Your most frequently asked
Real Estate questions – answered.
1. Can I sell my house myself?
Many people believe they can save a considerable amount of money by selling on their own. They look at the average commission on a house and remember stories of friends or relatives who managed to get through the process with seemingly little trouble. "Other people have sold their own homes," they say – "so why can't I?"
Approximately 10 percent of American homeowners handle their own sales. But in order to do this, you'll need to realistically assess exactly what's involved. The routine parts of the job involve pricing your house accurately, determining whether or not a buyer is qualified, creating and paying for your own advertising, familiarizing yourself with enough basic real estate regulations to understand (and possibly even prepare) a real estate contract, and coordinating the details of a closing. These are serious responsibilities to take on, and they include the concerns that your house is only on the market when you're home, your marketplace is limited to those you can reach locally, and a mistake may cost you the money you're trying to save. Commissions are negotiable. You can talk with a broker to discuss the level of services you will require to sell your home and determine an agreed upon commission rate based upon the services provided.
The best reason for working with a real estate broker is the enormous amount of information they have at their disposal – information that can help make your house sell faster and easier. Professionals know about market trends, houses in your neighborhood, and the people most likely to buy in such neighborhoods. They also know how to reach the largest number of people who may be interested in your house (both through old-fashioned sales skill and the Internet resources of a reputable real estate company), and are trained in areas like screening potential buyers and negotiating with them. Finally, they're always "on-call," and willing to do the things most of us don't: working on the weekends and answering the phone at all hours.
2. What makes a house sell?
This entire book could be devoted to answering this question. But to be as concise as possible, a successful sale requires that you concentrate on six considerations: your sale price, your terms of sale, the condition of your house, its location, its accessibility, and the extent of marketing exposure your house receives. While some of these factors are beyond your control (such as the actual sale price), you can compensate by taking advantage of others (like a new paint job) to make your property as attractive to prospective buyers as possible.
3. When is the best time to list a house for sale?
The "best" time to list your house is actually as soon as you decide to sell it.
If you want to get the best price for your house, the key is to give yourself as much time as possible to sell it. More time means more potential buyers will probably see the house. This should result in more offers; it also gives you time to consider more options if the market is slow or initial interest is low.
4. Is there any seasonality to the market?
Peak selling seasons vary in different areas of the country, and weather has a lot to do with it. For example, late spring and early fall are the prime listing seasons in many areas because houses tend to "show" better in those months than they do in the heat of summer or the cold of winter. And of course, people like to do their house shopping when the weather is pleasant.
But keep in mind that there are also more houses on the market during the prime seasons, so you'll have more competition. So while there is seasonality in the real estate market, it's not something that should dominate your decision on when to sell.
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Probably not. Even if you're under no pressure to sell, waiting for better market conditions is not likely to increase your profit potential.
6. How long should it take to sell?
Average listing times vary from 30 to 180 days, according to real estate market conditions in a particular region, town, or even neighborhood, and of course, price, terms, condition, location, accessibility and exposure play an even greater role. Selling in any market is easier if you keep time on your side. Most professionals will tell you that allowing yourself at least six months will put you in a position to get a better return from their marketing efforts.
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7. What if I can't sell my old house before I have to move?
This situation can arise for any number of reasons. For instance, getting the job promotion you've been waiting for may mean having to relocate very quickly. Another example: you finally find your "dream home," and need to get it under contract before it sells to another buyer. Whatever the reason, don't panic. You have some viable alternatives to the worrisome possibility of double mortgage payments.
If you don't have to sell in order to buy a new home, consider the advantages and disadvantages of renting your old house. If you're being transferred before you've had a chance to decide on the new house, you may be able to obtain a short-term rental of your own while you're becoming familiar with the new area. Either way, a local real estate professional can usually help, by advising you how much you can expect to pay for rent in your new city, or what you need to charge for your current home to both cover your mortgage payments and take care of other costs you'll entail as a landlord.
Another solution available our guaranteed sale plan, which is detailed in the next question.
8. What if I do have to sell my current house first?
Few brokers offer any kind of guaranteed-sale plan, which are essentially a written promise to buy your house at a pre-determined price if it doesn't sell by a certain date. ERA is the only national real estate system that has the confidence in its marketing to offer such a unique program.
If you opt for the guaranteed-sale route, look into the ERA® Sellers Security® Plan. It's a unique guaranteed-sale plan offered in all 50 states. You'll sleep better knowing your participating ERA Real Estate firm has the financial backing to fulfill the terms of the plan. You are also entitled to some additional benefits that are automatically included in the program.
9. How do I price my house?
Always price your property sensibly.
It is important to be realistic about your home's value and price it accordingly. To determine the fair real estate market value, we will supply information on comparable homes that have sold or gone under contract in your area.
Click here for information on the ERA Sellers Security Plan.
10. What is "fair market value," and how do I determine mine?
Simply put, the fair market value of a house is the highest price an informed buyer will pay, assuming there is no unusual pressure to complete the purchase.
To get an estimate of fair market value, contact us and ask for a Comparative Market Analysis (CMA) of your house. The analysis will give you a realistic figure based on the most salient features of the local real estate market. It should provide information about recent sales of similar houses, including how much they sold for and how long it took. The real estate professional's price opinion is very helpful in determining the right asking price.
11. What's the difference between fair market value and asking price?
You can assume that some negotiation will be necessary to reach an agreement with a buyer. The professional who presents you with the results of your CMA will provide all the data that establishes fair market value. Then, based on your own timing and marketplace variables, your real estate professional will be willing to help you establish a competitive pricing strategy. Generally speaking, the owner's asking price — the advertised price of a house when it goes on the market — is set slightly lower, at or slightly higher than fair market value based on your own timing and marketplace variables.
A common mistake made by property owners is they look at the asking prices of other homes on the internet, in newspapers and real estate magazines. Conclusions are then drawn that if those homes “can get” such a price then certainly “our home” can get such and such. However, comparing your home to listings that have not yet sold, or worse, are overpriced, is a recipe for disaster. Unfortunately many of these homes sell for far less than the ‘asking price” or do not sell at all. The error in using such a pricing strategy is obvious.
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12. Who can help me determine the right asking price?
Real estate sales professionals suggest asking prices based on a wide array of information you may not have at your disposal, including recent listing and selling prices of houses in your neighborhood. If you're not completely confident in their suggestions, you may want to order an appraisal.
Next, establish clear priorities. If you had to choose, are you more concerned with selling quickly, or getting the best price?
Someone else — a neighbor, friend or relative — may point out advantages or disadvantages about your house that you hadn't thought about. Third-party views will help you start thinking of your house as a commodity, with positive and negative selling points. Then you should decide on a price that you feel is competitive and consistent with what other houses in your area have sold for.
13. How flexible should I be about the asking price?
Generally, the first three weeks will be the test period of your initial asking price. If you see showings drop off and very few return visits, you may want to consider repositioning your asking price. Most buyers leave room for negotiation when they make an offer. Thus, a certain degree of flexibility is usually called for on the part of both the buyer and seller.
While it is ultimately your decision to accept or reject an offer, or present a counter-proposal, a good marketing professional can be of great assistance to you during the negotiating process. In fact, negotiation is one of the valuable skills a real estate professional can offer you. As negotiations proceed — whether in writing, face-to-face, or by phone — your sales professional will inform you of your options in responding to each offer from the buyer, so you can make an educated decision as to how you want to proceed.
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HOME IMPROVEMENTS FOR SELLING
14. Should I fix my house up before it goes on the market?
Unless your house is nearly new, chances are you'll want to do some work to get it ready to market. The type and amount of work depend largely on the price you're asking, the time you have to sell, and the present condition of the house.
If you're in a hurry to sell, do the "little things" that make your house look better from the outside and show better inside. Read on for several specific ideas for making low-cost improvements.
15. What is "curb appeal," and how do I create it?
"Curb appeal" is a common real estate term for everything prospective buyers can see from the street that might make them want to turn in and take a look. Improving curb appeal is critical to generating traffic. While it does take time, it needn't be difficult or expensive, provided you keep two key words in mind: neat and neutral.
Neatness sells. New paint, an immaculate lawn, picture-perfect shrubbery, a newly sealed driveway, potted plants at the front door — put them all together, and drive-by shoppers will probably want to see the rest of the house.
Then, for both the inside and outside of your house, if you're going to repaint, choose neutral colors, and keep clutter and personal knick-knacks, photos, etc. to a minimum. Remember, when a family looks at a house, they're trying to paint a picture of what it would be like as their home. You want to give them as clean a canvas as possible.
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16. What should I do to make the house show better?
First, make your house look as clean and spacious as possible. Remember, people may look behind your doors — closet and crawlspace doors, as well as those to the bedrooms and bathrooms. So get rid of all the clutter; rent a storage space if you need to, hold a garage sale or call a local charity.
After you've cleaned, try to correct any cosmetic flaws you've noticed. Paint rooms that need it, re-grout tile walls and floors, remove or replace any worn-out carpets. Replace dated faucets, light fixtures, and the handles and knobs on your kitchen drawers and cabinets if needed.
Finally, as with the outside of your house, try to make it easy for prospective buyers to imagine your house as their home. Clear as much from your walls, shelves, and countertops as you can. Give your prospects plenty of room to dream.
Use the ERA® "Show & Sell" Checklist to get specific ideas on how to make your house look its best. Additionally, viewing television shows, such as “Designed to Sell” will give you valuable ideas on how to increase your home’s buyer appeal.
17. Should I make any major home improvements?
Certain home improvements that are useful to almost everyone have proven to add value or speed the sale of houses. These include adding central air conditioning to the heating system; building a deck or patio; finishing the basement; doing some kitchen remodeling (updating colors on cabinets, countertops, appliances, panels, etc.); and adding new floor and/or wall coverings, especially in bathrooms. On the other hand, improvements that return less than what they cost are generally ones that appeal to personal tastes that not everyone may share, like adding fireplaces, wet bars and swimming pools, or converting the garage into an extra room.
The challenge that comes with any home improvement designed to help sell your house is recouping your investment. There's always the risk of over-improving your house — that is, putting more money into it than neighborhood prices will support.
So how much is too much? Professional renovators have found that, no matter how much you improve any given house, you're unlikely to sell it for more than 15 percent above the median price of other houses in the neighborhood, whether you do $1,000 worth of work or $50,000. That's why you might want to ask your sales professional's opinion about the viability of recouping the cost of any major renovation you have in mind before you start the work.
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18. Should I do the work myself?
If you have the time and talent, do-it-yourself improvements are the most cost-effective way to go. Painting, wallpapering, replacing cracked trim and old plumbing fixtures — the difference between work done by a competent amateur and a professional is usually time and money. Just make sure you don't tackle something you can't handle — this is no time for "on-the-job training." If you're not experienced, it may be worth calling in a professional.
Larger jobs involving mechanical systems (heating, electrical, plumbing, etc.), or work that must meet local building codes, are another story. Even if you or the family handyman know exactly what you're doing, it's not a good idea to engage in this type of work unless you're licensed to do so. Your attempts could make you responsible for more than you realize if something you worked on goes wrong after you sell.
19. Am I liable for repairs after I sell?
Yes. If the buyer's inspection reveals major problems with your house's structure or mechanical systems (heating, electrical, plumbing, etc.), the buyer may wish to negotiate the price downward on the basis of anticipated repair costs. So even though the repairs won't be made until after the sale, practically speaking, you'll be paying for them.
Sometimes, repairs may be required before the transfer of title takes place. This is especially true in sales that involve financing that's insured or guaranteed by the government (FHA/ VA loans, for example).
