Home Buyer Y O U R
N A S H V I L L E
W I T H
R E A L
A G E N T
E S T A T E
M A R Y
O ' N E I L
G U I D E
Why Use An Agent? I CAN GIVE YOU 5 GOOD REASONS TO USE A REALTOR.
The proliferation of services to help buyers and sellers complete their own real estate transactions are mostly recent, and it may have you wondering whether using a real estate agent is becoming a relic of a bygone era. While doing the work yourself can save you on commission rates many real estate agents command, for many, doing so could end up being more costly than a realtor’s commission in the long run.
1. Better Access/More Convenience
2. Negotiating Is Tricky Business
A real estate agent’s full-time job is to act as a liaison between buyers and sellers. This means that he or she will have easy access to all other properties listed by other agents. Both the buyer’s and seller’s agent work full time as real estate agents and they know what needs to be done to get a deal together. For example, if you are looking to buy a home, a real estate agent will track down homes that meet your criteria, get in touch with sellers’ agents and make appointments for you to view the homes. If you are buying on your own, you will have to play this telephone tag yourself. This may be especially difficult if you’re shopping for homes that are for sale by owner.
Many people don’t like the idea of doing a real estate deal through an agent and feel that direct negotiation between buyers and sellers is more transparent and allows the parties to better look after their own best interests. This is probably true–assuming that both the buyer and seller in a given transaction are reasonable people who are able to get along. Unfortunately, this isn’t always an easy relationship. What if you, as a buyer, like a home but despise its woodpaneled walls, shag carpet and lurid orange kitchen? If you are working with an agent, you can
express your contempt for the current owner’s decorating skills and rant about how much it’ll cost you to upgrade the home without insulting the owner. For all you know, the owner’s late mother may have lovingly chosen the décor. Your real estate agent can convey your concerns to the sellers’ agent. Acting as a messenger, the agent may be in a better position to negotiate a discount without ruffling the homeowner’s feathers. A real estate agent can also play the bad guy in a transaction, preventing the bad blood between a buyer and seller that can kill a deal. Keep in mind that a seller can reject a potential buyer’s offer for any reason–including just because they hate his or her guts. An agent can help by speaking for you in tough transactions and smoothing things over to keep them from getting too personal. This can put you in a better position to get the house you want. The same is true for the seller, who can benefit from a hard-nosed real estate agent who will represent their interests without turning off potential buyers who want to niggle about the price.
3. Contracts Can Be Hard To Handle If you decide to buy or sell a home, the offer to purchase contract is there to protect you and ensure that you are able to back out of the deal if certain conditions aren’t met. For example, if you plan to buy a home with a mortgage but you fail to make financing one of the conditions of the sale–and you aren’t approved for the mortgage–you can lose your deposit on the home and could even be sued by the seller for failing to fulfill your end of the contract. An experienced real estate agent deals with the same contracts and conditions on a regular basis, and is familiar with which conditions should be used, when they can safely be removed and how to use the contract to protect you, whether you’re buying or selling your home.
4. Real Estate Agents Can’t Lie Well, OK, actually they can. But because they are licensed professionals there are more repercussions if they do than for a private buyer or seller. If you are working with a licensed real estate agent under an agency agreement, (i.e., a conventional, full-service commission agreement in which the agent agrees to represent you), your agent will be bound by common law (in most states) to a fiduciary relationship. In other words, the agent is bound by license law to act in their clients’ best interest (not his or her own). In addition, most realtors rely on referrals and repeat business to build the kind of clientèle base they’ll need to survive in the business. This means that doing what’s best for their clients should be as important to them as any individual sale. Finally, if you do find that your agent has gotten away with lying to you, you will have more avenues for recourse, such as through your agent’s broker, professional association (such as the National Association Of Realtors) or possibly even in court if you can prove that your agent has failed to uphold his fiduciary duties. When a buyer and seller work together directly, they can (and should) seek legal counsel, but because each is expected to act in his or her best interest, there isn’t much you can do if you find out later that you’ve been duped about multiple offers or the home’s condition. And having a lawyer on retainer any time you want to talk about potentially buying or selling a house could cost far more than an agent’s commissions by the time the transaction is complete.
5. Not Everyone Can Save Money Many people eschew using a real estate agent to save money, but keep in mind that it is unlikely that both the buyer and seller will reap the benefits of not having to pay commissions. For example, if you are selling your home on your own, you will price it based on the sale prices of other comparable properties in your area. Many of these properties will be sold with the help of an agent. This means that the seller gets the keep the percentage of the home’s sale price that might otherwise be paid to the real estate agent. However, buyers who are looking to purchase a home sold by owners may also believe they can save some money on the home by not having an agent involved. They might even expect it and make an offer accordingly. However, unless buyer and seller agree to split the savings, they can’t both save the commission.
