfortunately, this may mean that your closing will be delayed. However, it may be well worth it to delay closing to make sure your builder gets it right.

Is That Home Price Fair Market Value?

RE.com Tips & Tools — Tue, 06 Feb 2007 21:22:00 GMT

With today's higher home prices, it can sometimes be hard to tell if the home you have your eye on is overpriced.

In certain markets, determining whether a home is overpriced, or priced at fair market value, can be a daunting task.

The following resources can help you determine the fair market value of a home:

Your Real Estate Agent

One of the best resources to use when shopping for a home is an experienced real estate agent. You should choose someone who has a thorough knowledge of the area in which you want to buy and who you can trust to look out for your best interests. He or she should be able to advise you whether or not that home you are interested in buying is overpriced through a competitive market analysis of the area. This involves comparing the listing price of the home you are interested in buying to the recent selling price of other homes in the region that are similar in size, condition and amenities.

A Professional Appraiser

A professional home appraiser can tell you whether there is a great discrepancy between a home’s asking price and its appraised value. Usually, this will involve an inspection of the physical condition of the property, the square footage and any extras such as a garage or swimming pool. Your mortgage lender, when determining the amount of funds you will be eligible to borrow, will also require an up-to-date appraisal.

A Home Evaluation Site

There are many Web sites, such as RealEstate.com, that can help you determine the fair market price of a home. By inputting the address and some additional information about the home, these sites will compare it to the price of other homes listed for sale online. While the result may not be as accurate as it would be if you were to have a professional home inspection performed, it’s a great way to get a quick feel for whether or not a home is likely to be worth the price.

Step 4: Finding a Real Estate Agent

RE.com Tips & Tools — Mon, 22 Jan 2007 19:40:00 GMT

When buying a home, it's helpful to have a real estate agent who will keep the process running smoothly.

Finding an agent who has expertise in the area you are looking is crucial. Your agent will know the market and work to get the best deal possible. Buying a home also means wading through a great deal of paperwork and dealing with some procedures that may be foreign to you, such as hiring a home inspector. A good agent will help you organize and coordinate all the important elements of buying a home.

One way to find a real estate agent is to ask friends and family for recommendations. However, if you’re looking in a different area than where that agent normally works, you could miss seeing some homes because the agent isn’t familiar with the area. Make sure you interview every agent you consider, and ask them how they will let you know when homes come on the market, which areas of town they specialize in, and if they have experience in your price range. Online companies such as RealEstate.com make the process easier by connecting you with real estate agents who are experts in your area and price range. Once you submit your information, you will be contacted by up to four agents agents, and after interviewing them, you can choose which one will be best for you.

When you find a real estate agent with whom you are interested in working, he or she should be clear about his or her role in the home buying process. It’s generally not a good idea to use the same agent who is selling the home you are considering buying; the agent has an obligation to represent the seller’s interests, not necessarily yours. Also know that some real estate agents work only with buyers, while others work only with sellers.

How dual agency works

RE.com Tips & Tools — Mon, 22 Jan 2007 18:57:00 GMT

Should one brokerage company or one agent represent both you and the seller of the house you want to buy?

Real estate brokerage commissions are one of the most mysterious aspects of buying a home. Yet it’s nonetheless important for prospective buyers to try to make sense of the commission system and understand the pros and cons of various scenarios.

One potential scenario is a dual agency, which occurs when one brokerage company represents both you and the seller of the house you want to buy. For example, a dual agency might be created if you toured an open house and agreed (either on the spot or later) to allow the listing agent to write an offer for you to purchase it.

A dual agency could exist even if two different agents who both worked for the same brokerage company represented you and the seller. And that would be the case even if the two agents didn’t work in the same office. Dual agency is legal in most states, though it may be subject to special real estate laws and regulations, and requirements of industry ethics codes.

Possible benefit of dual agency

A dual agency could present an opportunity for the seller to negotiate a reduction in the broker’s commission since the commission wouldn’t be shared with another broker. That opportunity might be even better if you and the seller were represented by the same agent as well as the same broker.

Possible drawback to dual agency

On the other hand, a dual agency could hurt your negotiating position with respect to the seller since the listing agent might be privy to more information about your needs, wants and ability to purchase the home.