You may also have heard about lawsuits involving sellers who failed to disclose major problems before the sale — like an addition to the house that wasn't built to code. Most states now maintain very specific disclosure laws that require sellers to disclose any pertinent information related to the condition of the property. For example, most states require sellers to notify buyers about the presence of any lead-based paint. It is important for you to be knowledgeable about your state's disclosure laws.
These are just a few good reasons to retain a lawyer or sales professional who know as much about the condition of your property as you do. It's also a good idea to get the buyer's written acknowledgment of any major problems when you accept their offer.
Yes they are, and they're worth investigating. It's our belief that the ERA® Home Protection Plan® is one of the best selling points you can add to your house. It's easy to see why. After a buyer has invested substantial funds in a down payment and moving expenses, the last thing they want to worry about is a costly home repair. With the ERA® Home Protection Plan®, they don't have to.
The warranty offers protection for you and your buyer, covering repair or replacement costs for breakdowns to most major systems and built-in appliances for up to a year after the date of closing. All you pay when there is a covered claim is a small deductible. And when you consider the peace of mind that comes with knowing 24-hour emergency service is always just a phone call away, it's hard to imagine a better investment. Offering a warranty on your home is a sure fire way to differentiate your home from others in the real estate market. If everything else were equal in the mind of a buyer who is trying to decide between making an offer on your home or a competing listing, by offering a one year warranty you would have a huge competitive advantage.
For more information on the ERA® Home Protection Plan®, click here.
MARKETING YOUR HOME
21. How do I reach the right potential buyers?
Today, people are moving farther and more frequently than they used to; it's not unusual for upwardly mobile executives to relocate across the country more than once in a year. The result is that the pool of potential buyers for your house is much larger and spreads far wider than ever before, and the competition to reach them is fierce.
These developments make it more important than ever to choose the real estate company with the most sophisticated and savvy marketing techniques. Companies with much-visited Web sites, extensive available listings, web tools designed to help consumers buy and sell, and prominent, effective advertising and marketing materials are essential for identifying the right buyers and convincing them that yours is the house for them. The yard sign is just the beginning, but with a knowledgeable sales professional, your selling process can promptly reach a happy ending. Learn more about the ERA Commitment to Cutting-Edge Technology.
22. What's an MLS and why do I need one?
A Multiple Listing Service, or MLS, is another resource to help ensure you reach a large number of prospective buyers and dramatically increase the exposure of a property.
Quite simply, it's a system under which participating brokers agree to share commission on the sale of houses listed by any one of them. So, for example, if you list your house with one broker and another broker actually sells it, they share the commission. The advantage to you is clear; more people have an interest in selling your house.
Over the years, the MLS concept has grown from a strictly local sales tool into a powerful national marketing system. That's due largely to ERA Real Estate, whose pioneering use of the fax machine, back in 1971, led to the development of the nation's first interstate shared listing system.
23. How important is advertising?
Advertising remains an important component in the marketing process. Today, however, this means much more that an ad placed in the local newspaper. Today's real estate brokers have the knowledge and resources to market your home through an array of proven modern methods, including Internet, newspapers, magazines and direct mail in addition to our other innovative methods. They are trained to determine where the pool of buyers for your particular property might most likely be found and from that, can best determine the type of advertising that is best for your property.
24. What should I expect from an open house?
The open house is another valuable part of the marketing process, offering prospective buyers the chance to view houses in a low-pressure, "browsing" atmosphere. With that in mind, you shouldn't expect it to generate a sale, at least not directly. What you should look for is interest expressed and requests for private showings made to your sales professional in the days following the open house.
Open houses can be valuable. If many prospective buyers attend, it shows you that the property is attractive and saleable. If very few people show up, it can indicate that the price is too high, and cause you to look for ways to improve Curb appeal. Try not to draw your own conclusions — your marketing professional will give you a full report on open-house activity and offer a professional assessment of its results.
25. Should I try to avoid being at home when the house is shown?
You should definitely plan to be out of the house during any open house your sales professional has scheduled; the same goes for showings to prospective buyers. People often feel uncomfortable speaking candidly and asking questions in front of current owners. You want them to feel as free as possible to picture your house as their "dream home."
26. Who actually sells my house — a broker or a marketing professional?
Both. In legal terms, a real estate marketing professional is an individual trained and licensed to act for other people looking to buy or sell a piece of property. While that definition applies to both, the broker is permitted to collect fees and/or commission for such work.
Thus, the sales professional — with whom you have most of your day-to-day contact — works on behalf of, and is compensated by, the broker.
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27. Will my sales professional be present at the closing?
If you wish. while the law does not require their presence, both the buying agent and the selling agent may attend the closing. Even though most of the procedures are handled by the lenders, title companies, and attorneys, you'll find that your marketing professional can be a valuable source of information and counsel, especially if any last-minute problems arise.
Good sales professionals are also extremely helpful in the days immediately prior to the closing. They'll help you prepare by giving you a step-by-step preview of the entire process and what will be expected of you. And they'll make certain you bring all necessary documents and other information.
WORKING WITH A REAL ESTATE PROFESSIONAL
28. What makes a marketing professional effective?
We believe good training and experience make the best marketing professionals. But the truth is, not every real estate professional is right for every seller. That's why we suggest that you follow this simple formula to help you decide whether a particular sales professional will work well for you
COMPETENCE + COMFORT + EFFECTIVE MARKETING = SUCCESS
Competence: When you first meet with a real estate professional, they'll do their best to show you that they have what it takes to sell your house. You can expect to be informed of credentials, past achievements, sales volume and letters of recommendation. Look for evidence that their competence might be relevant to your needs. The real estate professional you choose should also be up-to-date on the current pool of potential buyers for houses like yours. As in any profession, not all real estate agents have the same level of competence.
Comfort: The importance of being comfortable with your real estate professional as a person cannot be overstated. You're going to be dealing with this individual on a regular basis, maybe for months, during a time that can be emotionally trying for you and your family.
Marketing: Competence and Comfort represent two important legs on a three legged stool. This last leg is just as critical, if not more so, for a successful marketing effort. Without innovative and effective marketing, to help attract the available pool of buyers, the goal of selling your home fast and for the most money may not be achieved. Compare the range of marketing efforts and systems between the various competing real estate firms. You will find the range to be enormous. Time spent determining the differences will go a long way to helping you achieve your real estate goals.
It takes a unique combination of these three characteristics — competence, comfort and marketing — to inspire the confidence a homeowner needs to maintain peace of mind through the process of selling a house. It's something for which the Dan Sperduto Home Selling Team strives. Always There For You® is more than a tagline. It's our way of doing business.
29. How do I find the sales professional who's right for me?
A good place to start is by talking to friends, neighbors, and relatives — anyone whose recommendation you trust. You can also try responding to sales professionals' local advertising, direct mail, or Web site profiles. If they have the resources and initiative to maintain such a presence in your marketplace, it's a good sign that they may have the sales skill you're looking for.
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30. Do I have to pay a commission even if I find the buyer?
That depends on the type of listing you agree to. If you sign an exclusive agency contract, you may sell the house on your own without paying a commission. In an exclusive right-to-sell agreement, you owe a commission even if you find the buyer. Which type you choose may largely depend on which sales professional you work with and how much trust you place in their abilities (as well as how much time and expertise you feel you have to devote to finding a buyer and negotiating a contract on your own.)
31. What is the advantage of an exclusive right-to-sell?
Incentive — it lets sales professionals know that their time and effort will not go unrewarded. That's one reason the great majority of residential listings are marketed under exclusive right-to-sell agreements.
32. What if my sales professional doesn't produce?
Besides commission, the most important matter you negotiate at the time of listing your house with a broker is the duration of the listing contract. Terms vary, but listing agreements are seldom for less than three months or greater than one year.
But what if you find yourself dissatisfied midway through a nine-month contract? While the listing contract is legally binding, some brokers offer homeowners an "out" if they are unhappy with the services they are receiving. The ERA Commitment to Service is one example of such a satisfaction-guarantee, and more information about it is available at the end of this section.
33. Why list my house with an ERA Broker?
Exclusive services that can make selling your house faster and easier, and unparalleled expertise in local and national markets — those are two of the most important reasons why no one can sell your house more effectively than an ERA® professional.
Beyond that, we're sincerely interested in helping make the experience of selling your home as smooth and easy as possible. So even if you're not ready to list your house — if you simply have questions about the market in your area, price or mortgage trends, or anything else about real estate as it relates to you — just pick up your phone and call the Dan Sperduto Home Selling Team today. As our tagline states, we're Always There For You®.
WORKING WITH A PROFESSIONAL
34. What are the advantages of using a real estate professional to help me buy a home?
Buying a home is certainly one of the most rewarding experiences most of us ever have; it's also one of the most challenging. If you're buying for the first time, the process may seem overwhelming. And even if you've been through it several times, every move is different and presents new challenges.
One clear advantage of enlisting the help of a sales professional is simply that you don't have to go through it alone. A good sales professional has the background and skills to help you through each step of the process, and make the experience of finding, buying and moving into your new home as smooth, quick and enjoyable as it can be. Another advantage is that a sales professional represents a valuable source of information about market trends; communities and neighborhoods; and especially homes for sale throughout the area. Remember, not every home seller runs an ad in the local paper or puts a sign up in the yard. In fact, many homes actually sell before there is ever a need to advertise them. The market expertise a sales professional offers you is augmented by access to complete, regularly updated information about every home listed by area sales professionals through the Multiple Listing Service (MLS). As you'll see in the following questions, such professional expertise and services can be of considerable help throughout the real estate buying process.
STARTING THE BUYING PROCESS
35. Where do I begin the process of looking for a home?
The first thing you should do is to begin focusing on what you're looking for in a home. You can start by establishing priorities in the following three areas:
Location: Are you relocating to a new town because of a new job or to be closer to your current job? How will the location of schools, shops, and transportation affect your choice of neighborhood?
Personal Tastes: How large of a home do you need? What style of architecture do you prefer? What type of lot do you prefer? Depending on where you move to, you may have a choice of homes in dozens of styles, sizes, and settings.
Budget: How much home can you comfortably afford?
As you consider these issues, do a little research of your own. Look through magazines for ideas about home styles and features. Drive through neighborhoods that appeal to you to see what's available. Read the real estate listings in the newspaper to learn about current prices in the areas you're considering. Talk to friends about the features that you'd really like to have in your home. The more knowledgeable you become, the better your final decision is likely to be.
A good idea would be to speak with a mortgage lender to get an idea as to what kind of programs for which you may be eligible. There are many choices in lenders. For a no obligation free, fast (usually under 20 minutes) and over the phone mortgage pre-approval you can call ERA Mortgage. Their toll free number is 866-396-9056 and they are open 9AM – 9:30PM (Mon – Fri) and 10AM – 7PM (Saturday).
Then sit down and consider carefully all the things you're looking for in a home. The Homebuyer's Wish List worksheet later in this section is a good starting point. When you've filled it out, you'll begin to get a good idea of what you'd like your dream home to be.
36. How do I find the right sales professional to work with?
The key word here is "right." While there's certainly no shortage of qualified sales professionals to choose from, it's important that you find one who can fully understand your wants, needs and individual tastes, and whose personal and professional judgment you respect.
Today's buyers also have more choices when it comes to choosing the sales professional who can best represent them in a real estate transaction. Until recent years, virtually all real estate professionals involved in a given transaction worked for the seller. However, a growing number of today's home buyers are choosing to be represented by a "buyer's agent," who represents the buyer in contrast to the traditional seller/sales professional relationship.
