When starting your home search and looking for an agent, the first question a real estate professional will usually ask is "Have you been pre-approved?"
A mortgage pre-approval from a lender means they have verified and pre-approved the borrower to borrow a specific loan amount and possibly a specific mortgage type. It is the initial process of qualifying for a mortgage loan. The borrower has submitted the required financial information. This process usually requires pay stubs, bank statements, w-2's, social security number and an inquiry on the borrower's credit.
According to Investopedia, Consulting with a lender before the homebuying process can save a lot of heartache later. Gather paperwork before the pre-approval appointment, and definitely before you go house hunting.
Are you ready to get started? Click here to learn about our reliable mortgage partners!
Inviting, luxurious, and functional, a walk-in closet can bring a sense of order into your life. With this addition, you get extra space and storage, a spot for starting your day, and a feature that will improve your home's value. And it doesn't take any special skills or knowledge in carpentry to build your own walk-in closet. With enough space, the right tools, and a little bit of creativity, you can create something that will instantly add a touch of finesse to your master bedroom whilst giving you that private space for getting dressed. Here, our real estate agents will take you through the process of building an amazing DIY walk-in closet.
It would be nice if every house negotiationwent smoothly, but unfortunately, that's not always the case. Whether the seller is unwilling to negotiate or a closer look at your "dream" home reveals serious issues, sometimes it's better to walk away. Our real estate agents know what it takes to land your dream home, so let's take a closer look at the signs that it's time to walk away from a house negotiation.
Every successful negotiation requires compromise, and it's hard to find common ground when the seller refuses to negotiate in good faith. An overly rude seller refuses to listen to your concerns, or seems unwilling to budge on even the smallest issues may not be worth the trouble. You don't have to feel like the seller is going to be your best pal after negotiations, but civility and courtesy go a long way.
There's no avoiding the fact that buying a home is often an emotional process, and at some point in the shopping process, most buyers fall in love with a home. It's normal to get excited about a home that seems to suit your needs. Sometimes love at first sight turns into cold feet when it's time to commit. If the home you thought you love isn't all it's cracked up to be, then it may be time to move on to your next option.
While disclosure rules vary by location, in most places, sellers are required to disclose certain serious maintenance issues with the home. This may include things like flooding, leaks, foundation damage, roof damage, and damage to key systems within the home. If you discover the seller has been trying to hide issues that they're required to disclose, it's better to walk away.
The home may have issues turn up during the inspection that the seller wasn't aware of, and those issues may be serious enough to make you think twice. If the home inspection does reveal serious issues, you'll have to consider whether it's worth the time and money to fix the home before you decide whether to buy.
Tackling projects around the house is simply part of owning a home, but not every owner is qualified to handle home improvement projects. If the home has too many DIY fixes that would have to be repaired by professionals, it may no longer be the right fit for your budget.
If you discover that the home has serious issues with termites, mold, or other hidden problems, those issues will naturally impact your perception of the home. If the cost of repairing termite damage or eliminating mold is more than you bargained for, it's time to shop for a different home.
The negotiation step of buying a home can be stressful. An experienced agent can be there to help by giving you advice , and telling you when it might be time to walk away. Whether you're shopping for the first time or getting your search back on track after a failed negotiation, our team is here to help you find a home you'll love. Contact us to buy and sell homes throughout the Northern New England area, and check out The Ultimate Home Buyers Guide to help you on your journey to find a new home.
If you're like most people buying or selling a home, you'll choose to work with a local, licensed real estate professional or REALTOR®. These professionals know and understand the local market, have outstanding negotiating skills, and as we have mentioned in prior posts (internal link to REALTOR "overview" article HERE), can make the entire buying and selling process easier.
As compensation for their expertise, your REALTOR® is paid a commission based on the sale price of your home. There are several different commission structures based on the structure of your deal. Here's a breakdown of the role of the various players, how realtor commissions work, and who pays these fees.