Whether a dual agency makes sense depends on your personal priorities and the dynamics of the local housing market. If the market were characterized by high demand among buyers relative to a limited supply of for-sale homes, a dual agency could help you compete against other buyers’ offers. But if the market conditions were reversed, you might want to think harder before you agreed to a dual agency. Don’t make a hasty decision if you can take some time to weigh the pros and cons and consider other options.

If the listing broker won’t reduce the contracted commission, the cooperating broker or agent might offer you other concessions to help you to buy the home. Concessions might include paid closing costs, a repair allowance or a rebate, among other possibilities. Buyer rebates are legal in most, but not all states.

Don’t disclose personal or financial information to an agent until you decide you want him or her to help you purchase a home. You might need to discuss your needs in a general way when you interview agents, but be cautious. If any of those agents later represented the seller of a home you wanted to purchase, information such as how quickly you wanted to move or the top-dollar you could afford to spend could be used to your disadvantage in those negotiations.

Real estate commissions can create perverse incentives

RE.com Tips & Tools — Mon, 22 Jan 2007 18:17:00 GMT

Choose a reputable agent to protect yourself from commission shenanigans

Realty commissions are among the best-kept secrets in home sales, perhaps because the subject is akin to asking brokers and agents how much money they make and, like most people, they consider their own income to be a private matter.

Yet savvy home buyers should educate themselves about commissions and ask questions that are pertinent to their own situation. The commission may provide the brokers’ and agents’ incomes, but the buyer brings the money to pay that commission to the deal.

Brokers and agents are compensated only when someone buys a home. That means if an agent shows you 10, 20 or 200 houses, but you never buy one, he or she will have invested a lot of time and effort for no reward.

This reality places intense pressure on agents, who sometimes transfer that pressure to buyers. A good agent should allow you to make decisions without undue pressure since otherwise you might be too petrified to act or you might experience deal-breaking buyer’s remorse afterwards.

(If you don’t know how commissions work, read more about real estate broker and agent commissions.)

An agent probably won’t pressure you to buy a more expensive house than you can afford just to earn a bigger commission since the additional compensation wouldn’t outweigh the risk that you might not buy a home at all.

An example illustrates this point:

House price: $250,000
Offer to cooperating broker*: 3 percent
Agent’s split: 65 percent
Agent’s compensation: $4,875

House price: $255,000
Offer to cooperating broker: 3 percent
Agent’s split: 65 percent
Agent’s compensation: $4,972
Additional compensation for $5,000 higher price: $97

House price: $260,000
Offer to cooperating broker: 3 percent
Agent’s split: 65 percent
Agent’s compensation: $5,070
Additional compensation for $10,000 higher price: $195

* Remember, the listing (seller’s) broker offers a share of the commission to the cooperating (buyer’s) broker and each agent earns a split of the broker’s share.

However, the compensation system can create an incentive for agents to prioritize the sale of houses for which sellers have agreed to pay larger commissions and listing brokers have offered larger shares of those commissions.

Again, an example illustrates this point:

House price: $250,000
Commission: 4 percent
Offer to cooperating broker: 2 percent
Agent’s split: 65 percent
Agent’s compensation: $3,250

House price: $250,000
Commission: 5 percent
Offer to cooperating broker: 2.5 percent
Agent’s split: 65 percent
Agent’s compensation: $4,062
Additional compensation for .5 percent higher share: $812

House price: $250,000
Commission: 5 percent
Offer to cooperating broker: 3 percent
Agent’s split: 65 percent
Agent’s compensation: $4,875
Additional compensation for 1 percent higher share: $1,625

A practice of showing a buyer only higher-commission houses violates some industry ethics codes, and most agents are honest dealers who would rather sell a house and earn a lower commission than not sell a house and earn no commission. For those reasons, this practice doesn’t occur as often as it otherwise might. But not often doesn’t mean never.

Some sellers, listing agents and builders add a cash bonus or other incentive to sweeten the cooperating agent’s compensation. A bonus doesn’t necessarily mean you shouldn’t buy that house, but you might want to know an incentive is part of the deal. Ask your agent whether an incentive has been offered on any of the homes you’ve been shown.

The best protection against realty commission shenanigans is to interview several agents and choose someone who you feel is trustworthy and whose reputation is beyond reproach.