Many real estate companies throughout the United States have both buyer and seller agencies. A sales professional should present you with a disclosure statement before any working relationship is created. That statement should explain what a buyer's agent is and does, what a seller's agent is and does, and what dual agency means. It is very important to remember that real estate firms are governed by laws that can vary by state. Disclosure laws also vary by state.
37. How do I know how much home I can afford?
We've found that affordability is probably the single biggest concern of today's first-time real estate home buyers. Given the wide range of media coverage regularly devoted to the issue, it's not surprising that many young families wonder how long it will take them to afford their first home.
Our advice: Don't sell yourself short. Talk to your real estate professional. A good sales professional is committed to honestly and responsibly working with you to determine your affordable price range. There are many financing options available today, and some include low down payments. Your sales professional will help find an option that fits your budget, and you may be surprised at just how much home you can afford.
For tips on various mortgages and more, see the "Financing" section of this book.
RENTING VS. BUYING
38. How does buying compare to renting?
Renting offers a lifestyle that's nearly maintenance-free. That may appeal to you, but consider that renting offers you no equity, no tax benefit, and most likely no protection against regular rent increases.
If your rent has averaged $1000 a month for the last 10 years, you've spent $120,000 with nothing to show for it. Isn't it time you invested in yourself instead of your landlord?
Several financing options hold special advantages for first-time buyers or families with limited cash reserves. FHA-insured and VA-guaranteed mortgages can minimize or even eliminate your down payment. You may also consider a lease-purchase agreement, or borrow cash for a down payment from life insurance, profit-sharing or a retirement account.
In addition to tax deductions you'll likely receive that can partially offset the cost of real estate taxes, insurance and home maintenance, your home may appreciate in value. If you purchase a home that costs $100,000 and the property increases in value only two percent each year, your potential appreciation in just two years is nearly $4,200. And due to changes to the tax code, subject to certain restrictions, up to $250K (or $500K if married filing jointly) of the profit you make when you sell the house is tax-free as long as you own the property for a minimum of 24 months.
CHOOSING A COMMUNITY
39. What should I think about when I'm deciding which community I want to live in?
Good town services, nice parks and playground facilities, convenient shopping and transportation, a track record of sound development and good planning — these are just a few considerations that are important to many people when they choose a community in which to live.
As for individual neighborhoods within a village or city, there is no better source of information than your real estate professional. Sales professionals know the people and the communities they serve, and chances are they can help you find a neighborhood that really fits your family's needs.
40. Where can I get information about local schools?
Again, a good real estate professional is perhaps your best source. They know where to direct you so that you can learn valuable information about school districts, including test scores, extracurricular activities, bus service and more. If you're relocating, a sales professional may even be able to put you in touch with teachers and principals when you visit the area. And if you want to do a little searching on your own, the Internet may also be a good place to start. ERA.com has a special link to neighborhood information, including information about area school districts.
41. How can I find out what homes are selling for in a given neighborhood?
In most areas, home sales are a matter of public record — you can get all the information you want about recent sales, including prices, by visiting the Town Clerk’s office where they record the transfer Deeds.
An easier way is to ask your real estate professional. If you're interested in a particular home, a sales professional may be able to provide you with a list of comparables — sale prices of homes in your area that are roughly the same size and age as the home you're considering. Although there will certainly be some differences between the homes — the house next door may have an extra bedroom, or the one down the block may be older than the one you're looking at — it's a good basis for evaluating the seller's asking price.
Progressive agents may also be able to direct you to web sites which will provide you with real estate property sale data.
42. How can I find out what my property tax bill will be?
Usually, the total amount of the previous year's property taxes is included on the listing information sheet for the home you're interested in. If not, you can call the assessor's office in the town where the property is located.
Remember, tax rates change from year to year, so the previous year's bill should be considered simply as a "ballpark" figure of what you would pay. For a more precise projection, call the local assessor's office for assistance, or ask your real estate professional.
43. If I'm moving a considerable distance, is there any way I can screen homes before I start traveling?
Yes. Today's Multiple Listing Services (MLS) — which include as much as 90 percent of the homes listed in any given community — have made it relatively easy for buyers to access detailed information on homes for sale practically anywhere in the country.
ERA Real Estate has taken the MLS concept into the next generation with ERA.com, our Web site, which features over 50,000 domestic listings. It's a powerful way for buyers to find the perfect home. The site also includes ERA® International listings, allowing interested buyers to expand their search to other countries without ever leaving their home.
There are additional resources that a knowledgeable real estate professional can provide you including internet sites that will allow you to see addresses, multiple photos and virtual tours when they have been prepared for a particular property.
44. Real estate listings and ads seem to have a language all their own. What do all those abbreviations mean?
Abbreviations are a necessity in real estate advertising because so much information must be communicated in so little space. Some common abbreviations and their meanings:
for sale by owner
master bed room/suite
hot water baseboard heat
If you run across any other abbreviations or terms you don't understand, don't be embarrassed — after all, you don't buy a home every day. The glossary of real estate terms in the back of this book provides further assistance, or you can simply contact ERA REALTY PROs; they'll be happy to "translate" for you.
HOME HUNTING TIPS
45. When I start visiting homes, what should I be looking for the first time through?
The house you ultimately choose to call home will play a major role in your family's life. A home can be an excellent investment, but more importantly, it should fit the way you live, with spaces and features that appeal to everyone in the family.
As you look at each home, consider these important factors:
§ Is there enough room for you now and in the near future?
§ Is the home's floor plan right for your family?
§ Is there enough storage space?
§ Will you have to replace the appliances?
§ Is the yard the size that you want?
§ Are there enough bathrooms?
§ How much maintenance and/or decorating will you need to do right away? Later?
§ Will your present furniture work in this home?
46. How many bedrooms should I be considering?
Whether you are married or not, or have kids or not, spare bedrooms come in handy when family and friends come to stay. And when you're not having guests, extra rooms are useful as a library, den, or TV room.
Another good reason to choose a home with extra bedrooms: extra space will make your home more appealing to a larger number of interested buyers when it comes time to sell.
47. Is an older home as good a value as a new home?
It's a matter of personal preference. Both new and older homes offer distinct advantages, depending upon your unique tastes and lifestyle.
New homes generally have more space in the rooms where today's families do their living, like a family room or activity area. They're usually easier to maintain, too.
However, many homes built years ago offer more total space for the money, as well as larger yards. Taxes on some older homes may also be lower.
Some people are charmed by the elegance of an older home, but shy away because they're concerned about potential maintenance costs. Consider a home warranty to get the peace of mind you deserve. The ERA® Home Protection Plan® protects you against unexpected repairs on many home systems and appliances for a full year or more after you move in.
48. What do I need to bring along when I'm looking at homes?
Bring your own:
§ Notebook and pen for note-taking
§ Flashlight for seeing enclosed areas
§ Tape measure for checking room sizes, clearances, etc.
§ Camera (digital or 35mm)
Be prepared to investigate a little. After all, you want to know as much as possible about the home you buy. Sellers understand that because their home is on the market, it will be looked over pretty thoroughly.
If you need to go back to a home for another look, your sales professional will be happy to schedule an appointment. Also, be sure to ask any questions you have about the home, even if you feel you're being nosy. You have a right to know, and the serious seller will not mind making you feel more confident that you've chosen the right house.
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49. What should I ask about each home that I look at?
As a rule of thumb, ask any questions you have about specific rooms, features, or functions. Pay particular attention to areas that you feel could become "problem" ones — additions, defects, areas that have been repaired. And above all, if you don't feel your question has been answered, ask until you understand and are satisfied.
In most cases, your real estate professional will be able to provide you with detailed information about each home you see. State laws usually require property sellers complete a Property Condition Disclosure and provide a copy to prospective buyers. Additionally, there are likely to be other disclosures for Mold and Lead.
50. What should I tell the sales professional about the homes I look at?
Tell the sales professional everything you like and don't like about each home you see. Don't be shy about discussing a home's shortcomings. Is the home too small for your needs? Let the sales professional know. Was the home perfect except for the carpeting? Let the sales professional know.
However, remember that there can be two types of sales professionals involved in a real estate transaction; those working for the buyer, and, frequently, those paid by and working for the seller. The seller's agent is obligated to help secure the best price for the seller. In addition, seller's agents may also report any confidences you share with them — including any willingness to pay a higher price should the seller not accept your initial offer(s). This is why you may want to be represented by a buyer's agent, because he/she will keep your input confidential. A buyer's agent puts the interests of the buyer — not the seller — first.
51. How many homes should I look at before I buy?
There is no set number of homes you should look at before you decide to make an offer on one. That's why providing the sales professional with as many details as possible up front is so helpful. The perfect home may be waiting for you on your first visit. Even if it isn't, the house-hunting process will help you get a feeling for the homes in the community and narrow your choices to a few homes that are worth a second look.
If you're looking in more than one community, try to make the most of each house-hunting trip. Also, be sure to take along a camera and snap some pictures of all the homes you're interested in. That will make it easier to remember and reach a decision.
APPRAISALS, INSPECTIONS, LEGAL, INSURANCE
52. How do I know I'm getting the best value for my money?
A professional appraisal is the best way to tell if a home is priced fairly. A real estate appraisal is an unbiased opinion of a property's value. It is based on comparing its style and appearance, construction quality, usefulness, square feet, bedrooms, baths, garages, lot size, and other factors, to comparable properties that have sold nearby.
When you apply for a mortgage, the lender will have a professional real estate appraiser perform an appraisal of the property.
53. I'd like to have a professional look at the home before I buy it. What does a home inspector do?
For your own safety, and to make sure you're getting your money's worth in the home you choose, using a professional home inspector is highly recommended. A home inspector will check a variety of things such as your home's plumbing, heating, cooling, and electrical systems, and look for structural problems like a damp or leaky basement, etc.
Usually, you call an inspector immediately after you've made an offer on a home. However, before you sign any written offer, make sure (or have your attorney make sure) that it includes an inspection clause, which says that your purchase obligation is contingent on the findings of a professional home inspector.
Your inspector will not tell you whether he or she thinks the home is worth the money you are offering. Rather, the inspector's job is to make you aware of repairs that are recommended or necessary. A seller may be willing to renegotiate a price to accommodate needed repairs, or you may decide that the home will take too much work and money. A professional inspection will help you make an informed decision.
In choosing a home inspector, consider one who has been certified as a qualified and experienced member by a trade association. You can obtain a list of potential inspectors by looking in the local yellow pages or contacting the State Dept of Consumer Protection. Your real estate professional can also refer you to qualified inspectors in your area.
54. Should I be present during the inspection?
Yes. It's not required, but it is very much to your advantage. You'll be able to clearly understand the inspection report and know exactly which areas need attention. Plus, you can get answers to many questions, tips for maintenance, and a lot of general information that will help you when you move into your new home. Most importantly, you'll see the home through the eyes of an objective third party.
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55. Are there any other inspections I need to have done?
In addition to the overall inspection, you may wish to have separate tests conducted to check for insects, the presence of radon gas, ensure the septic system is functioning properly, and the quality of drinking water, to name a few. Talk to your real estate professional for information about these tests and companies in the area that perform them.
56. Do I need to use a lawyer to buy a home?
Because the legal contracts and other paperwork involved in buying a home are complex and can be confusing to the general public, some people prefer to have an attorney review. Real estate professionals generally use legally approved contract forms that have been reviewed by attorneys from the local Bar Association.
Your mortgage lender will require an attorney handle the closing for them. The same attorney typically handles the buyer side of the transaction as well. Local real estate customs usually dictate the closing location to be in the office of the buyer’s attorney. The attorney will guide you through the paperwork and hold your hand through to entire closing process.