The Bottom Line While there are certainly people who are qualified to sell their own homes, taking a quick look at the long list of frequently asked questions on most for sale by owner websites suggests the process isn’t as simple as many people assume. And when you get into a difficult situation, it can really pay to have a professional on your side.
The Buying Process
YOUR GUIDE TO HOME BUYING
1. Define Your Goals Given that buying a home is such a big step, it’s all the more important for you to educate and prepare yourself as much as possible in advance. This means clearly determining why you’re buying and what kind of home you’re looking for. And because buying and financing a home are so closely related, it also means examining your current financial situation and projecting how much you can afford.
2. Contact A REALTOR® However, with all the unique opportunities and potential pitfalls of the current market, it’s even more important for you to contact a REALTOR® once you’ve definitely decided to buy. In choosing a REALTOR® to guide you through the property search, financing, negotiation and transaction processes, you should consider their local market knowledge, experience and track record.
3. Get Pre-Approved The pre-approval process involves meeting with a lender and authorizing them to examine your current financial situation and credit history.
On the basis of this examination the lender will provide you with a document that details how much you can borrow to buy a home.
The benefits of pre-qualification: You’ll have information about what you can afford and be able to plan accordingly • As a qualified, motivated buyer you’ll be taken more seriously when you make an offer on a home • Lenders can tell you whether you qualify for any special programs that will enable you to afford a better home (particularly if you’re a first-time buyer) •
Real estate financing is available from many sources, and as your REALTOR®, I will be able to suggest lenders with a history of offering excellent mortgage products and services.
4. View Homes And Select THE ONE Simply put, the key to the home search process is knowing what you’re looking for. Among other things, that means distinguishing between “must-haves” and “like-to-haves”. That said, here are a few recent facts about the search process that might put your experience in perspective: Almost 90% of buyers use the Internet to search for homes • The typical buyer searches for 12 weeks and views 12 homes • 81% of buyers view real estate agents as very useful in the search process •
There are many benefits to starting the search process at my website, SearchAllNashvilleHomes.com, an easy and trustworthy source of property information, unlike websites like Zillow or Trulia, which frequently display incorrect information. You can view many homes and access neighborhood info. However, it’s also important to view homes in person. While property details may seem similar online, homes can actually be very different in terms of layout, design, workmanship and other aspects. It will be my job to arrange tours and go with you to viewings, helping to notice things you might miss, provide expert analysis, and act as an impartial sounding board.
5. Make An Offer And Negotiate Now that you’ve found the home you’d like to buy, it’s time to make an offer! The local real estate association, with legal counsel, has developed the contracts that are used for transactions in the Nashville area. These contracts enable you to specify a sale price and also include many clauses for specifying various terms of purchase, such as the closing and possession dates, your deposit amount, and other conditions. I will carefully review these clauses with you to ensure that they express your desired offer. In addition to drawing up the contract, I will be happy to address all your questions about the offer process!
Is It Time to Find Your Dream Home?
Once you’ve written the offer, I will present it to the seller and/or the seller’s representative. At that point, the process – given that a home’s eventual sale price is subject to supply and demand – will depend on the kind of market you’re in. Generally though, the seller can accept your offer, reject it, or counter it to initiate the negotiation process. Successive counter-offers, with deadlines for responding and meeting conditions, will be exchanged between you and the seller until a mutuallysatisfactory pending agreement is reached or the negotiations breakdown. Negotiations can involve many factors relating to different market conditions, homes and sellers
6. Secure Your Financing Once you have a pending agreement, it’s time to go back to your chosen lender to finalize your mortgage details so you can close the deal. This means finalizing your down payment, interest rate, regular payment schedule and any other financial conditions associated with the closing. As noted in the section on loan preapproval, if you’ve already been qualified with a lender for a certain loan and home purchase, this phase of buying your new home should be a relatively straightforward matter that centers around finalizing the loan details and signing the mortgage papers.
