For every hour an agent spends in your presence, he or she will spend an average of nine hours behind the scenes working on your behalf and to protect your assets. Why? Because agents don’t get paid if they don’t close the deal for you! Unlike lawyers who bill by the hour, agents won’t receive a penny until– or unless– a sale comes to fruition. It’s all a gamble, in which they could come away with bupkis. Here are the top ways Realtors protect your assets:
Good Realtors Don’t Let Their Clients Drive Drunk
Shopping for a home before getting pre-approved for a mortgage is like driving buzzed… you know you have the desire to drive home, but not the wherewithal to get there effectively. You’re seeing things through rose-colored shot glasses.
Getting fully pre-approved for a home loan averts the sobering bummer of having your lofty dream home vision collide with what you can really afford. In fact, good Buyer’s Agents won’t even drive you around to go house shopping if you’re not pre-approved first.
Your agent is looking out for your best interests. Not only will you know your home price tag maximum and corresponding monthly mortgage nut, but it will increase your negotiating power. In addition to strengthening your offer when compared to buyers who haven’t taken this step, getting pre-approved may give you the upper-hand when negotiating the price. If the homeowner is eager to sell, they may be more willing to accept a lower offer from someone they’ve been assured is financially capable of purchasing their home and in a shorter amount of time.
Pre-qualified vs. pre-approved… Note that these two phrases are not the same. A pre-qualified buyer doesn’t carry the same weight as a pre-APPROVED buyer who has been more thoroughly vetted.
Pre-qualification is usually just a verbal interaction. You tell a lender the particulars on your income, assets, debts, and a potential down payment amount. The lender then provides you with a ballpark figure of how much he thinks you could afford to pay for a monthly mortgage and the max home price. There is no cost involved and there is no commitment on either side.
In the more in-depth, pre-approval analysis, you provide a home loan lender with actual documentation of your income, assets, and debts. This process typically requires an application fee as well, since the lender will run a credit check and work to verify all your employment and financial information. Once you are approved, the lender will give you a letter of commitment, stating how much money her bank is willing to loan you for a home purchase. ( typically good for 60-120 days.) With a pre-approval in hand you can start your shopping and present it with your offers. Your time frame from contract to closing will also be quicker.
A Good Realtor is Your Ace Wingman
Sometimes properties are available but not listed on the local Multiple Listing Service (MLS), nor actively advertised. A good Realtor can find you juicy pocket listings that are privy to enterprising agents who network together– but not the hoards of other buyers who you’d have to compete against in our low-supply, high-demand housing market. Fewer buyers bidding on a property is a hedge against overpayment.
Realtors provide insights on utilities, zoning, schools, transportation improvements, etc. to help you determine if a property fits your needs. They also think around corners about things that even home inspectors wouldn’t know to advise about. Things that can cost you money later or become just plain annoying. Things like:
– Nearby commercial zoning plans; noise, dust and traffic hassles
– How certain species of mature tree roots can invade sewer lines
– Wi-fi speed and reliability
– Is the home in a flood prone area?
– Are those solar panels leased or owned by the seller? How many more payments remain that a new owner will be on the line to pay for?
If you decide to move forward with a property after inspections and your agents’ insights, she would then negotiate necessary repairs before closing as well as a seller-paid home warranty for your first year of ownership– potentially saving you thousands.
Then there’s the appraisal phase of loan approval. It is said that you have to sell a home twice: once to the buyer and then to the Lender (by way of the appraisal). You can only get a loan for the amount that the lender deems it’s worth.
To appraise the value of a property, appraisers rely heavily on “comps”, which are comparable prices paid for similar homes that sold recently. But the appraiser could select comps of homes that sold for mysteriously low prices. Appraisers don’t normally physically inspect the comparable homes. They wouldn’t know if there was a mold issue or a nasty divorce that led to a quick below-market sale of a comparable home, thus skewing the analysis.
Also, in hot markets, home prices in the area might be increasing so quickly that the comps that sold six months ago don’t yet reflect this improvement. So a good Realtor will meet the appraiser at the home with her own ammunition to avert a low appraisal and keep the deal from blowing up.
Good Realtors are Steady on the Throttle
Your real estate agent is your objective Rock during emotional moments. They keep you calm when the pressure’s on, because few sales goes perfectly smooth. Having a concerned, but objective third party helps you stay focused on the big picture issues most important to you. Good agents try to shield their clients from the high drama unless there’s a reason to fill them in. They put out fires that a lot of times clients never need to be made aware of. They also often act as a couples therapist– like an intervention to keep hubby from purchasing that man-cave big-screen TV a week before closing and derailing the loan– making your journey much less stressful.
Having a Realtor that’s got your backside… priceless.
Get in touch. I’d be privileged to guide you through the process.