Most advice columns tell you what you should do, but just as importantly, there some things you shouldn’t do. Here are 10 frequent home finance mistakes that consumers make – and that you should avoid.
The Multiple Listing System (the MLS) is a collection of databases owned by Local Boards of Realtors or Private companies who subscribe Boards in particular state markets that local real estate agents use to input all the data of property listed for sale. It is the single local source of every property currently for sale on the real estate market in a specific area. Through the REALTORS union (local board which is a part of the State Board of Realtors which is a part of NAR, the National Association of Realtors & or Realtists (same type of hierarchy)). It allows licensed real estate agents, who are representing sellers under a listing agreement, the opportunity to advertise their listings to other real estate professionals searching on behalf of buyers. The MLS provides the most effective form of advertisement for a seller who is serious about selling their home.
How the MLS works:
Modern technology has provided an open market playground for real estate agents as well as independent home buyers. According to The National Association of Realtors, over 80% of home buyers use the internet to search for homes to purchase. Partial access to the MLS is available to the public on several websites over the internet. These websites provide buyers the freedom to search and explore the MLS without the aid of a Realtor. However, they must contact a Realtor in order to gain access to the inside of a home for viewing. Also, all negotiations and offers to purchase a home must be done through a licensed real estate professional.
To have unlimited access and freedom to submit homes into the Northwest Louisiana MLS, one must own a real estate license issued by The Louisiana Real Estate Commission. When a home is placed on the MLS by a licensed professional it becomes part of a worldwide inventory of real estate. This inventory provides the foundation for a concept and strategy of marketing that does not target the home buyer, but focuses on targeting real estate agents.
Jerel Washington lists every property from Condo’s to Estate Homes on the MLS and the top 25 Tier 1 Real Estate Web Portals for absolute maximum exposure. Selling a house has everything to do with how many qualified people are able to find it.
How to motivate Realtors to sell a home:
The MLS is basically a tool used to provide real estate agents with motivation for producing buyers and promoting the sale of homes. When working with a home buyer, a real estate agent will consider many factors that are based on the individual preference of his client. These factors include desired number of bedrooms, bathrooms, area of town, square footage, and most importantly the amount of money the buyer is willing to spend for a home. After an MLS search is performed by the agent based on the search criteria, the agent must then consider the amount of commission rewarded to them if the showing of a particular home results in a sale.
Keep in mind that being a real estate agent is a profession just like any other. A Realtor will consider their salary before ever showing a home to a prospective buyer. A Realtor is compensated in the form of a commission agreed on by the seller and the agent. The amount of the commission is usually based on a percentage of the selling price of the home. When proper motivation is provided in the form of an appropriate commission, every Realtor in on the MLS will be competing to bring buyers for that particular home. When the home is sold the commission is split between the listing agent and the agent who produced a ready, willing, and able buyer.
All information regarding a listed home is provided to a real estate agent when the MLS is accessed. The most important information to an agent is motivation for them to bring buyers.
How to understand and break down Realtor commission costs:
In order to understand why a reasonable real estate commission is very important to help motivate agents to bring buyers, consider the following breakdown of a Realtor’s commission once it has been earned:
selling price of the home – $150,000
real estate commission – 6% or $9,000
Listing Agency/Broker to share with Listing Agent – $4,500
Buyer Agency/Brokerage to share with Selling/Buyers Agent – $4,500
Agent Split / Share with Brokerage
50/50 – Very common = $2,250 to the agent then deduct 55% for taxes, fees, and cost of business expenses = Agent Net Commission/Profit – 1,012.50
60/40 – Moderately Common
70/30 – Most Common
80/20 – Fixed High performers
Graduated Scale – Depends on production performance
100 / Cap Commission
After commissions are disbursed to the two brokerage firms, the listing and selling agents must then split their earnings with their sponsoring broker*.
A processing fee is then deducted by the broker in the amount of $350 which reduces the commission owed to the agent to $1,525**. The agent must then consider the annual $780 that must be paid to have unlimited access to the MLS. Other Realtor fees for which the agent is responsible for on an annual basis are dues owed to the Louisiana Real Estate Commission and errors and omissions insurance***. Finally, because a Realtor is an independent contractor, the agent must consider annual taxes to be paid.
*The amount split between broker and agent varies and depends on the agreement between both parties. The amount usually takes into consideration various factors including office space, equipment, and supplies used by the agent and the amount of individual production of the agent. In this example, let’s just say that the agent and broker have agreed to a 50% split.