Dos and don'ts when preparing your home to sell

RE.com Tips & Tools — Wed, 17 Jan 2007 14:54:00 GMT

Here are some tips to follow, and some to avoid, whether you're selling your home soon or sometime down the road.

Selling a home is no walk in the park. It involves strategic thinking, patience and hard work. If that’s not enough, there can be the added pressure of having to sell your home quickly while still trying to get your asking price. The good news is that there are techniques to make the process a whole lot easier.

Selling this month?

Do:

• De-clutter. Consider hiring professionals to help de-clutter and stage your home to sell, especially if you’re a pack rat. They’ll have no qualms about removing objects off of shelves and countertops and out of closets. They can also help you with furniture placement, accessorizing and lighting. Note: Some real estate agents also offer home staging services.

• Clean. Be sure to go through your house with a damp rag and wipe finger marks off light-switch plates, doors and walls. While you’re at it, wipe down blinds, clean curtains and shampoo carpets and rugs.

• Fix cracks and watermarks. Inspect ceilings and walls for cracks or signs of water damage. Repair cracks and paint areas with watermarks to prevent anyone from thinking that your home still has plumbing or leaking problems.

Don’t:

• Leave out personal items. Stop thinking of your home as yours and start thinking of it as someone else’s. Remove items such as photos to de-personalize your space and help potential buyers envision your home as theirs.

• Pack. Don’t start packing until you sell. It’s harder to sell a home that’s piled high with boxes. If timing prevents you from waiting, start packing personal items and small accessories that won’t be missed, and store boxes out of sight.

Selling in a few months?

Do:

• Take photos to help you assess your rooms. It’s easier to see your home through someone else’s eyes by photographing each room from many angles. You’ll see things you should fix or change that you may not see if you’re standing in the room. It’s amazing how much more revealing photos can be!

• Spring clean. Comb through your closets, drawers and storage room. Give your old, unneeded items to charity or friends or hold a garage sale.

Don’t:

• Neglect your home décor. Don’t assume everyone will see that your home has “good bones” even if they don’t like your decorating. Many people can’t see past what’s there today. If you’ve painted your walls in bright colors, consider repainting in neutral shades. And remove any unusual decorative accessories.

Selling this year?

Do:

• Find a good real estate agent. Look for someone with a proven record of selling in your area. A good agent should be able to provide you with tips to help speed up the selling process. Get references from friends or neighbors and interview several agents before you sign a contract.

• Repair basic problems. Get a head start on prepping your property, inside and out. Gradually start fixing or replacing things like missing roof shingles, sagging eaves troughs or leaky faucets so you won’t be in a race against time later.

Don’t:

• Spend money on expensive upgrades. Don’t put any major money into your home unless you have to. For example, if your furnace goes kaput, you’ll have to replace it. On the other hand, while your hallway might look great with hardwood instead of the existing carpet, you probably won’t get your money out of installing it. Unless the carpet is so hideous it’ll deter buyers, just make sure it’s clean and live with it until you sell.

• Be inflexible on price. Don’t assume that the real estate market will be the same as it is now when you’re ready to sell. A lot can change over a few months. So keep your eye on home prices and what’s selling in your neighborhood. You may even want to take notes so you can refer back to them when setting your asking price.

• Use your tax appraisal as a guideline. Don’t assume your tax appraisal is an accurate measure of your home’s value. Comparing similar homes that have sold in your neighborhood will better reflect its true current market value.

The key to preparing your home to sell is to step back and consider how it is going to look to potential buyers. So before you put it on the market, do an inspection tour and try to look at things through the eyes of a stranger. Make a list of things that need to be cleaned and repaired and estimate the time, cost and priority of each chore. Take a particularly good look at your bathroom(s) and kitchen. Time and money invested in painting and refurbishing these key rooms will have maximum impact.

Is an open house right for you?

RE.com Tips & Tools — Tue, 16 Jan 2007 15:25:00 GMT

Ask yourself these questions to see if an open house will really help you sell your home.

There is some debate over whether an open house is a useful tool in today’s real estate market. Consider the following when deciding if one makes sense for you.

Where is your home?