If you don't know a real estate attorney, ask your real estate professional for help. Sales professionals work with many legal professionals every month and can provide you with the names of several attorneys in the community.
57. Do I need to talk to my insurance agent?
Yes. Your real estate professional can help you with this, but most insurance professionals have a lot of experience in working with homeowners and can offer useful tips about homeownership, particularly regarding home safety and keeping your premiums low.
Once you've found a home, work with your insurance agent to develop a homeowner's policy that meets your individual needs. You'll need to bring evidence of a fully-paid policy for your mortgage lender when you come to closing. Make sure you take this step with your insurance provider as early as possible; in many locations you'll have trouble assuming title if you don't have proper insurance in place.
MAKING AN OFFER
58. When I've found the home I like, how do I make an offer?
When you've found a special house you want to call home, you'll probably feel excited and a bit nervous. Let the sales professional know you're ready to write an "offer to purchase" — a written document that declares how much you are willing to pay for the home provided that certain conditions are met. Because it's a legally binding contract that you will sign and date, you may feel more comfortable having an attorney review it.
This is the time when it is most important for you to keep in mind that, unless you have specifically retained the services of a buyer's agent, the sales professional is working for the seller. As the legal agent of the seller, he or she is obligated to help the seller get the best price, and will report to the seller any confidence you share.
It's best to make your offer without sharing with the agent your willingness to offer any higher price if the seller does not accept your offer.
Your offer should have a time limit for the seller to accept it, reject it, or make a counter-offer. If a counter-offer is made, you will have some time to respond. Often, several offers go back and forth until an offer is accepted, or one party decides to end negotiations.
59. How do I determine the amount of my initial offer?
There is really no rule to use in calculating an initial offer. Naturally, the buyer wants the best value and the seller want the best price, but negotiations can be influenced by many factors, such as a seller who may be changing jobs and wants to sell quickly, or a buyer who is set on a specific home.
After you've looked at the home's features, asked questions, checked comparables, and talked about it with your sales professional, you should have a good idea of what the home's value is in the current market. Consider what you can afford, and make an offer that you consider to be fair. We suggest you figure out market value instead of being focused primarily on negotiating. Not all sellers overprice their house. Sometime homes are extremely well priced and you would be getting a great value even if you paid full price. Your real estate professional will assist you in determining which homes are fairly priced from those that are overpriced.
60. What is "earnest money" and how much do I need?
When you sign an offer to purchase, your real estate professional will ask you for "earnest money," commonly called a deposit. This refers to a monetary commitment that shows you are serious about wanting to buy. Usually, you will be asked to write a check for between 1 to 10 percent of the sale price.
This money will be held in a special escrow account. If your offer is accepted, your earnest money will be included as part of your down payment. If your offer is not accepted, you'll get back all your earnest money. But keep in mind that if you back out, or otherwise breach the terms of the contract, you may forfeit the full amount.
61. Is there any way I can protect myself against emergency repair bills in my new home?
Yes. Home warranties offer you protection against many potentially costly problems not covered by your homeowner's insurance. Such warranties have become increasingly popular in recent years, and for good reason. The coverage can save you thousands in the event of a major mechanical breakdown at a time when your cash reserves have been depleted by your down payment and moving expenses. For more about home warranties, see the information on the ERA® Home Protection Plan®.
CLOSING PROCEDURES AND MOVING
62. There's so much to remember before I close. What do I have to do?
Your sales professional can help you with many of these considerations:
§ Are all the necessary inspections complete?
§ Are all the required repairs complete?
§ When will you conduct your final walk-through inspection?
§ Have you confirmed the approximate fuel oil remaining in the house oil tank?
§ Is your attorney satisfied that title to the property is clear (no one else has a claim on it)?
§ Have you confirmed a date, time, and place for your closing?
§ Who will conduct the closing?
§ Is your insurance policy paid and ready to go into effect the day you close? You'll need a receipt for proof.
§ What form of check should you use (and who should it be made out to) to pay for the closing costs?
§ Has your closing attorney told you the closing amount?
§ Bring your checkbook to cover any last-minute extras that might have been overlooked.
63. What should I look for on my final walk-through?
In most cases, you'll be given the opportunity to inspect the home immediately prior to closing. At this time, it's important to check on any work the seller agreed to have done in response to your initia inspection. You should perform operational checks to ensure the heating system is functioning. Likewise you should verify the proper functioning of the various appliances, lights, fans, faucets, toilets, garage door openers, etc. You also should verify the seller, or their movers, did not inadvertently remove something that, by contract, should have remained with the house. If you find any problems, don't hesitate to bring them up at the closing. It's the seller's responsibility to correct them.
64. What will happen on closing day?
1. Your attorney will ask for your paid home insurance policy be brought to closing, if not already done.
3. You will sign a number of documents relating to the loan process, mortgage note, etc. This gives the lender legal rights to the property if you don't make your payments. They also contain the promise for you to repay the loan in regular monthly payments.
5. Your attorney will collect the closing costs from you and give you a settlement statement of all the items you have paid for.
6. The deed and mortgage will be recorded in the town clerk’s office.
65. Is there anything I should do immediately after closing?
The first thing you'll want to do is have the locks changed. Also, your attorney will give you a file with copies of everything you signed. Usually within a few weeks the town clerk will mail you your original deed that they had recorded on the land records. Put your deed and other important paperwork from the closing in a secure place, preferably a safe deposit box. Even though it's all on file with the town hall, it's smart to know where your copies are and have access to them at all times.
66. Should I move myself or use a moving company?
In almost every case, you can save yourself time and energy by using a reputable moving company to help you move.
Ask your sales professional, friends, and co-workers for recommendations, then get estimates from several companies. Don't choose a mover based on price alone — consider the reputation and professionalism of the company, too.
Work closely with the moving company to coordinate your efforts and your move will be achieved with maximum efficiency.
67. Can a sales professional help with the move itself?
Yes. Most sales professionals are more than willing to offer advice and assistance to new homeowners; all you have to do is ask.
68. When applying for a mortgage, you will need the following pieces of information:
§ Name and Social Security number of each applicant
§ Current address and prior addresses over the last five years
§ Phone number where you can be reached
§ Monthly salary and sources of income (include child support or alimony received)
§ Copies of your last two years W-2 forms, some lenders require copies of tax returns
§ Last two months' bank statements
§ Information on length of employment, and employer address and phone number
§ Loan balances and the monthly payment you are obligated to pay on each
§ Credit card balances and the minimum monthly payment on each
§ Other debts you owe such as child support, student loans, etc
69. What is a mortgage, and what are the benefits of different kinds of mortgages?
Simply put, a mortgage is a loan that a homebuyer obtains directly from a lender to purchase real estate. The mortgage is a lien on the property that secures a promissory note (promise to repay the debt) that states the terms of the loan, including the interest rate and the number of payments.
The most popular mortgages available to home buyers today can be divided into two general categories: those that offer fixed interest rates and monthly payments, and those in which one or both of those factors are adjustable.
Fixed-rate/fixed-payment loans are more traditional and remain the most popular home financing method, currently accounting for about two-thirds of all residential mortgages. Their advantages are well-known: you always know what your monthly principal and interest payment will be, so your basic housing cost will remain unaffected by interest-rate changes until the mortgage is paid off.
Mortgages that entail flexible rates and/or payments have grown in popularity in recent years, primarily during periods of high interest rates and/or rapidly rising home prices. Many, including the popular ARMs (Adjustable Rate Mortgages), offer lower-than-market initial interest rates that allow buyers a measure of affordability unavailable in fixed-rate loans. The tradeoff may be higher interest rates and higher monthly payments later on.
The "Mortgages at a Glance" table provides a brief synopsis of some of today's most popular mortgages, their benefits and drawbacks. To find out about any one of them, talk to your ERA® real estate professional. We can put you in touch with a representative from ERA Mortgage, the preferred lender for ERA nationwide. Their toll free number is 866-396-9056 and they are open 9AM – 9:30PM (Mon – Fri) and 10AM – 7PM (Saturday).
70. What are the different types of lenders, and how do I choose the right one for me?
Before someone lends you the money to purchase your home, they'll want to know a lot about you. And you're entitled to know as much as you can about them too.
It's important because getting a mortgage is not just a one-time signing of documents, a handshake and a check. You will be depending on your lender to fund the loan as promised, on time, and over the life of the loan; to keep good payment records, pay your taxes and insurance (if included in your monthly payment); and to perform many other continuing services. As the preferred lender for ERA Real Estate, ERA Mortgage provides all such services.
Talk to your ERA® real estate professional about the lenders you have in mind. Experienced sales professionals are quite familiar with mortgage lenders and can give you sound advice about a lender's reputation, its qualifying procedures, and the unique programs and benefits it offers home buyers.
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71. Are there any mortgages especially designed for first-time buyers?
Today, first-time buyers enjoy a number of mortgage options that make purchasing a home more affordable by minimizing down payments and keeping monthly payments as low as possible during the early years of the loan.
Most ARMs feature an interest rate that is below market for the first year and may only rise gradually after that.
VA- and FHA-insured loans call for extremely low down payments (zero to five percent of the purchase price) and often offer a below-market interest rate. Similarly favorable terms can be arranged with the help of private mortgage insurance or PMI.
Finally, first-timers who can find a cooperative seller or third-party investor can look into such non-traditional financing methods as a lease/buy arrangement. Check the "Mortgages at a Glance" table for the unique benefits and requirements of several major mortgage alternatives.
72. Can I get an FHA or VA mortgage?
Just about anyone can apply for an FHA-insured mortgage through banks and other lending institutions. They are particularly well-suited for buyers of moderate income; the low down payment requirements (as low as five percent of the purchase price) are matched by a relatively low maximum mortgage amount.
Similarly, VA-guaranteed loans often require no down payment for up to four times the amount guaranteed by the VA. These loans are reserved for either active military personnel or veterans, or spouses of veterans who died of service-related injuries.
If there is a downside to these loans, it's the qualifying process. Though you apply for government-insured financing through a lending institution, the Federal Housing Administration or the Department of Veterans Affairs must insure or guarantee the loan and may require specific documentation or procedures not necessarily required for conventional financing. That may take more time than is generally required for conventional mortgage approval. Additionally, FHA-required insurance must be added to your payment.
As the preferred lender for ERA Real Estate, ERA Mortgage has been delegated authority by each of these agencies to ensure a quicker loan process.
DOWN PAYMENTS & AFFORDABILITY
73. How much of a down payment will I need to buy a home?
The amount of money that a buyer must put down at closing depends on the loan-to-value ratio — the percentage of the property's appraised value or sales price (whichever is less) that a lender is willing to loan.
For example, if a property is appraised at $200,000 and the loan-to-value ratio is 90 percent, the lender would be willing to loan $180,000. The buyer's down payment is the remaining $20,000. Because the loan-to-value is a percentage, the higher the sales price of a house, the higher the down payment.
A down payment of 20 percent has been the benchmark for conventional financing, but today, many options are available, some requiring as little as five percent down, or even zero percent down. A representative from ERA Mortgage can help you determine which down payment option is right for you and your budget. Contact ERA Mortgage for more information about their services. Their toll free number is 866-396-9056 and they are open 9AM – 9:30PM (Mon – Fri) and 10AM – 7PM (Saturday).
74. How does a lender determine the maximum mortgage I can afford?
The three primary areas lenders examine in determining the size of mortgage you can handle include your monthly income; non-housing expenses; and cash available for down payment, moving expenses and closing costs.