**Most real estate brokerage companies require agents to pay a processing fee for every transaction made by the agent. These transaction fees vary and can range anywhere from $100 to $550. It depends on the original agreement between the broker and the agent.
***Errors and Omissions Insurance is required by the New Jersey Real Estate Commission to be paid by every working real estate agent in the state of New Jersey.
The temptation to low ball a house is just that, a huge temptation. In today’s market understand what the market means. There is a National market, Regional market, State markets, local markets, Area Markets, Community markets, and finally Micro/Neighborhood markets. While any buyer wants to get a great deal on a house they can ruin it by trying to get to good of a deal. Sellers who get mad are really hard to make a good deal with. So here are a couple of things to keep in mind.
These are the other people out there looking too. Just because the house has been sitting for a while does not mean the seller is going to roll over and give it to you. Be smart, ask for advice from your agent. They can show you what is going on in the area and give a good idea of what may work.
How do you do that? Buyers who remember that you get more by being thoughtful and nice may be surprised how softening up a seller can work. People like to business with someone they like.
Have your agent present a letter to the seller with your offer. Tell the seller that you like their home and what you like about it, and that you imagine that they have enjoyed it as much as you hope to in the future. It looks like just the place for us (your family your pets etc.)
With the right negotiations you can give a little and get a lot. If you ask for seller concessions like a deep discount on price or repair costs or 1-2 years of prepay Association Dues, then try to double dip by also asking the Seller to pay your closing costs or too many extras, you will probably lose the deal altogether. The cut in the seller’s price may be too deep to provide anything else. If you force a seller into a corner, they may not be willing to take the loss. In fact it is the rare seller that is not just plain insulted and will kill the deal very angrily. A reasonable offer can expect a reasonable counter-offer. An unreasonable offer is usually met with a full price counter if they will counter at all. Remember, it’s the Buyer who sets the tone for negotiations. With our consultation we will make yours count!
Try to figure out what you really want and what you really need to buy your next home. Most people today need help with closing costs. What this is are your mortgage costs and pre-paids. Pre-paids are property tax escrows and also hazard insurance. Your mortgage may have discount points and origination fees. Many times the seller is okay with paying for this, it hurts but they will do that.
Or, if you have a healthy cash flow and you are looking for a discount, then a 3 to 5% discount may be in line in the current market. A lot depends on the house, how long it has been on the market and what kind of condition it is in. I have observed several buyers lose out on a good buy by getting a little greedy. Usually Buyers get frustrated when this happens. So asking for a huge discount AND closing costs may poison the deal on the home of your dreams.
Now this could be a full Video.. As a matter of fact, that isn’t a bad Idea! Until then, read below!
Make sure you hire a licensed, bonded, insured and referred contractor. You’ll also need to gather multiple opinions, testimonials, references and check online ratings before hiring a professional. Why? Because hiring a contractor is not the same as hiring your neighbors kid to cut your grass. There is a wide range of skills, process, products and their correct applications, talent, business savvy, estimation, crew size, time to complete, BBB checking, contract clarity and if they do not produce penalties, contract review and negotiations, change orders and the list goes on. An unskilled home owner choosing a bad contractor can and often end up over budget, with incomplete projects or completed projects that are sub-par.
Experience and practice shows that homeowners getting multiple bids, typically enjoy more than 10% money saving. I always recommend to check contractor references. When you interview contractors for your home projects make sure they:
Have the necessary knowledge to successfully manage the construction project. Have the time required to manage the project. Will provide a contract with work to be performed, materials to be used and price before the work starts. Carry Worker’s Compensation Insurance to cover his employees in case of injury. Carry a bond to protect you. Know about necessary permits and inspections, preventing unnecessary delays once the project is underway
My Hiring Contractor Checklist:
Relax, you just hired a professional who will make your project an enjoyable and rewarding experience. Just remember to check back frequently and check the work while it’s being done!!!
One of the most important things you can do is to make yourself a checklist as you search for, find, and buy a home. http://www.ourfamilyplace.com/homebuyer/checklist.html
Fair Isaac Corporation is organization that developed the Credit Reporting system we have today. Take advantage of their tools to get control and manage your Credit history and credit score. You’ve nothing to loose and everything to gain. The best scores get the lowest interest rates. Having the best possible score you can have will save you thousands and thousands of dollars. Don’t wait any longer. Get control today! http://www.myfico.com
The Census Bureau Web Site provides on-line access to data, publications, products, and programs.