Is your home in an area with a lot of traffic? That may improve the chances of potential buyers driving by and taking advantage of the open house. If you live in a new community with model homes, an open house may also draw in visitors to these homes. Someone who wants to move in immediately may make an offer on your house instead of waiting to build.

What is the first impression of your home?

If your home has a high “wow” factor, then an open house may make sense for you. When a home is dramatic or has special features, an open house may be able to change a casual visitor into a potential buyer with a serious offer.

What is your listing price?

If your listing price is high compared with the average home values where you live, you should maybe avoid having an open house. It would mean unescorted people coming through your home and, unfortunately, a high price attracts gawkers and potential thieves.

Are you willing to give up your time?

Are you willing to leave your home for three or four hours on a Sunday afternoon while your agent holds an open house? If not, then maybe it’s not for you. If you are going to be away anyway, then perhaps it does make sense to schedule one.

What does your agent say?

Does your agent recommend that an open house, or does she think it would be a waste of time? She knows the market best, so give a lot of weight to her opinion. Be aware, however, that agents often use open houses to attract new clients, so they may have their own interests at heart, too.

Remember that a low percentage of sales actually come from open houses. It may be worth it, though, if you are having a tough time selling your home. It can also be a good opportunity to get constructive feedback on your house.

Finding a house in a new city

RE.com Tips & Tools — Fri, 12 Jan 2007 16:38:00 GMT

Some research and a good real estate agent will help you find the best neighborhood for you.

Finding a house in a new city is a common occurrence in today’s mobile society. Everyone seems to be moving across the country for a new job or opportunity. But it can be intimidating to figure out which neighborhood is best for you. Here are some tips to help you approach finding a house in a new city with confidence.

Use your resources

When finding a house in a new city, chances are that you have a friend or a friend of a friend who is familiar with that city. Ask questions. Find out any and all details that you can about your new destination. If one of your friends has someone for you to call that lives in that city, don’t hesitate. What you need is an expert in your new city, and who better to ask than someone who already lives there?

If you cannot find someone who has intimate knowledge of your new city, there are also online resources for finding a house. Web sites such as CitySearch can help you identify neighborhoods with criteria that are important to you.

Also, be sure to actually visit your new city. Spend a few days getting a feel for the city and what the different neighborhoods are like. This can help you in finding a house.

Know what is important to you

In order to make finding a house easier, know what is most important to you. Do you prefer a rural, suburban, or urban setting? How important is commuting distance to you? Do you want to be in the middle of the action – close to restaurants, theaters, and shopping – or do you want a nice, quiet neighborhood? Don’t forget about schools. You may just need an elementary school now, but high school will be here before you know it. When finding a house, make sure it is zoned for schools that you will be happy with your kids attending.

Many statistics are available to you online when finding a house in a new city. You can find school rankings, income levels, educational levels, crime rates, political party donations – almost anything that you could possibly want to know. A few minutes searching online can help you in finding a house that fits where you want to live.

Find a good real estate agent

A good real estate agent can be a great asset in finding a house in a new city. The agent should be an expert in the area with much more intimate knowledge of your new city than you can find out on your own. Make sure you provide your agent with your needs and wants, so they can find the right neighborhood for your family.

Being new to a city can be quite stressful, but finding a house does not have to be. Know what you want and educate yourself as much as possible about the new city in order to make things as easy as possible.

Closing Costs Checklist

RE.com Tips & Tools — Thu, 11 Jan 2007 20:15:00 GMT

It is important to carefully compare closing costs between lenders before selecting a loan.

Closing Cost Descriptions

We recommend that you carefully compare closing costs between lenders before selecting a loan. This task is complicated by the fact that different lenders and brokers use different names for the same item. All lenders and brokers are required to provide you with a Good Faith Estimate detailing the services you may be required to get and pay for in connection with your loan.

This Good Faith Estimate will give you a way to compare loans and see what your closing costs would be. Below you will find a list of coded names that describe the different fees, which may be associated with the services previously mentioned. These codes and names correspond to those found on the HUD-1 Settlement Statement.

Broker Fees

700 - Sales/Broker’s Commission: If you use a real estate agent or broker to buy a house, the seller (not you) of the house will usually pay a fee to the real estate agent/broker. This commission is usually a percentage of the sales price.

