Most home buyers have a limited amount of knowledge of the home purchase
process and may be afraid that their ignorance will cause them to
overlook problems that might be obvious to those more familiar with
real estate transactions. Such trepidations are not unfounded, and
that's why I recommend surrounding yourself with the best team of
experts you can find.
The specialists you'll need should be expert in their field-professional,
knowledgeable, and dedicated to their craft. The team you assemble
can give you a decisive advantage to help you locate and purchase
your dream home.
AGENTS, BROKERS, REALTORS®
As you prepare for your search, you may decide to use the services
of a real estate professional. Although finding one will be simple,
finding a true professional may be somewhat more difficult. You'll
want someone who is employed full time in real estate, who is familiar
with the area where you want to live, works within your price range,
and has sufficient time to dedicate to your search.
Many people are confused by the terms Realtor®, broker, and agent
and wonder what the differences are. The term Realtor®, always
capitalized and denoted with the registered symbol, refers to a real
estate broker, agent, or appraiser who is a member of the National
Association of Realtors and who agrees to follow a strict code of
ethics prescribed by the association.
Real estate companies consist of agents who work with both sellers
and purchasers and usually a single broker who acts as manager of
all the transactions conducted by their office. The job of the broker
is to confirm that all transactions conducted by the agents in their
office are done both legally and ethically. The broker is there, also,
to resolve problems or disputes that sometimes arise during real estate
While an agent must pass an exam and is licensed by the state in
which they conduct business, the broker is required to take additional
classes and spend a certain amount of time serving as an agent before
earning his/her title. While sales agents work under the guidance
of a broker, in some real estate companies, many of the agents also
have the broker designation. Having such an agent may sometimes be
a plus; however, a dedicated agent can generally meet the needs required
for most transactions.
There are also other designations, such a GRI and CRS that denote
additional training and experience. Agents who have made the effort
to go beyond the minimum requirements are more likely to be able to
help you, especially if unusual circumstances arise during your home
The lender is another important member of your purchase team. The
lender will determine the maximum amount of money you have to apply
to your home purchase and will also set interest rates, loan fees,
and monthly payments.
Although fees and rates may not appear to vary significantly from
one lender to another, the seemingly small differences can have a
dramatic impact over the life of a thirty-year mortgage. Shop your
market. Compare fees and rates. Your decision will have a lasting
impact upon your future.
An additional factor to consider as you select your lender is the
service you'll receive. While an interview will give you only a brief
glimpse of the lender's commitment to customer satisfaction, it's
your first exposure to them. Pay attention to how through their presentation
is and whether or not you fully understood everything presented.
Once again, your agent's input can be helpful. Real estate agents
deal with many lenders each year and are quite familiar with those
lenders who are principled, keep their commitments, and provide the
best service. Get recommendations from your agent, your agent's broker,
and other real estate professionals.
THE HOME INSPECTOR
Whether you're buying a new home or a resale, you'll want to have
that home thoroughly inspected by a competent home inspector. All
homes will have some hidden defects, and it's the job of the inspector
to discover as many of those defects as possible. I'm not referring
to the superficial or cosmetic defects that you'll find during a new
home walk-thru. The kinds of problems you want your inspector to point
out are those defects that can create significant problems and are
expensive to correct.
Select your home inspector carefully. Get recommendations from friends
who have recently purchased homes, you may wish to ask your real estate
agent, but be aware that have a vested interest in achieving a closing.
You can also go online and check with ashi.org for the American Society
of Home Inspectors®. They will provide a list of certified home
inspectors in your area. If your inspector is not a member of ASHI®,
make certain that they are certified in the CABO building code and
carry errors and omissions insurance. Then, interview at least three
inspectors before you make a decision. A brief phone conversation
will sometimes be enough to rule out some of those who are less competent.
Home inspectors, like all other professionals, vary widely in competence,
knowledge, experience, and professionalism. Choose one who inspires
confidence and trust. Your decision could keep you from purchasing
a home with serious structural defects or other problems that could
cost thousands of dollars to correct.
Expect to pay from $250 - $400 for the average inspection. While
this fee is normally paid for by the purchaser, it is sometimes possible
to get an eager seller to share in the cost of the inspection. Ask.
If you already have an accountant, tax adviser, or CPA, that's great.
If you don't, it may be a good idea to consult one. Buying a home
alters your financial picture significantly, and you may need expert
advice to guide you through the process. Consulting an accountant
or CPA will be well worth the modest fee they'll charge.
DO I NEED AN ATTORNEY?
The answer to that question varies by locality. Many states do not
require the participation of an attorney in real estate transactions,
allowing lay people-real estate, mortgage, and escrow companies to
conduct closings. Some allow the closing to be handled by a single
attorney, and a few may require that both parties be represented by
counsel. Check with a local attorney or real estate company to determine
the requirements in your area. However, if you have questions or doubts
about any aspect of the purchase process, consulting an attorney will
be worth the fee you'll pay for their services.
The average real estate transaction is straightforward and simple,
and the purchase agreement, while written in legalese, is usually
relatively easy to understand. In those cases, an attorney may not
be necessary if not required by state law. If, however, you've chosen
to make your purchase without an agent, are paying cash, or have complex
stipulations in your purchase offer, then consulting an attorney may
be helpful. Other situations requiring the advice or participation
of an attorney are cases of multiple sellers, properties that have
liens filed against them, or properties with title problems.