As the midway point between new York and Philadelphia, Mercer County has so much to offer. We are rich in history, having been the scene for two revolutions: Major battles in the Revolutionary War took place in Trenton and in Princeton, and county government operates from the very building that served as a hub of the Industrial Revolution. Today, waves of newcomers are adding new ideas to the chorus of energy that makes Mercer County a center for education, arts and entertainment, technology, and entrepreneurship. Whether you visit one of our historic sites, take in a play or musical performance, or shop in one of our many retail centers, you will agree that Mercer County has it all — Open Space-more than 8,400 acres of county land for recreational use. County facilities are here for boating, biking, ice skating, horseback riding, or just taking a stroll in the woods. Services for seniors. Mercer County is home to several outstanding municipal senior centers, and Mercer County works in partnership with our 13 towns to provide high-quality medical care, nutrition, and recreation opportunities for the elderly. http://www.mercercounty.org/
It has long been a commercial and industrial center, with older communities to the north and newer housing to the south. In the last generation, the county’s major urban center, New Brunswick, has undergone extensive renewal and now boasts a first-class downtown area with top-rated restaurants and state-of-the-art theaters. Rutgers University and Johnson & Johnson have both played a major roll in the redevelopment of this area, with Johnson & Johnson establishing its world headquarters here. Major hospitals include Robert Wood Johnson University Hospital and St. Peter’s Medical Center, as well as several other medical facilities scattered throughout the area. With Rutgers as a major regional resource, education has become a high priority in most communities, and several towns boast schools that are rated among the top in the nation. http://co.middlesex.nj.us/
With several major corporate headquarters scattered along the Interstates 287 and 78, and Route 22 corridors, and with beautiful communities nestled among wooded hillsides and valleys, Somerset County has become one of the most desirable areas in New Jersey. It was ranked one of the most affluent counties in the nation in the 1990 census. The county features good commuting to New York City by train, bus and car, excellent schools, and a broad range of housing options from multi-family to luxurious estates. Communities range from urban to rural, though most are truly suburban. Several universities in the area serve the residents, including Raritan Valley Community College. Many students in this county also commute to Rutgers or Princeton Universities, which are in neighboring counties. http://www.co.somerset.nj.us/
FAIRWAY MORTGAGE: www.PinkyMortgage.com
Pinky Shah and her team are amazing… Give them a try. You will be telling all your friends how amazing they are!
AMIC – 100’s of Mortgage Programs – www.AMIC.net
Alternative Mortgage Company… working with people who are looking to achieve their goals. What are your unique needs?
An independent source of mortgage information on the Internet. http://www.mortgagequotes.com/
CyberHomes MLS Listings
Homes for sale with a difference. Why? Because the web sites on this list are from the same MLS organizations that maintain the complete professional list of homes for sale in each metropolitan market. http://www.cyberhomes.com/
Manage the moving and relocation process with mortgage quotes and calculators, address change, utility transfer, city profiling, self storage locator, moving van line and moving truck rental quotes.http://www.monstermoving.com/
A comprehensive, nationwide resource for the latest relocation/moving information organized by city and categories of interest from apartments to zoos. http://www.relocationcentral.com/
Free salary information, salary and benefits advice, career and job search help. Hundreds of salary surveys, compensation reports, and useful links. http://www.salary.com/
American School Directory
Find vital school information on all 108,000 K-12 schools in America. http://www.asd.com/
Source of graduate school programs information. Find thousands of graduate programs by curriculum or by school. http://www.gradschools.com/
Princeton Theological Seminary
The establishment of The Theological Seminary at Princeton by the General Assembly of the Presbyterian Church in 1812 marked a turning point in American theological education. General education was also the context for professional studies in divinity, medicine, and the law. In the first quarter of the nineteenth century, professional training became disengaged from the college curriculum, medical and law schools were established, and seventeen divinity schools and seminaries came into existence. http://www.ptsem.edu/
The University provides its students with academic, extracurricular and other resources — in a residential community committed to diversity in its student body, faculty and staff — that help them achieve at the highest scholarly levels and prepare them for positions of leadership and lives of service in many fields of human endeavor. http://www.princeton.edu/main/
Schools near Princeton University
This link has 44 links to the different Princeton University Graduate Schools.
Top Mistakes Buyers Make When Buying A Home!
Don’t be your own enemy!
By: Jérel Washington
If you are like most people, buying a home will be the largest investment you are ever likely to make. Annual mortgage, taxes, and insurance costs can range from 25% to 40% of your gross annual income. By using the information in my website reference pages, you are well on your way to protecting yourself and making the home-buying process easier, by becoming an informed consumer.
Read, talk to family and friends, and talk to me, a licensed, real estate professional. Even if you are not in the State of New Jersey, I can still help, by referring you to a ranked and Quality-Certified Agent who can assist you in your local market. You will be glad you took the time to understand the process of buying and selling, and to take advantage of a professional referral.