Lender Fees

801 - Loan Origination Fee: A fee to cover the lender’s costs for obtaining financing and administrative costs, most often expressed as a percentage of the loan amount (1% = 1 point). Can be a flat fee and/or paid by sellers and third parties.
802 - Loan Discount Fee Discount Points: Often called "points", is a one-time charge to you from lender to lower the interest rate on your loan. Generally, the more points you pay, the lower your rate. Each point is 1% of the loan amount. For example, if you have a loan amount of $100,000, one point would cost you $1000. Sometimes you will see offers with negative points. Negative points refer to money paid to you that can be used to offset your other closing costs. You will usually see a higher interest rate with negative points.
803 - Appraisal Fee: The appraisal fee covers the cost of evaluating your home to estimate the fair market value. The appraised value of your home is used to calculate LTV. See LTV for more information.
804 - Credit Report Fee: This fee covers the cost of obtaining a credit report, which shows how you have handled other credit transactions. The lender uses this report in conjunction with information you submitted with your Q-form regarding your income, outstanding bills, and income to determine whether you are an acceptable credit risk, how much the lender can loan you and at what interest rate.
805 - Lender Inspection Fee: This covers inspections by the lender or outside inspector of your house/property. Most often associated with new construction.
806 - Mortgage Insurance Application Fee: You may be charged this fee to process an application for Mortgage Insurance (MI) if needed.
807 - Assumption Fee: The assumption fee is a charge to you, if you take over the existing mortgage on the house you are purchasing. For example, if you are buying an existing house from someone you may have the option to take over the mortgage that the seller is paying.
808 - Mortgage Broker Fee: If you use a broker to get a loan, any fees charged by the broker are listed here.
809 - Underwriting Fee: A cost to cover the final analysis and approval of the mortgage; often the lender’s cost to the investor who will subsequently purchase the loan.
810 - Tax Service Fee: A fee paid to set up a service which identifies the payment due date of local taxes for the servicer of the loan.
813 - Processing Fee: A fee charged by the lender to cover costs associated with the processing and closing of a mortgage loan.
814 - Application Fee: A fee to reimburse the lender for internal costs associated with initiating the application process.
822 - Flood Certification Fee: Since your house is collateral for your loan, the lender wants to be sure the property is not in a flood zone. This fee covers obtaining a report from the Federal Emergency Management Agency (FEMA) that indicates whether or not your property is in a flood zone. If your home is located in a flood zone, you will need to get flood insurance. Most homeowner insurance policies do not cover flood damage. This only covers the report and not the insurance if needed.

Lender Pre-paid Items

901 - Interest: Lenders require you to pay the interest due on your mortgage from the close date to the first day of the following month. The interest due is calculated using the loan’s interest rate, the loan amount and the number of days until your first payment. For example, if you close on the 11th of March, you will pay 21 days interest (3/11-3/31) assuming your first payment is May 1st. Mortgage interest is always collected in arrears therefore you will pay the April interest in the May payment using the example above.
902 - Mortgage Insurance: Premium Lenders usually require Private mortgage insurance (PMI) when your LTV (loan amount divided by property value) is greater than 80%. The insurance protects the lender in case of loan default.
903 - Hazard Insurance: Premium Since the property is collateral for the loan, you will be required to insure your house. At closing, you must pay the first year’s premium or prove that you already have coverage (if refinancing). If you are purchasing a condominium, your association policy will already cover your unit and you will not need to make this payment. Homeowner’s insurance covers you against damage from fire, wind, and other natural hazards. Flood damage is usually not covered by a Homeowner’s Insurance Policy.

Escrow Account Deposits

An escrow account is an account used when the lender will be paying your homeowner’s insurance and property taxes on your behalf. You prepay the amounts and the lender pays the costs as they come due. You will probably have to pay an initial amount to start the reserve account.

1001 - Hazard Insurance: This fee represents the amount the lender withholds to ensure you pay your homeowner’s insurance on time. Typically, the lender will require you to pay two months of premiums at closing, and then the remaining payments are included in your monthly payments.
1002 - Mortgage Insurance: If you need private mortgage insurance (PMI), you may be required to prepay those premiums. Remember to reference canceling mortgage insurance to see when you can stop paying it.
1003 - City Property Tax: If your property is in a jurisdiction where city taxes apply, you will be required to pay a portion of the taxes at closing.
1004 - County Property Tax: The amount of property tax you owe can vary dramatically by county and the date you purchase your home.