The most common way lenders interpret these variables to estimate your mortgage capacity is the Percentage Method. Most lenders feel a family should spend no more than 28 percent of its income on housing costs, including the mortgage, insurance, and real estate taxes. In addition, these housing costs plus your long-term debts (car loans, child support, minimum credit card payments, student loans, etc.) shouldn't exceed 36 percent of your income. Some mortgage companies, including ERA Mortgage, have relaxed ratios to help you purchase the home of your dreams.
To get an idea of how much home you can afford, contact ERA Mortgage to receive a free pre-qualification in minutes. Their toll free number is 866-396-9056 and they are open 9AM – 9:30PM (Mon – Fri) and 10AM – 7PM (Saturday).
THE LOAN PROCESS
75. What are the steps involved in the loan process?
When you apply for a mortgage, you will need to furnish information regarding your income, expenses and obligations. It will be very helpful, and save time, if you have the following items available:
§ Two most recent pay stubs from your employer
§ W-2s for the last two years
§ Last two months' bank statements
§ Long-term debt information (credit cards, child support, auto loans, installment debt, etc.)
CAN'T AFFORD A 20 PERCENT DOWN PAYMENT? ASK YOUR REAL ESTATE PROFESSIONAL ABOUT PRIVATE MORTGAGE INSURANCE (PMI).
Designed to protect the lender against default by the borrower, PMI allows you to obtain traditional financing with a down payment significantly lower than the standard 20 percent. By using PMI, you may be able to get a fixed-rate or adjustable-rate mortgage by putting as little as five percent down.
As with an FHA-insured loan, you must pay premiums for PMI coverage, the amount being determined by the type and amount of your loan. But unlike FHA financing, the maximum loan amount is determined by the lender. Moreover, PMI premiums are often lower than FHA insurance, and may be paid as part of your monthly mortgage payment, in annual installments, or in a lump sum at the time you obtain the loan.
If you'd like to find out more about the unique advantages of PMI, ask your ERA real estate professional to put you in touch with ERA Mortgage.
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76. What are typical closing costs?
You can expect to pay the following closing costs at the time of closing settlement:
§ Appraisal fee — covers the cost of a professional written estimate of the property's value.
§ Attorney's or escrow fees — your own and the lender's if they have one.
§ Credit report fee.
§ Documentation preparation — covers the cost of your attorney preparing the multitude of closing and mortgage documents.
§ First year's premium on fire and hazard insurance.
§ Escrow account — sufficient to cover real estate taxes on the purchased property for the current tax period to date. The lender then pays these bills when they come due.
§ Interest — Also referred to as prepaid interest and is paid from the date of closing until 30 days before your first monthly payment.
§ Mortgage insurance if required.
§ Origination fee — covers the lender's administrative costs.
§ Recording fees. This covers the cost of recording your deed at the town hall.
§ FHA mortgage insurance (FHA loans only).
§ VA guarantee fees ( VA loans only).
77. What are points, and what's the point in paying them?
In real estate, the term "point" refers to one percent of the total mortgage loan amount. Buyers often pay lenders a supplemental fee, calculated in points, to get a better interest rate on a particular mortgage.
For instance, a lender may offer you a choice of two 30-year mortgages: the first at eight percent with no points, and the second at 7.5 percent with an additional three points. If the loan is for $200,000, those three points will cost you an extra $6,000 up front — but you'll get a payback of significantly lower monthly payments for the lifetime of the loan.
If you plan on selling your home within a few years paying points may not make sense for you. Likewise if your available cash assets for closing costs are low then it probably does not make sense to pay points.
Many lenders will advise you to pay the points for the better rate if you can afford it, especially if you plan on keeping the home for many years. Like interest, the money you pay for points may be tax-deductible, and the investment may pay for itself through savings generated by lower monthly payments. We suggest you call your tax preparer.
78. Is the lending process regulated by the government?
Yes most definitely. There are many laws and government regulations that all lenders must follow to ensure that all applicants are given fair and equal treatment. For example, in 1968, Congress passed the Truth in Lending Law, which requires that lenders provide borrowers with information about a loan's true interest rate. By law, lenders must reveal a loan's annual percentage rate (APR).
The law also stipulates that for refinancing and second mortgage loans, the borrower has up to three days after closing to change his or her mind and call the deal off. The lender may not disburse money until after this three day "recession period" has passed.
What is APR and how is it calculated?
The annual percentage rate (APR) is a calculated rate of interest for a loan over its projected life. This rate includes the interest, all points (which are considered prepaid interest), Mortgage insurance, and other charges associated with making the loan that the lender collects from the borrower.
The APR is calculated by a standard formula that all lenders use. This enables the borrower to comparison-shop between lenders and/or loan products. In other words you can compare apples to apples.
What is a good-faith estimate?
Your lender or loan agent must provide you with a good-faith estimate within three days of your application. This is the information you need to make a fair and accurate judgment when shopping for a loan.
Your estimate is a written document that shows all the costs that can be estimated in advance by the lender. You need this information so there are no surprises on the day you close your sale on the property to be purchased. You will be expected to pay closing costs.
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79. What does my monthly mortgage payment include?
The bulk of your monthly mortgage payment goes toward paying off the principal and interest of your loan. In addition, most lenders require that you pay a sufficient amount to cover your local real estate tax, plus your homeowner's or hazard insurance. This amount is placed in an escrow account, from which your lender then pays your tax and insurance bills as they come due.
80. Can I pay off my loan early?
If you can afford it, and are interested in the considerable advantages of having more equity and/or owning your home free-and-clear at the earliest possible date, the answer in most cases is yes. Earlier in this section, "How to Pay off a 30-Year Mortgage in 15 Years Without Really Feeling It" — outlines a popular formula for pre-payment.
The FHA, VA, and even some states do not allow lenders to charge penalties for paying mortgages early or refinancing. In fact, many lenders now include space on monthly statements for borrowers to itemize an additional principal payment they wish to include with their regular payment. If you can discipline yourself to pay an extra monthly amount of $50, $100 or more, the reward will be shaving many years off the life of the mortgage and saving tens of thousand of dollars in mortgage interest you would have otherwise paid.
If you're unsure about the rules governing pre-payment, review your loan agreement.
81. What are the respective advantages of 15-year and 30-year loans?
The 30-year fixed-rate mortgage remains the standard mortgage, with an array of valuable benefits designed especially for buyers who expect to stay in their homes for a long time. Because the borrower pays more interest than principal for the first 23 years, the tax deduction is substantial. And as inflation causes both living expenses and income to increase, your unchanging monthly mortgage payments account for a relatively smaller portion of income as the years go by.
As you'd expect, a 15-year monthly mortgage means higher monthly payments than an equivalent 30-year loan...but not as much higher as you may think. At the same rate of interest, payments on the 15-year mortgage are roughly 20-25 percent higher than a loan that takes twice as long to pay off. And one of the benefits of choosing a 15-year mortgage is that you can generally get a lower interest rate for an otherwise similar loan. Another advantage is faster equity build-up because a larger portion of your early payments is going to pay off principal. This makes the 15-year mortgage an ideal alternative for couples approaching retirement or anyone else interested in owning their home free-and-clear as quickly as possible.
82. Do adjustable-rate mortgages offer any protection against rising rates?
Yes. ARMs and other variable-rate-of-payment plans offer lower-than-market interest rates initially, but because they are tied to the interest rates of U.S. Treasury Bills or other indexes, interest rates later in the loan term may rise. However, many such loans offer built-in safeguards designed to minimize the effect of any rapid escalation in interest rates.
One such safeguard is the rate cap. Many ARMs include provisions for the maximum amount your rate can rise, both annually and over the life of the loan. For example, if your initial rate is 5.5 percent, the loan may include two-percent annual and six-percent lifetime caps...which means even if rates rise dramatically, you'll pay no more than 7.5 percent next year, 9.5 percent the following year and so on, until a maximum rate of 11.5 percent is reached.
An ARM may also allow your rate to decrease when the index it is tied to goes down. As you might expect, decreases are usually capped as well.
A second protective device included in some ARMs is the payment cap. Under this provision, your monthly payments may rise by only a set dollar amount. The potential disadvantage of this type of cap is that it can slow or even reverse your equity build-up. If rates rise dramatically, you could actually wind up owing more principal at the end of the year than you did at the beginning.
Of course, ARM holders can also consider refinancing to a fixed-rate loan after a few years. Some ARMs even include a provision for converting to a fixed-rate loan after a set period of time.
83. What can I do if I have a fixed-rate loan and interest rates go down?
When interest rates drop significantly as they have in recent times, the homeowner should investigate the financial advantages of refinancing. Essentially, this means taking out a new loan to pay off your existing loan.
Refinancing may require paying many of the same fees paid at the original closing, plus origination fees. Most mortgage experts agree that if you can get a rate two percent less than your existing loan, and you plan on staying in your home for at least 18 months more, refinancing is a good investment.
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84. What is the difference between pre-qualifying and pre-approval?
A pre-qualification consists of a discussion between you and a loan officer. The loan officer will collect information regarding your income, monthly debts, credit history and assets, and based on this information calculate an estimated mortgage amount for which you qualify. The pre-qualification is not a mortgage approval, but more an estimate on what you can afford.
A pre-approval, on the other hand, is a more comprehensive approach giving an actual decision on a home loan. With ERA Mortgage, a credit report is ordered electronically and is received within 30-60 seconds. This is an actual credit approval and it carries with it some considerable benefits. From this information, a loan approval is given agreeing to finance a home and specifying the total mortgage amount available to you.
What could be more comforting than the peace of mind that goes with knowing that your mortgage is fully approved?
You will have a greatly improved negotiating position when you are pre-approved for a mortgage. Sellers are more apt to negotiate with someone who already has a mortgage approval in hand. The pre-approval letter lets the seller know they are working with a serious cash buyer. A pre-approved buyer can also close on a property more quickly — another major consideration for a motivated seller. We strongly recommend it.
85. WANT TO PAY OFF YOUR LOAN EARLY? THERE ARE SEVERAL WAYS.
§ Save some extra money every month. With the interest you earn on savings you may be able to make an extra payment at the end of the year.
§ Pay an extra twelfth of your principal and interest payment every month.
§ Send whatever extra you can every month.
§ Whichever method you choose, be sure to clearly indicate that the excess payment is to be applied to principal.
86. Can proper maintenance increase the value of my home?
Yes. There's no question that careful maintenance can pay off when it's time to sell your home. As we explained in the "Selling" section of this book, a neat, well-maintained house can be expected to generate more traffic, and quite possibly a faster sale for a better price, than a comparable house in less desirable condition. The same goes for home improvements, even smaller ones like minor kitchen remodeling or new bathroom wall coverings.
Even if you're not planning on moving in the foreseeable future, keeping up with routine maintenance will pay big dividends in the long run. For one thing, it will save you considerable time, trouble and expense when you are finally ready to sell. And it's certain to make real estate homeownership a more rewarding, worry-free experience for you and your family.
Best of all, home maintenance doesn't have to cost a lot, in terms of either time or money. Even if you're not a weekend do-it-yourselfer, there are steps you can take right now to keep your home in top shape, inside and out.
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87. What are some home maintenance tasks I can do myself?
You can get more enjoyment in your home, and save money along the way, just by making a quick inspection every few months. The following inspection checklist includes some important safety, economy, and comfort considerations that you shouldn't overlook.