Buying a home? DON’T MAKE THESE MISTAKES!!!
1.) Looking for a home without being pre-approved.
One of the most common errors made by home buyers is starting the search without being pre-approved for a home loan. When you start to look, it is important that you know how much you can comfortably spend on a home. Getting pre-qualified for financing will lock down a price range and help prevent you from being turned down after falling in love with a home. It will also save you the stress and strain of having to find a lender while you are against the wall of a “contingent offer” or a “conditional purchase.”
In these times of fluctuating interest rates, it would benefit you to lock in at a lower rate. This could save you thousands of dollars if the rate increases while you are in the process of buying.
2.) Pre-Approval and pre-qualification are two different things.
During the pre-qualification process, a loan officer asks you a few questions, then hands you a “pre-qual” letter. The pre-approval process is much more thorough. – During the pre-approval process, the mortgage company does virtually all of the work associated with obtaining full-approval for your home loan. Since there is no property yet identified to purchase, however, the appraisal and title search are not yet conducted.
Once you are pre-approved, you have much more negotiating clout with a seller. Sellers know you can close the transaction because a lender has carefully reviewed your income, assets, credit and other relevant information. In some cases (multiple offers, for example), being pre-approved can make the difference as to whether your offer to buy is accepted or rejected. Also, you can save thousands of dollars as a result of being in a better negotiating situation.
Most good Realtors® will not show you homes until you are pre-approved.
Being pre-approved shows you are serious about buying a home and not a Lookie-Loo. If, however, you are just looking to gather information, most Realtors will gladly provide you with that information. Just let us know up-front. This will prevent us from wasting your time, and even the seller’s time, allowing us to put our focus where it is most needed. Many mortgage companies will help you become pre-approved with little or no cost at all. They will usually need to check your credit and verify your income and assets.
3.) Letting your Emotions Cloud Your Judgment.
Buying a home is a tedious yet exhilarating process! It is important not to let your emotions get the best of you and cloud your judgment, such as not being realistic as to whether or not you can really afford to make your mortgage payments comfortably. Be sure not to get so excited that you get in over your head. Use your Realtor as a sounding board to help you and your family consider all of your options.
4.) Failing to seek out the Services of an Experienced Real Estate Agent.
Many Buyers are unaware that in almost every case the buyer is not responsible for paying the agent’s fees; the agent is being paid a commission from the seller. It is always best to seek out an experienced real estate agent that can use information regarding recently listed and sold properties to get you the lowest price possible.
5.) Making verbal (oral) agreements!
If an agent tries to make you sign a written document that is contrary to their verbal commitments, don’t do it! For example, if the agent says the washer will come with the home, but the contract says it will not–the written contract will override the verbal contract. In fact, written contracts will almost always override verbal contracts. When buying or selling real estate, abide by this maxim: Get it in writing!
6.) Choosing a lender because they have the lowest rate, but not getting a written good-faith estimate.
While rate is important, you have to consider the overall cost of your loan. Pay close attention to the APR, loan fees, discount and origination points. Some lenders include discount and origination points in their quoted points. Other lenders may only quote discount points, when in fact there is an additional origination point (or fraction of a point).
This difference in the way points are sometimes quoted is very important for you to understand. One lender will quote all points, while another lender may disclose an extra point, or fraction thereof, at a later time–an unwelcome surprise.
Within 3 working days after receipt of your completed loan application, your mortgage company is required to provide you with a written good-faith estimate (G.F.E.) of closing costs. You may want to consider requesting a GFE from a few lenders BEFORE submitting your application to any of them. With a few GFEs to compare, you can get a feel for which lenders are more thorough, and you can educate yourself regarding the costs associated with your transaction. The GFE with the highest costs may not indicate that a particular lender is more expensive than another–in fact; they may be more diligent in itemizing all fees than the lenders you thought had lower quotes.
The cost of the mortgage, however, should not be your only criteria for going with a particular lender. There is no substitute for getting referrals from family and friends, and for interviewing prospective mortgage companies. You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what they promise.
7.) Choosing a lender just because they are recommended by a friend or Realtor® is a mistake!
Your Realtor is not a financial expert and your friend may not be either. He or she may not know which loan is best to recommend for you. Your Realtor® gets a commission only when your transaction closes, not paid by the lender but by the seller, in most cases. As a result, the Realtor® may refer you to a lender who they feel comfortable will close your loan, but who may not have the best rates or fees. It is your responsibility to get a list of Mortgage companies and find the one that best suites your needs.