When you decide to sell your home and enlist the help of a REALTOR®, you sign a listing agreement. In that agreement is an agreed-upon commission rate with the listing agent, which is typically a negotiable rate, typically between 4 and 6%.
This commission is often split evenly between the seller's agent and the buyer's agent (if they are working with an agent). Each agent pays a portion of their commission to their brokerage.
For example, for a home with a sale price of $500,000 and a 6% commission rate – split equally between the buyer's and seller's agents – each agent would receive 3%, or $15,000. Assuming each agent must split their commission 50/50 with their respective brokerages, each agent would make $7500 from the sale (before subtracting any additional marketing costs incurred).
While this is the typical arrangement, commission splits are not always 50/50 between the agent and the brokerage. For experienced agents who reach a certain commission level, the split can step up to 70% in favor of the agent. This brokerage model relies on the agent sourcing all of their own leads, clients, and business.
Precisely who pays the commission can be a bit tricky. The standard practice is that the seller pays the fee. However, the fee is often wrapped into the home price, so the buyer ultimately ends up paying the fee, albeit indirectly.
Let's look at how this works using the above example.
Each with an agent, a buyer and seller agree to a deal on the $500,000 house. Assuming a 6% commission on the sale, the entire commission of $30,000 comes out of the home's sale.
The buyer will pay the $500,000 purchase price. The seller would receive $470,000 ($500K minus the 6% commission). Depending on who is responsible for the closing costs and other fees, these fees could either come out of the seller's $470,000, or the buyer would have to pay all or part of these additional costs (or roll them into their mortgage).
The listing agent's brokerage would then receive the entire $30,000 commission from the closing attorney. They would issue the buyer's agent or their brokerage a check for half of the commission, and each of the brokerages would pay their respective agents their 1.5% commission from the sale.
While it may seem like selling your property directly or creating a FSBO ("Fisbo" or "for sale By Owner listing and taking the real estate agent out of the process makes financial sense, in the long and short run, unless you're selling to a family member, it's rarely a good decision.
A real estate professional is vital to the process of selling (and in today's market, buying) a home. They can help to facilitate the negotiations, manage the paperwork, and maximize your chances of selling your home at a fair price through staging, arranging professional photography, as well as virtual tours, and other marketing activities. Your listing or seller's agent will represent you and look out for your best interest, making sure that you receive top dollar and that all of the legal requirements of selling your home are met.
When working with a buyer's agent, you have the best possible chance of finding the perfect house that you'll love based on your needs. A buyer's agent will research your market to find the perfect home and increase the likelihood of a successful sale.
Real estate professionals are there to ensure that the process moves smoothly. When dealing with your home, it's often the biggest investment you will make and is worth hundreds of thousands of dollars. If you're on the brink of either buying or selling, they ensure that the process is fast, smooth, and easy.
One of the biggest contentions for selling (or buying) a home is that the real estate fees are too high or that the service isn't worth the cost. In fact, there are even newer services that will work for a flat fee – like $100 or $500 or a steeply discounted commission. While this can sometimes benefit sellers (and ultimately buyers) in terms of cost savings, typically, you get what you pay for in terms of representation.
When working with a real estate professional in a more traditional arrangement, your interests as both a seller and a buyer are protected. While it sometimes happens, if your home sells on the day it's listed, your agent could make a tidy sum for a relatively small amount of work – taking some photos, determining a price, and listing the home on the market.
However, this is rarely the case. Sometimes a home can take weeks, months, or in the case of very unique or expensive houses, can take years to sell.
For the seller's agent, this means spending hours marketing the home, making phone inquiries, staying abreast of other listings and sales in the neighborhood. The seller's agent will also bear the costs of keeping the house on the market, signage, and advertising costs. The fact is, most sellers wouldn't want to be paying their agent by the hour!
This is also true for buyers. Some might find a house immediately. However, most will look at dozens of homes over the course of weeks or even months before finding the right one. If buyers had to pay their agent by the hour, they would probably feel rushed into making a decision!