Also, keep a record of the maintenance performed on your home with this Service Schedule.
a. Make sure handrails and posts on stairways are secure. Replace when necessary with inexpensive bracket hardware.
b. Test all household alarms, especially smoke alarms; change batteries frequently. And don't forget the doorbell.
c. Make sure drains are running smoothly. Check traps and basement waste pipes, then check the main water line and shutoff.
d. Inspect the basement for any damp spots, especially in corners. If you catch these areas early, a little waterproofing compound will usually do the trick.
e. Wrap your cold-water pipes with foam rubber insulation. It prevents pipe "sweating" in the summer and freezing in the winter.
f. Keep gutters sloped toward the downspout, and keep them free of leaves and twigs.
g. Keep basement windows in good order. Consider window well covers to keep out leaves and rain.
h. Flashing is where a roof or wall meets a chimney or skylight. Check the seals in these areas to see if they're secure.
i. Replace individual shingles when worn or loose.
j. Use wire screening to keep insects and birds from nesting in roof ventilation areas.
k. Lubricate garage door hardware and hinges.
l. Fill and seal driveway cracks when necessary.
IN CASE OF EMERGENCY, BE PREPARED!
Make sure that everyone in the house, including children who are old enough to be left alone, knows where to find the following:
m. The closest fire extinguisher, and how to use it.
n. The main circuit breaker, and how it works.
o. The main gas shutoff valve, and how to turn it off.
p. The main water shutoff valve, and how to turn it off.
q. Emergency-services contact numbers (fire, police, ambulance) in your area.
88. How can I increase the energy efficiency of my home without spending a fortune?
Making your home more comfortable and efficient doesn't have to take a great deal of time and money. For a good start toward saving on your home heating, cooling, and other energy bills, here are five easy steps you can take:
1. Keep your thermostat set around 77 degrees in the summer, 67 degrees in the winter. By avoiding constant adjustments you can stabilize your energy bills.
SAVINGS: You'll stay comfortable year round, and your heating/cooling bills won't make you uncomfortable either.
2. Dripping bathroom faucets and leaky showerheads are obvious waste culprits. Fortunately, they're easy to fix with a do-it-yourself book. Toilet tank water-savers can mean significant dollar savings, too.
SAVINGS: An average family can save about 20,000 gallons of fresh water a year with a few easy bathroom fix-ups.
3. Compact fluorescent lighting costs more than you're used to paying for the standard incandescent bulbs, but fluorescents last more than 10 times longer (over five years in many cases) and use just a quarter of the electricity.
SAVINGS: Over its lifetime each compact fluorescent bulb will save you $40 to $60 on your electric bill.
4. Fireplaces can be a big energy leak. Check dampers and screens to make sure warm air isn't escaping when the fireplace isn't in use. Consider installing an energy-saving firebox to help circulate heat. If the fireplace is just for decoration, cover the chimney.
SAVINGS: An energy-efficient fireplace can be an economical and cozy source of supplemental heat.
5. Help your home systems and appliances do their jobs by keeping filters clean and operating parts oiled. Clean air conditioning filters and wall units each year. Change furnace filters frequently, and keep your furnace motor oiled. A professional inspection once a year will keep things running smoothly.
SAVINGS: Doing the little things adds up to lower electric bills and fewer appliance replacement costs.
89. What's one sure way to keep my home energy bills under control?
Insulating your home is one of your best protections against high heating and cooling bills. It's also the best way to keep your home comfortable in every season.
Start with any unfinished attics and crawl spaces — that's where you'll notice savings of heat and money. Then consider adding insulation to the ceilings and walls between your living space and an unheated basement or garage.
Finally, don't forget that windows and doors can be some of your home's biggest energy wasters. Check weather-stripping, replace broken parts, and use storm windows and doors to stay draft-free.
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90. What kind of insulation do I need?
The main considerations when selecting insulation for your home are ease of installation; cost; and durability. Because there are several different materials and forms to choose from (blanket, board, loose, etc.), it's best to talk with a building professional or salesperson to determine your particular needs.
HOW TO MEASURE INSULATION FOR YOUR HOME.
How much insulating material you need to protect your home depends on the material's "R-value." That's the rating of how well the material can block the flow of heat.
The higher a material's R-value, the better it is as an insulator. For example, fiberglass has an R-value of 3.1, while urethane board has an R-value of 5.9. Therefore, 12 inches of fiberglass and six inches of urethane would give you roughly the same amount of insulation.
91. Is it worth the money to call a professional just to handle maintenance?
When everything in your home seems to be running fine, it's very tempting just to let maintenance go until next year. Do your best to overcome that temptation.
Get into the habit of sticking to a regular schedule of maintenance for the systems and equipment in your home. You'll catch most little problems before they get big, and that can add up to enormous equipment and energy savings. Of course, the added benefit is the peace of mind that comes with being sure that everything in your home is running the way it was meant to.
If your home is covered by an ERA® Home Protection Plan® and you need assistance, simply follow service instructions included in your warranty contract. If you have any questions, or need professional repair service, help is available to you 24 hours a day, 365 days a year.
92. What maintenance records do I need to keep?
For easy reference in case of a repair or maintenance question, it's a good idea to keep a record of the brand, model number, and serial number of your major appliances and systems. Your records should also show the equipment installation dates (when known), as well as performance checks and service calls. Keeping these records can help you keep your home running smoothly the way checking your odometer can help you keep your car in top shape. Having such a handy reference source can help protect your investment for as long as you own your home, and it's impressive proof of consistent maintenance to prospective real estate buyers.
Welcome to the Helpful Worksheets area. Each of the informative worksheets and tip lists included in this section is designed to help you better prepare for the home buying and selling process.
If you want to get the best possible price for your house, start by making sure it looks its best, inside and out. The following checklist offers several easy things you can do to improve a buyer's first impression. While all the points may not apply to you, the process will help you develop an eye for the most attractive aspects of your house.
Before You Begin Showing
Repaint or touch up trim
Repair/clean gutters and downspouts
Remove oil stains from garage floor
Wash all windows
Trim trees, hedges, shrubs
Weed and feed lawn
Remove all clutter (garden tools, toys, etc.)
Check working order of doorbell and exterior light
Replace welcome mat
Repair/repaint storm door and/or front door
Clear interior entry of all clutter
Clear and clean out front hall closet
Repaint or touch up walls and ceilings
Repair/replace old molding
Shampoo or replace carpet and/or wash and wax floors
De-clutter and remove excess or unattractive furniture
Clean curtains, shutters, blinds, etc.
Clean fireplace, mantle, shelving
Replace old bedspreads
Repair or replace faucets and fixtures
Thoroughly clean range/oven, refrigerator and other appliances
Clear out and clean cabinets, drawers, and medicine chests
Remove clutter from countertops
Clean or replace curtains
Grout tubs and showers
Replace old toilet seats and shower curtains
Replace burned-out light bulbs
Clear cobwebs from corners, doorways and basement
Wash light switches, hand rails, and doorknobs
Clear and clean all closets
Add "welcoming" touches: potted plants, dried flowers, etc.
Before Every Showing or Open House
Pick up tools and toys
Put garbage cans in garage
Close garage door
Park cars on street or around corner
Clear off all counters and table tops
Turn on all lights
Open shades and curtains
Put soft music on stereo
Give the house a pleasant aroma - fresh bread, fire in fireplace, etc.
Set dining room table
Make all beds
Set thermostat at comfortable temperature
House & Community Information (display in entranceway or another prominent place)
Paid utility bills
Current property tax receipts
Real estate listing sheet
Floor plan (if available)
List of upgrades you've put into the house (and dates, if available)
Map and/or list of community features and points of interest
Warranty information on appliances
ONE FINAL SUGGESTION:
Want to own your home by the middle of the next decade, but can't handle the monthly payments on a 15-year mortgage right now? Try applying the "Three Percent Rule" to your 30-year mortgage. Here's how it works: You make your regular monthly payments for the first year of the loan. At the beginning of the second year, you take an amount equal to three percent of the monthly principal and interest portion of your bill (it's itemized on your statement), and include it as additional principal with each payment for that year. Repeat the procedure for each subsequent year, and in about 15 years you own your home.
As an example, consider a $100,000, 30-year loan at 7.25 percent:
3% ADDITIONAL PAYMENT
TOTAL MONTHLY PAYMENT
And so on. In effect, you're giving your lender an "annual raise" of three percent — likely less than the cost of living. And the reward is full ownership of your home in about half the time called for by the term of your mortgage!
Here's a day-by-day seller checklist of things to do during your final week in your old house:
Four Days Before
Schedule final utility meter readings for day of closing, including:
In case the meter readers come while you're at the closing, arrange for a friend or relative to be home during the time you're out of the house.
Three Days Before
Visit the post office and arrange for mail to be forwarded to your new address. Cancel newspaper subscriptions, cable TV service, telephone and garbage collection.
Two Days Before
Talk to your lawyer, and your sales professional to verify that all necessary paperwork will be ready for your closing.
The Day Before
Pick up a written copy of your estimated closing costs from the closing officer or have your sales professional do it — you're entitled to it by law. Check to make sure all fees, tax adjustments, and other charges are correct.
Gather all appliance and equipment manuals, spare keys, remote controls for garage openers, remote controls for ceiling fans, etc and leave on the kitchen counter.
Before you leave, sweep out the house and make certain all your belongings are out.
When you leave for the closing, make sure you bring a set of keys to give the buyer. Also, take a reading of the fuel oil tank (if applicable) level because the buyer will reimburse you for remaining fuel oil.
After the closing is completed, call your insurance agent and cancel your homeowner's policy.
Weed out Unwanted/Unnecessary Items Before You Move
Organize a garage sale or donate them to a charity. Remember to keep your receipts for tax purposes.
Get a Jump on Packing
If possible, begin packing fragile or heirloom items a few days before the move. It will make it easier for you when your moving day arrives.
File Change-of-Address Notifications With Your Post Office
Make sure you inform government offices, insurance agencies, business accounts and other institutions of your move.
Keep Track of Moving Expenses
Many costs may be tax-deductible.
Cancel Services Before You Move
These include gas, water, telephone, electric, cable, waste-removal, fuel oil automatic deliveries, newspaper and postal delivery services.
Contact Utility Companies in Your New City
Inform them of your move date so that utilities in your new home are operational when you arrive.
Below is a brief synopsis of the types — and the pros and cons — of some of today's most popular mortgage loans.
A long-term loan in which principal and interest are amortized over 30 years; both interest rate and amount of monthly payment remain unchanged for life of the loan.
Considerable tax benefits, especially in early years. Payments never rise, regardless of inflation.
Slow equity build-up.
The most common mortgage in the U.S., a particularly good investment when rates are low.
As above, but payback period is 15 years.
Usually lower interest rate than 30-year. Faster equity build-up. Less interest paid out over life of loan.
Higher monthly payments; less tax-deductible interest.
Good option for buyers whose income will rise and/or when rates are expected to drop.
ARM (Adjustable Rate Mortgage)
A mortgage whose rate changes over time according to terms specified by the lender, usually according to short-term Treasury Bill rates.
Low initial interest rate, sometimes below market. Payments may decrease over time.
Payments may increase over time. Risky if rates rise significantly.
Good option for buyers whose income will rise and/or when rates are expected to drop.
Government-insured or guaranteed mortgages that can make purchase more affordable than conventional loans.
Little or no down payment required. Marginally better rate than conventional 30-year mortgages.
Lower limits on the maximum that can be borrowed. VA requires current or past military service record.
Good option for first-time buyers with little funds to invest in a down payment.
GPM (Graduated Payment Mortgage)
A fixed-rate mortgage offering low initial monthly payments that increase by a predetermined amount, then level off after about five years.
More affordable payments for first few years. Unlike ARMs, buyer knows up front how much payments will rise in the future.
Slower equity build-up. Buyer's income may not rise in proportion to payments.