Title Charges

1101 - Settlement or Closing Fee: This fee pays for the services of the escrow holder or settlement service that handles all the financial transfers and payments associated with the closing process. The title company sets these fees.
1102-1104 - Title Fee: Title fees may include title search, title examination and title insurance.
1105 - Document Abstract Preparation Fee: Lenders or title companies may charge a fee to cover the costs of preparing the final legal documents required for closing.
1106 - Notary Fee: This fee covers the cost of a person licensed as a notary public to swear to the fact that the individuals named in the documents are the actual persons that signed them.
1107 - Attorney Fee: You may be charged a fee to pay for legal services of a settlement service provider at closing. The lawyer will usually oversee the signing of the documents.
1108 - Title Insurance: The total cost of your and lender’s title insurance.
1109 - Title Insurance Lender’s Coverage: Protects the lender against loss due to problems or defects in connection with the title. The face amount of coverage is usually written for the amount of the mortgage loan and covers losses due to defects for problems not identified by title search and examination.
1110 - Owner’s Title Insurance: This fee covers the part of the title insurance policy that protects the owner against loss due to disputes over ownership of the property. The owner’s policy is not necessary for a refinance transaction as the existing policy remains in full force and effect, if obtained when you purchased your house, for as long as the owner owns the property.
1112 - Carrier Fee: A fee paid to an overnight delivery service for delivery of mortgage documentation.

Government Fees

1201 - Recording Fee: After you close, your mortgage is recorded at the county office to make record of your mortgage.
1202 - City/County Tax/ Stamps: You may be charged tax on your mortgage by the state the property resides in.
1203 - State Tax/ Stamps: You may also be charged tax on your mortgage by the state the property resides in.

Additional Settlement Charges

1301 - Survey Fee: Your lender may require a surveyor to conduct a survey of your property. A survey determines the exact location of the home and the lot line, as well as, easements and rights of way. This also protects you to ensure you have record of your property boundaries and size.
1302 - Pest Inspection Fee: This fee covers the cost of inspections for termites and other pest infestation.
1303 -1305 - Lead-Based Paint Inspection Fee: Houses built prior to 1978 may be required to have an inspection for lead-based paint hazards.

This information is adapted from "U.S. HUD" .

The Advantages of Using a Local Agent

RE.com Tips & Tools — Thu, 11 Jan 2007 19:09:00 GMT

Hiring a real estate agent who is familiar with your area and budget doesn't just make sense -- it can save both time and money

When you’re buying or selling a home, there are many deciding factors that go into hiring an agent. Naturally, you need to consider reputation and track record. You also want to make sure you have a good rapport and feel comfortable with the agent. But that’s not all. Buying or selling a home successfully can also come down to your agent’s familiarity and experience working in your neighborhood and price range. After all, if you’re looking for a starter home in the suburbs, there’s no use interviewing an agent who specializes in million-dollar city condos. Hiring an agent who speaks your language can save you a lot of time and money.

Test your agent’s local knowledge with these questions:

How long have you specialized in this neighborhood?
Do you have a list of houses you have sold here?
How many clients have you helped buy a home here?
What can you tell me about house construction, age and prices?

If a local agent is good, he or she will have a solid understanding of the area and be up to speed on new property listings. So ask about current availability in your price range, as well as common construction and problems in the area. The agent should also be able to tell you what you can expect for your money when it comes to lot size, square footage, number of bathrooms and bedrooms and special features, such as a main floor laundry room.

If an agent is unable to answer these initial questions, you’re better off looking for another one than wasting any more of your valuable time. If they have responded successfully, then move on to more specialized queries:

Which streets are quiet and which have a lot of traffic?
Who lives on the various streets: young families with kids, retirees or a mix?
What parks, schools, churches, grocery stores and other amenities are in the area?
Is there public transit?
Where are the best schools and shopping?
What can we expect to pay in property taxes?
Are there any area bylaws we need to be aware of?

It’s also important to find a good local agent when selling a property. Not only will he or she likely be well-connected with local clients and agents, but they will also know how best to price your home.