7. Close The Deal If you’ve efficiently taken care of everything connected with purchasing your new home, the experience of taking ownership will be a positive joy with no surprises. Key steps to the closing, also referred to as the “escrow” or “settlement”, include: Getting a Title Search – an historical review of all legal documents relating to ownership of the property – to ensure that there are no claims against the title of the property. It is also necessary to purchase Title Insurance in case the records contain errors or there are mistakes in the review process. •
The Final Walkthrough – you’ll be given the chance to look at the home to make sure it’s in the same condition as when you signed the sale agreement. •
The Settlement – typically, on the Closing Date you’ll go to a lawyer’s office to verify and sign all the paperwork required to complete the transaction. The settlement will include paying your closing costs, legal fees, property adjustments and transfer taxes. At that point, you’ll receive the property title and copies of all documentation pertaining to the purchase. •
Oh, and one more thing – you’ll get the keys! In most cases, Possession Date will fall within a couple days, at which point you’ll be able to move into your new home.
To Buy or Not to Buy CONSIDERATIONS FOR HOME BUYERS IN THE NASHVILLE MARKET
Buying your first home is a major step. There’s a lot you need to know to make the right decisions – and also to avoid making the wrong ones. And that’s particularly true in this current seller’s market, when there are few homes available and sellers hold all the cards. The good news is that if you know what you’re doing, or if you’re working with a highly-experienced REALTOR® who does, this market still offers opportunities to get a great home at a great price.
Owning Versus Renting Without question, owning a home comes with responsibilities and risks that you don’t have to worry about when you rent, such as a mortgage, taxes, homeowner’s insurance, maintenance and repairs, to name a few. However, financial advisors – not to mention homeowners – say there are far more advantages to owning. Historically, it has trended that over time, you’ll lose money by renting instead of owning your own home. Why not build up equity in a home instead of paying your landlord’s mortgage? Although there are periodic market drops, historically owning a home has been a prime
financial investment. You can take advantage of many ongoing tax benefits, like deducting the interest on your mortgage and property taxes from your income tax. At the end of the day, it just feels good to own your own home. You can decorate it any way you like, renovate or build additions, personalize your landscaping.
Is It A Good Time To Buy? In a report by Auction.com, Nashville was rated as the #3 real estate market in the country. Only Denver and San Antonio rated higher. This is due to a strong housing recovery, local economy and population growth.
Due to its popularity, Nashville is currently experiencing what housing experts call a “seller’s market.” This means that it is typically more advantageous for home sellers than buyers because there is more demand for homes than there is inventory. During this period, homeowners can expect their homes to sell for more than they would during a buyer’s market. In fact, in our latest market report, we saw the median home value rise over $25,000 from this time last year. If you are looking to buy a home in Nashville, most experts are predicting that home prices will continue to rise for the next few years and that the city will grow by 1 million more people in the next 20 years. With this in mind, if you are waiting for prices to come down before purchasing, you could be waiting quite some time and by that point there’s a good chance interest rates will have risen. So now that you know that there is limited housing inventory in Nashville, what can you do to ensure your chances of securing your next dream home? The first thing I do with all of my clients, is set them up to receive email property alerts directly from the MLS. While websites like Zillow and Trulia are easy to navigate, many times there can be lag time for new properties to show up on their sites. In a hot market like Nashville, you want to be fast and hopefully first to view a property and this is exactly what the alerts from the MLS offer. My clients receive home alerts as soon as properties are listed that meet their criteria, allowing them to move a little quicker if they see a home they like. The other part to being able to react quickly is already having your finances in place! This means you will want to make sure you are pre-qualified before you begin your home search. With time being of the essence, you don’t want to have to wait on lender paperwork to submit your offer. So the bottom line is that if you are currently renting but really want to own a home, this is a fantastic time to buy. And again, you may qualify to buy and not know it. I will not only be able to guide you towards getting all the financial support you qualify for, but you’ll also get the scoop on the many and various great real estate opportunities currently available.
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The Loan Process Unless you’re one of the rare few able to pay cash for your home, central to buying is finding the right lender and mortgage product. There are many different kinds of lending institutions, offering a wide range of loans and special programs. In fact, you should diligently research your options and shop around for a mortgage with as much care as you take when looking for a home. Here are the main steps to securing the mortgage that best suits your needs. Educate Yourself About Your Options It’s crucial for you to learn as much as you can about your mortgage options. There are myriad loan types and programs available through thousands of banks, finance companies, credit unions, and other assorted lenders. Always do your research! And be sure to get a few opinions. Sincerely Examine Your Financial Situation Together with educating yourself about your loan options, you should be asking yourself how much
mortgage and down payment you can really afford. Make yourself accountable. What might you be giving up– not just every month, and also perhaps 20 years down the road – by extending yourself further? Maybe taking on a larger mortgage will pay off greatly as an investment, maybe it won’t. Be sure to weigh the risks and opportunity costs. One other point to note is that some lenders will qualify you for the maximum they’re willing to lend which, however, may be more than you can truly afford given all your other responsibilities. Additionally, be sure to factor all related taxes, insurance, improvements, homeowner fees and all other potential costs into the equation. The bottom line is that you should make a list of your monthly expenses, as well as project your financial commitments during the life of the mortgage. This will provide a realistic figure of what you can afford. In shopping for a loan you should consider two main sources: direct lenders and mortgage brokers. Direct
During the application process you’ll discuss your different loan options and programs you ualify for, as well as finalize the size of your down payment.