Another good choice for buyers who expect income to rise after home is purchased.
A short-term (3-5 year) loan, usually at a fixed rate. Paid back in equal, monthly payments and a final "balloon" payment for the remaining balance.
Lower monthly payments. Full tax benefits.
Little or no equity build-up. Monthly payments are often interest only. Balloon payment usually requires refinancing or selling the house.
Designed for buyers who plan on moving within a few years and/or are confident in the short-term appreciation of a property.
Knows the community.
Choose a sales professional who really knows the local real estate market, who can identify the most likely buyer type for your present home, and who can introduce you to the neighborhoods, schools, parks, playgrounds, shops, and more.
Can show you more of the homes available throughout the area.
Choose a sales professional who subscribes to at least one Multiple Listing Service (MLS). This means you'll have access to information on as much as 90 percent of all homes for sale in the community.
Provide all the services you need.
Choose a sales professional who has the products, services, and know-how to find the right home for you — and to market your present home for a faster, more profitable sale.
Offer you protection against unexpected repair bills in your new home.
The last thing a new homeowner wants to worry about is spending cash to cover a major repair expense. Choose a sales professional who can offer you a warranty protection on your new home.
Listens to your needs and responds as a friend.
Choose a sales professional who really listens, and shows as much interest in your satisfaction as in making the transaction. You may even want to consider working with a buyer's agent.
1. ERA® real estate professionals have detailed knowledge about the communities in which they sell properties.
Whether you need information about neighborhoods, city services, or even sources of financing for your home, look to your ERA real estate professional first.
2. Nobody uses cutting-edge technology and innovation to show you more homes that are right for you than an ERA® real estate professional.
ERA Real Estate- unlike other real estate companies — was founded on providing its customers with online, interactive and value-added resources that are unmatched in real estate today. Beyond subscribing to the local MLS, your hometown ERA® office is linked to every other ERA® office across the world via ERA.com. What's more, ERA.com allows you to search for homes from coast to coast.
3. ERA® real estate is committed to customer service.
Every ERA® broker and sales professional has participated in the most comprehensive, service-oriented training in the real estate industry. Their service to you is backed by a powerful national referral and relocation network, as well as thousands of other ERA® offices nationwide.
4. Your ERA® real estate specialist offers the ERA® Home Protection Plan®.
This warranty covers unexpected repair expenses for many of your new home's major mechanical systems and components if they break down, and delivers the peace of mind that service is always just a phone call away.
5. ERA Real Estate — Always There For You®
The commitment behind this tagline comes naturally to ERA real estate professionals, who often say that the most rewarding aspect of their work is the chance to help people. That means we'll listen carefully to you, then work hard to help you find the home that matches all your needs — and your dreams.
6. Only an ERA® real estate professional can offer you the ERA® Sellers Security® Plan that guarantees the sale of your current home.*
For those sellers that need to sell their current home before buying a new home, the ERA® Sellers Security® Plan can provide a qualified seller a guaranteed sale and closing date on their old home. The ERA® offer puts you in a better negotiating position than other buyers who may still have a house to sell.
* Certain terms, costs and limitations apply.
The ERA Sellers Security Plan:
"We Will Sell Your House, Or ERA Will Buy It!"
Now you can buy a new home before you've sold your old one. That's the promise of the ERA® Sellers Security® Plan, and it's just one of many exclusive benefits designed to give you peace of mind.
Guaranteed sale, guaranteed price.
When you accept an ERA® offer, the ERA® Sellers Security® Plan assures you that ERA Real Estate will buy your current house if it doesn't sell within 180 days from the application date. The Sellers Security® Plan assures you a guaranteed sale price on your current home giving you the ability to purchase your new home sooner, with greater negotiating power. The ERA® offer is based in part on an independent appraisal that ERA Real Estate will order for you. This helps assure both you and your ERA® professional that your house has been accurately valued.
You realize the profit, ERA Real Estate covers any loss.
You will usually receive more than the price guaranteed by the agreement, for two reasons. First, the ERA® Sellers Security® Plan allows you to accept any higher offer within 180 days of the date your house is listed. Second, if ERA Real Estate purchases your house and then resells it for more than we have invested in it (including holding expenses), the net profits are returned to you. But if they sell it for less, you don't take the loss; ERA Real Estate assumes the expense.
Here's how to make it work for you:
1. List your house with a participating ERA® broker, submit a Sellers Security® Plan application and agree to offer the ERA® Home Protection Plan® (please see Question 20).
2. Select an appraiser from an approved list. ERA Real Estate will then order the appraisal and home inspection for you at your expense.
3. If your home qualifies, ERA Real Estate will provide an offer to you based on the appraisal giving you the ability and assistance to purchase another home. Contact your local ERA® professional on the policies regarding the amount of the ERA® offer.
4. You also agree to purchase a home through a broker designated by ERA Real Estate. An exception is made for military personnel moving into base housing.
Not all houses qualify for the ERA® Sellers Security® Plan. For complete information, contact your participating ERA® professional.
Protection from the unexpected.
After spending so much time, money and effort buying and moving into your new home, the last thing you want to worry about is a costly breakdown of your furnace, plumbing, or any other major mechanical system or appliance. But since homeowner's insurance seldom covers such problems, what's the alternative? One good answer: the ERA® Home Protection Plan®.
Comprehensive coverage at a nominal cost.
The ERA® Home Protection Plan® covers repair and replacement costs on most major home systems and built-in appliances, including heating and cooling systems, duct work, electrical and plumbing systems, water heaters and much more. If a problem does arise, service is always just a phone call away, 24 hours a day, 7 days a week.
Yet the most you'll ever pay for a service call is a modest deductible. And the cost of the coverage itself is nominal – in fact, for many buyers, it's included in the price of the house.
Two plans – one for buyers, one for sellers.
ERA Real Estate actually has two Home Protection Plans – one for buyers and one for sellers. With the buyer's plan, standard coverage extends for one full year after your purchase, with the option to renew. Similar coverage is offered to sellers while their house is on the market, under the condition that they purchase the coverage for the buyer. So if the home you buy is covered, you receive full protection for no additional cost.
For exact costs and conditions of the ERA® Home Protection Plan®, call your local ERA real estate professional.
For more than three decades, ERA Real Estate has been creating powerful technology tools to help its global membership in assisting their customers to buy or sell a home. Perhaps one of the most powerful tools is our award-winning Web site, ERA.com.
ERA.com offers Internet exposure for listings and offices. ERA.com provides potential buyers with details, photos and virtual tours of the nationwide inventory of ERA® listings. Sales professional profile pages on ERA.com feature photos; personal profile; hobbies; specializations; awards; designations; and languages spoken, as well as links to the sales professional's email and personal Web site. The helpful advice and user-friendliness of ERA.com attracts a large global audience.
In today's market, home buyers come from across the nation and around the world. That makes ERA.com a valuable tool for relocating families. The Web site offers an easy way to preview houses thousands of miles away before you travel. And if you're selling, the ERA® Web site exposes your house to an enormous number of potential buyers.
Our commitment to using next-generation technology does not end with listing information and photos online. ERA.com has many other features that can help you during the home buying and selling process. Value-added features include virtual tours, the ERA® Move Planner (a resource for helping a major life change go smoothly), and ANSWERS® online, our Internet version of this book. ANSWERS® online contains the same valuable worksheets and information you find right here.
Finally, by contacting the Dan Sperduto Home Selling Team, we can make it easy for you to be in touch with another ERA® office in the area in which you may be relocating. ERA® has the relocation expertise and connections to assist you. Put the marketing expertise of an ERA real estate professional to work for you. Our team of ethical, proactive, results-oriented professionals is committed to making the real estate process as smooth and easy as possible for you.
We like to say we're Always There For You®, but it's more than just a tagline - with our time-honored professionalism and cutting-edge technology, our services are everywhere you need them, from your neighborhood office to the Internet connection on your home computer.
THE ERA COMMITMENT TO SERVICE:
Your ERA® broker's commitment to you goes above and beyond the terms of a standard listing contract. That's what the ERA Commitment to Service is all about.
It's a written document, signed by your broker, that assures you of access to all of the exclusive ERA® sales and marketing services.
These services include the ERA Home Protection Plan®, which protects you and your buyer against repairs when your house's major systems and built-in appliances break down. The ERA® Web site ERA.com and the Internet-based national ERA® Referral Network market your house to thousands of potential buyers around the world. The ERA Sellers Security® Plan guarantees, "We Will Sell Your House, or ERA Will Buy It!" ® The ERA® Select Services® program provides you a suite of products and services that are convenient and can provide cost savings during your move and throughout your lifetime of homeownership. These are just a few of the ERA® programs and services that give sellers an edge; we're always adding more, and we're happy to discuss them with you.
If your broker fails to live up to these or any other terms of the agreement, you simply identify the issue in writing and give the broker 10 days to “fix” it. If after the 10 days the issue is not solved, you're free to void your listing contract.
That's a commitment few brokers are willing to match.
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Abstract of title: A condensed version of the history of title to a piece of land that lists any transfers in ownership, as well as any liabilities attached to it, such as mortgages.
Acceptance: An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance must be communicated to the offeror.
Acknowledgment: A declaration made by a person to a notary public, or other public official authorized to take acknowledgments, that the instrument was executed by him and that it was his free and voluntary act.
Acre: A measure of land equal to 43,560 square feet.
Adjustable Rate Mortgage (ARM): A mortgage with rates and terms that can change. The adjustable rate loan has become commonplace, with allowable ranges as to time intervals, percentage of increase or decrease and total increases or decreases likely to change as market conditions change.
Adjustments: Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment.
Agency: A relationship created when one person, the principal, delegates to another, the agent, the right to act on his or her behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations, and high standards of good faith and loyalty.
Annual Percentage Rate (APR): An expression of the relationship of the total finance charge to the total amount to be financed as required under the federal Truth-in-Lending Act. Tables available from any Federal Reserve bank may be used to compute the rate, which must be calculated to the nearest one-eighth of 1 percent. Use of the APR permits a standard expression of credit costs, which facilitates easy comparison of lenders.
Appraisal: An estimate of the monetary value of a property on the open market; an estimate of a property's type and condition, its utility for a given purpose or its highest and best use.
"As-is": Words in a contract intended to signify that no guarantees, whatsoever, are given regarding the subject and that it is being purchased exactly as it is found.
Asking (list) price: The price placed on a property for sale.
Assessment: The imposition of a tax, charge or lien, usually according to established rates.
Assignment: A transfer of property rights from one person to another, called the assignee.
Assessor: Municipal or county official who determines the value of property for taxation.
Balloon mortgage: A short-term loan, usually at a fixed interest rate, paid back in equal monthly payments, with a final "balloon" payment for the remaining balance.
Broker: Person licensed to represent homebuyers or sellers for a fee.
Brokerage: For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.
Building inspection: An overall inspection of a home or building performed by a qualified contractor or inspector. The inspection usually covers all major systems including foundation, plumbing, electrical, roof, heating and air conditioning.
Buyer listing: An agreement where a buyer agrees to pay a commission if a broker locates a property that the buyer purchases.
Buyer's agent: Agent who represents the buyer in the real estate transaction.
Buyer-agency agreement: A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
Buyer's broker: A licensee who has a written agreement to represent the buyer in acquiring real estate, regardless of whether compensation is paid by the buyer or the listing broker through a commission split.
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Cap: The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.
Closing: The final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded.
Closing costs: Expenses of the sale (or loan refinancing) that must be paid in addition to the purchase price (in the case of the buyer's expenses) or be deducted from the proceeds of the sale (in the case of the seller's expenses). Some closing costs result from legal requirements; others are a matter of local custom and practice.