Although most Realtors® are professional and concerned about your best interests, you should do your own homework. I recommend shopping for a loan with at least three mortgage companies before you make a decision. If you come to me, without having chosen a lender yet, it is my practice to give you a list of two or three that I have worked with personally. There are countless stories of consumers who ended up paying higher rates, or got a loan that wasn’t right for them, because they blindly followed their Realtor’s® advice.
8.) Not getting a Rate-Lock in writing.
When a mortgage company tells you they have locked your rate, get a written statement detailing the interest rate, the length of the rate lock, and other particulars about the program.
9.) Using a Dual Agent: an agent who represents the buyer and seller in the same transaction.
Buyers and Sellers have opposing interests. Sellers want to receive the highest price; buyers want to pay the lowest price. In most situations, dual agents cannot be fair to both buyer and seller. Since the seller usually pays the commission, the dual agent may negotiate harder for the seller than for the buyer. If you are a buyer, it is usually better to have your own agent represent you. This is my personal recommendation.
10.) Not Being Informed Of Your Rights & Obligations before And During Your Offer To Purchase.
It is of the utmost importance to be aware of your rights and what to expect from a competent real estate agent. A small mistake in a condition or clause could end up costing you time and money, or in some cases even void your contract.
11.) Buying a home without professional inspections.
Would you take the seller’s word that repairs have been made? Unless you’re buying a new home with warranties on most equipment, it is highly recommended that you get property, roof and termite inspections at a minimum. These reports will give you a better picture of what you are buying. Inspection reports are also great negotiating tools when it comes to asking the seller to make repairs or lower the selling price. If a professional home inspector states that certain repairs need to be made, the seller is more likely to agree to make them.
11a) If the seller agrees to make repairs, have your inspector come back to verify the completed work, prior to the close of escrow. Do not assume that everything will be done as promised.
12.) Failing to Use a Home Inspection Company.
Buying your home is often the most important investment and financial transaction that you will ever make. A home inspection can save you hundreds or even thousands of dollars and unexpected problems down the road. In addition to the inspection, it is often a good idea to request some type of Home Warranty to cover the appliances that come with the home. It is wise to warranty any appliance over 5-7 years old. They will fail at some point.
13.) Not shopping for home insurance until you are ready to close.
Start shopping for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and find they have no time left to shop around. This puts you in a bad position and usually the Mortgage Company will add their insurance on your loan. This insurance is typically 30-50% higher than insurance you could have gotten on your own.
14.) Signing documents without reading them.
DO NOT sign documents in a hurry. As soon as possible, review the documents you will be signing and again at close of escrow–including a copy of all loan documents. This way, you can review them and get your questions answered in a timely manner. Do not expect to read all the documents during the closing. There is rarely enough time to do that. As your realtor, I will make sure you have as many documents beforehand as possible. This will give you enough time to review them and jot down any questions before closing.
15.) Making moving plans that don’t work.
You expect to move out of your current residence on Friday and into your new residence over the weekend. Also on Friday, your lease terminates and the movers are scheduled to appear.
Friday morning arrives: bags packed, boxes stacked, children under arm and the dog on a leash; you’re sitting on your front door stoop awaiting the arrival of the movers. Your phone rings. Your loan closing is delayed until the following Tuesday. The new tenants turn into your driveway with a weighted-down U-Haul and the movers pull up across the street. You ask yourself:
Cancel your lease and ask the movers to show up five to seven days after you anticipate closing your transaction. Consider the extra expense of an insurance policy. You are buying peace of mind-and protecting yourself from expensive delays.
16.) Not Understanding the Common Negotiating Methods Used At Offer Time.
Some buyers have been told that the best way to get a good price is to low-ball the seller from the start, in hopes that the seller will drop their price in their counter offer. In reality this often does nothing more than upset the seller and will probably exclude you from future consideration. You can end up ruining the chance of an acceptable offer to both parties involved. Have good communication with your agent, and they will be able to instruct you on the many proper ways to negotiate a deal, while still getting you the best price available. Keep in mind that today most buyers are more educated than in previous years, having access to the Internet and various other sources. Remember also that Sellers have access to the same sources. These days, everyone is more educated as to the process of buying and selling property, so let your Realtor guide you through this process of Best Practices.
17.) Failing to Know or Research The Market Before Making Your Offer.
Have your agent prepare all the area sales and properties comparable in your area and get a copy to look over before you make your offer. This will help to ensure that you do not overpay for what the home is actually worth. In most cases, this is the same information the seller saw when setting the price of their home.
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