lenders have the money and make the decisions, but have a limited number of in-house products to offer. Brokers are intermediaries who charge a fee, but who can provide you with loan options from many sources and can often save you money overall.
Another main consideration with a fixedrate mortgage is the term. Shorter term mortgages, like a 15-year, have lower rates than a 30-year. The shorter term and lower rate mean that you’ll pay less interest over the life of the loan, although your monthly payments will generally be higher.
Your Basic Mortgage Options Generally, there are two ways you can go: a fixed-rate mortgage with an interest rate that remains the same for the life of the loan, or an adjustable-rate mortgage (ARM) with a rate that adjusts up or down, depending upon economic trends.
On the other hand, an adjustable-rate mortgage’s (ARM) rate is commonly based on the U.S. Treasury index for a one-year Treasury bill, although it may also be geared to other indexes.
The advantages of a fixed-rate mortgage – particularly if you lock in at a low rate – are that they protect you against the risk of rising interest rates, and their stability can also make it easier for you to plan and budget your short and long-term expenses. Their down side is that they generally have higher rates than ARMs at any given time, and by locking in you run the risk of being rapped at a relatively high rate if interest rates fall.
Generally, lenders add 2-4% to the index rate to get their ARM rate. Initially, the rate is lower than the fixed rate by a quarter point to two points or more. This rate will periodically adjust within set limits or “caps” that are specified by the terms of the loan. Finally, it must be reiterated that the loan you ultimately qualify for will depend on your credit status. The best rates and terms are only available to those with solid credit so, if possible, pay off your credit cards and make all other bill payments in full and on time. Apply For A Mortgage Once you’ve reached a pending agreement with a seller to buy a home
you’ll have all the details you need to formally apply for a mortgage. When you meet with your chosen lender to complete the application you’ll need to provide information – if you didn’t during the pre-approval process – about your household income, job tenure and stability, assets and existing debt, and regular expenses. This may take the form of pay stubs, bank and investment statements, tax returns and other documentation. The lender will also check your credit status. If you place less than 20% down, the lender may require the mortgage to be guaranteed by a third party such as the Veterans Administration (VA), the Federal Housing Administration (FHA) or a private mortgage insurer (PMI).
if you qualify for a loan, the lender will often have the home you’re buying professionally appraised to ensure that it is worth the purchase price.
EVERY AGENT SAYS THEY'RE AN EXPERT. BUT YOU CAN REALLY
MOVE SMARTER WITH MARY O'NEIL. So when you decide to buy a home, or if you hear that any of your family and friends are looking to buy, be sure to take advantage of the knowledge, experience and professionalism of a Nashville REALTOR® that's more than a cut above the rest-- she's in a different league.
87%
DID YOU KNOW? OF HOME BUYERS WORKED WITH A REAL ESTATE AGENT IN 2015 FROM MAY 2015 TO MAY 2016, THE AVERAGE NASHVILLE HOME PRICE INCREASED
2.0%
Selecting Mary O'Neil TO BE YOUR NASHVILLE REAL ESTATE AGENT One of my many designations in real estate include being a buyer specialist. As such, I focus on helping people successfully find and buy the homes they’ve always wanted. One benefit of using my services is that I hear about listings right when they come on the market – in fact, sometimes even before they’re on the market. And that’s just the first step. When I work for you, I will: • Educate you about Buyer Agency, outlining my professional responsibilities to you, including complete Disclosure, Loyalty, Confidentiality, Obedience and Accountability • Help you explore your financing options and, if required, refer you to some excellent mortgage professionals so you can make the best possible mortgage decision • Save you time by regularly searching the market for affordable homes that meet your criteria • View homes with you and provide comparative analysis. I can also refer you to expert home inspectors and other professionals that will provide more in-depth analysis and advice on specific homes