Commission: The compensation paid to a licensed real estate broker or by the broker to the salesperson for services rendered, usually a percentage of the selling price of the property.
Comparables: Houses and properties that are similar in style, appearance, amenities, construction quality, and usefulness to a particular property in a certain location.
Comparative Market Analysis (CMA): Realistic estimate of a home's current market value based on the most salient points of the local real estate market.
contingency: A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.
contract: A legally enforceable agreement to do, or not to do, a particular thing for a consideration.
contract of sale: The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.
Conventional mortgage: Mortgage not FHA-insured or guaranteed by the VA, known by this name because it is the most popular home financing method.
Counter-offer: Offer made by the buyer or seller in response to the other's bid.
Curb appeal: Common term for everything prospective buyers can see from the street that might make them want to take a closer look at a house for sale.
Deed: A written instrument, when executed and delivered, conveys title to or an interest in real estate.
Deposit: Commonly referred to as earnest money. Money paid by the buyer, at the time of making an offer or entering into a contract to purchase, which is intended to show the buyer's good-faith intention to complete the purchase. Generally, the deposit is applied against the purchase price, but may be forfeited if the buyer fails to complete the purchase.
Down payment: Buyer's payment to the sellers at time of closing for that percentage of the purchase price required by the buyer's mortgage loan.
Dual agency: Representing both the buyer and the seller in the same real estate transaction. By law, all states require that dual agency be disclosed to all parties in the transaction. There are numerous instances where this could occur. One example would be where a real estate firm has a signed buyer agency agreement and then that same firm is hired by a seller to sell a home, that the buyer then chooses to purchase.
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Earnest money: Commonly referred to as the deposit. Money paid by the buyer, at the time of making an offer or entering into a contract to purchase, which is intended to show the buyer's good-faith intention to complete the purchase. Generally, earnest money is applied against the purchase price, but may be forfeited if the buyer fails to complete the purchase.
Equity: The interest or value that an owner has in a property over and above any indebtedness.
Escrow: The process by which money and/or documents are held by a disinterested third person (a stakeholder) until satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow) have been achieved. Once these terms have been satisfied, delivery and transfer of the escrowed funds and documents takes place.
Escrow account: The trust account established under the provisions of the license law for the purpose of holding funds on behalf of the principal or some other person until the consummation or termination of a transaction.
Exclusive Agency (EA): A written listing agreement giving a sole agent the right to sell a property for a specified time, but reserving to the owner the right to sell the property himself without owing a commission. The exclusive agent is entitled to a commission if he or she personally sells the property or if it is sold by anyone other than the seller. It is exclusive in the sense that the property is listed with only one broker. The multiple-listing service must accept exclusive-agency listings submitted by participating brokers.
Exclusive right to sell (ER): A listing agreement which gives the listing agent the right to sell the property for a specified time, with the right to collect a commission if the property is sold by anyone, including the owner, during the listing period.
Fiduciary: The relationship of trust, honesty and confidence between agent and principal; the faithful relationship owed by an agent to the principal.
Fair market value: highest price an informed real estate buyer will pay, assuming there is not unusual pressure to complete the purchase.
FHA: The Federal Housing Administration which insures mortgage loans made by approved lenders, in accordance with FHA regulations.
FHA-insured mortgage: A mortgage with low down payment requirements, insured by the Federal Housing Administration and made available through banks and other lenders.
Fixed rate mortgage: A mortgage with an interest rate that doesn't vary for the term of the loan.
For Sale By Owner (FSBO): Some owners choose to sell their own property without the aid of a real estate broker. "For Sale By Owner" properties can be a source of listings when the owner is unsuccessful in selling their property.
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Home equity loan: A loan (sometimes called a line of credit) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.
Homeowners' insurance: A type of insurance policy designed to protect homeowners from financial losses related the ownership of real property. In addition to covering losses due to vandalism, fire, hail, etc., most policies also provide theft and liability coverage. Flood related damage requires a separate flood insurance policy or rider.
Home warranty: A policy purchased by a buyer or seller as an assurance against unexpected home repair costs.
House closing: The final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded. Also known as just "closing".
Impound account: Also known as an escrow account.
Inspection: A formal survey of a home's structure and systems, often performed by a licensed professional.
Inspection clause: A stipulation in an offer to purchase that makes the sale contingent on the findings of a home inspector.
Interest: A charge paid to a lender for borrowed money.
Lease-purchase agreement: An agreement between a tenant and landlord that a portion of monthly rent may be credited toward eventual purchase of the rental property.
Lease purchase: A contract in which an owner leases his house (usually for one to five years) to a tenant for an increased monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance, with the incremental rent increase being used to form a down payment. Buyers should be wary of this type of contract since they may lose their extra rent/down payment money should the owner suffer financial setbacks before the purchase has been completed.
Lender's agent: A person who represents the lender holding the mortgage at closing. This person is usually an attorney.
Listing: A contract in which the seller agrees to pay a commission to the agent who finds a purchaser who can meet the specified terms.
Listing agreement: A written employment agreement between a property owner and a real estate broker authorizing the broker to find a buyer or a tenant for certain real property. Listing can take the form of open listings, exclusive-agency listings, or exclusive-right-to-sell listings. The most common form is the exclusive-right-to-sell listing.
Listing broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.
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Market: A place where goods can be bought and sold and a price established.
Market analysis: A regional and neighborhood study of economic, demographic and other factors made to determine supply and demand, market trends, and other factors important to buying/leasing and selling real property.
Market value: The price that a willing buyer and a willing seller, both given full information, and neither under pressure to act, would agree upon. Also known as Fair Market Value.
Mortgage: A contract providing security for the repayment of a loan, registered against property, with stated rights and remedies in the event of default. Lenders consider both the property and financial worth of the borrower in deciding on a mortgage loan.
Mortgage broker/company: A person or firm that acts as an intermediary between borrower and lender; one who, for compensation or gain, negotiates, sells or arranges loans and sometimes continues to service the loans; also called a loan broker. Loans originated by the mortgage broker are closed in the lender's name and are usually serviced by the lender. This is in contrast to mortgage bankers, who not only close loans in their own names but continue to service them as well.
Mortgage insurance: A kind of insurance policy that will pay off the mortgage balance in the event of death, and in some policies, disability. Premiums are paid with the regular monthly mortgage payment.
Mortgage loan: A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or deed of trust is your agreement to pledge your home or other real estate as security.
Mortgage note: A signed promise to repay a mortgage loan in regular monthly payments.
Multiple-Listing Service (MLS): A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own. The result is buyers get exposed to more potential listings and sellers get exposed to more potential buyers.
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Offer: A proposal to enter into an agreement with another person. An offer must express the intent of the person making the offer to form a contract, must contain some essential terms — including the price and subject matter of the contract — and must be communicated by the person making the offer. A legally valid acceptance of the offer will create a binding contract.
offeree: The person to whom an offer is made — usually the owner.
offeror: The party who makes an offer — usually the buyer.
Open house: The common real estate practice of showing listed homes to the public during established hours.
Open listing: A listing given to any number of brokers who can work simultaneously to sell the owner's property. The first broker to secure a buyer who is ready, willing and able to purchase at the terms of the listing earns the commission. In the case of a sale, the seller is not obligated to notify any of the brokers that the property has been sold. Open listings are not able to be placed on the MLS and therefore don’t get widely exposed to the maximum number of potential buyers that may be in the real estate market at any given time.
Origination fee: A fee charged by lenders, in addition to interest, for services in connection with granting of a loan. Usually a percentage of the loan amount.
Over-improvement: An addition or improvement in which the cost is greater than the increased value of the house.
Payment cap: protective device included in some adjustable-rate mortgages that sets a maximum amount monthly payment may rise in any given year.
PITI: Principal, Interest, Taxes, and Insurance, the four main parts of a monthly mortgage payment.
PMI: Private Mortgage Insurance, which protects the lender in case of default by the borrower. PMI is often used to allow buyers to obtain financing with less than a 20 percent down payment.
Points: Where one point equals one percent of the total mortgage loan amount. Buyers often pay lenders a supplemental fee, calculated in points, to get a better mortgage interest rate.
Pre-approval: An actual decision on a home loan, involving the obtaining of a credit approval and an agreement to finance a home, with specifics on the total mortgage amount available to the buyer.
Prepayment: Paying off all or part of the mortgage before the scheduled date.
Pre-qualification: An informal determination by a lender or broker of how large a mortgage a buyer can afford.
Principal: Money borrowed from a lender, not including any fees or interest.
Qualify: The ability to meet a lender's mortgage approval requirements.
Rate cap: A protective device in some ARMs that sets a maximum amount that interest rates may rise or decrease annually over the life of the loan.
Real estate: The physical land at, above and below the earth's surface with all appurtenances, including any structures; any and every interest in land whether corporeal or incorporeal, freehold or nonfreehold; for all practical purposes, the term real estate is synonymous with real property.
Real estate agent: A person licensed to negotiate and transact the sale of real estate on behalf of the property owner.
Real estate brokerage: A Real Estate Brokerage is a business in which real estate license-related activities are performed under the authority of a real estate broker.
REALTOR®: A registered trade name that may be used only by members of the state and local real estate boards affiliated with the National Association of REALTORS® (NAR). The term REALTOR® designates a professional who subscribes to associations of REALTORS® to govern real estate practices of members of the board. The use of the name REALTOR® and the distinctive seal in advertising is strictly governed by the rules and regulations of the national association.
Referral: One agent's recommendation of a potential buyer or seller to another cooperating agent.
Refinance: To obtain a new loan to pay off an existing loan, or to pay off one loan with the proceeds from another. Properties are frequently refinanced when interest rates drop and/or the property has appreciated in value.
Sales contract: A real estate sales contract contains the complete agreement between a buyer of a parcel of real estate and the seller. Depending on the area, this agreement may be known as an offer to purchase, a contract of purchase and sale, a purchase agreement, an earnest money agreement or a deposit receipt.
Sales professional: A licensed representative who assists buyers and sellers with information, advice, and assessment of current market conditions.
Seller's agent: An agent who represents the seller of real property.
Settlement disclosure statement: A list giving a complete breakdown of costs involved in a real estate transaction, prepared by the lender's agent at closing. This document is often referred to as the HUD.
Title: The right of ownership and possession of a property
Title insurance: Protection for lenders or homeowners against financial loss resulting from legal defects in the title.
VA loan: A government-sponsored mortgage assistance program administered by the Department of Veterans Affairs. Under the Servicemen's Readjustment Act of 1944, eligible veterans and widows or widowers (who have not re-married) of veterans who died in service or from service-connected causes may obtain partially guaranteed loans for the purchase or construction of a house or to refinance existing mortgage debt.
Walk-through: A final inspection of a property just before closing. This assures the buyer that the property has been vacated, that no damage has occurred and that the seller has not taken or substituted any property contrary to the terms of the sales agreement. If damage has occurred, the buyer might ask that funds be withheld at the closing to pay for the repairs.
Warranty: A promise that certain stated facts are true. A guarantee by the seller, covering the title as well as the physical condition of the property. A warranty is different from a representation in that a representation is a statement made in the course of negotiations leading up to the sale, but not incorporated into the contract. A warranty, on the other hand, is a statement in the contract asserting the truth of certain things about the property.
Zoning: The regulation of structures and uses of property within designated districts or zones. Zoning regulates and affects such things as use of the land, lot sizes, types of structure permitted, building heights, setbacks and density (the ratio of land area to improvement area).