Selling or buying a home is a complicated endeavor that is made easier by working with a qualified real estate professional or REALTOR®. Having a professional in your corner, whether selling or buying, can help you find exactly what you're looking for at the right price that is fair to both the buyer and seller.
In exchange for the hours of work they do, agents receive a percentage of the sales price or a commission. While it's typically the seller who pays the commission, the cost is generally factored into the home's list price. In this way, the buyer ultimately bears the cost of any real estate fees.
While it's important to understand how commissions are structured and who is ultimately responsible for payment, it's equally important to keep in mind that commissions are always negotiable. For homeowners who are concerned about high fees and may opt to use a flat fee or discount broker or list their home as a FSBO, it's important to remember that, like many things in life, you often get what you pay for!
Your home is often the most expensive and biggest investment you'll make in your lifetime making it important to understand what your realtor commission will cost and to trust who you're working with. It's a smart choice to work with a professional REALTOR® when selling or buying your next home!
More travelers than ever before are skipping staying at hotels, instead choosing to rent rooms or entire homes from Airbnb hosts. With Northern New England being such a beautiful place for a getaway, the demand for Airbnb rentals in the area is often high. Becoming an Airbnb host is a great way to earn some extra income in your primary residence, meet new people from around the world, or even turn your second home into an income generator whenever you're not using it. Our real estate agents have the details to help you decide if becoming a host is right for you
Your credit score is a little three-digit number between 300-850 that depicts a consumer's creditworthiness, and that has a BIG impact on your home-buying process. The higher the score, the better a borrower looks to potential lenders. Our real estate agents know buying a home is an exciting experience. Whether it's your first time purchasing a property or if you're moving into a new space that will cater to your changing lifestyle, we want to make sure that your experience is an easy one.
With years of experience helping clients buy and sell homes, we understand real estate transactions inside and out. Our customers often ask questions regarding how a credit score impacts purchasing a home. To provide you the best advice, we've answered some of the most common questions about credit scores so you can head into your home search with confidence.
Yes! Your credit score is an essential aspect of your financial life. Although it is an important consideration in a real estate transaction, your credit score can also impact other things like buying a car or taking out a loan. You can also leverage great scores into great deals — on credit cards, insurance premiums, apartments and cell phone plans. Bad scores can hammer you into missing out or paying more. According to Nerd Wallet, a 15-year home equity loan of $50,000 would cost a low scorer $22,500 more than someone with high scores.
A credit score is composed of many elements, including your credit payment history, your debt-to-credit utilization, your length of credit history, your credit mix, and your new credit accounts.
Technically, you can buy a home with any credit score. However, securing financing gets increasingly more difficult the lower your credit score is. Credit scores range from 300 to 850, with anything above 760 considered exceptional and anything below 650 considered less than favorable. For example, a credit score of 700 is good, and you may have an easier time qualifying for a loan than someone with a credit score of 400, which is considered unfavorable in the eyes of lenders. Similarly, those with an 800 credit score should have no trouble getting a mortgage approved by a financial lender.
You can always raise your credit score no matter how low it is. Although it may take discipline and time, there's no reason why any individual can't get their credit score to a level which a mortgage lender will approve of. First, you should check your credit score and report to see where you stand. If you notice an error on the report, dispute it so it can be removed. Next, you'll want to gather all of your debts and plan a way to pay them down. Many people choose to pay off smaller debts first to show better management of debt-to-credit utilization. Moving forward, you'll want to ensure that you pay every bill on time so you won't chance missing a payment and dropping your score. Some individuals with limited or very low credit scores may want to consider building new credit responsibly by opening a new credit account, getting a new credit card or taking out a secured loan. Using these resources wisely can help boost your score.
While it's not absolutely necessary to raise your score before you begin your search, we do recommend that you try to boost it if possible. When you seek out a loan or mortgage, you want to have the highest score and best credit report possible so you can secure funding quickly without trouble.
To learn more about how your credit score impacts the home buying process, contact us today!
When it comes to real estate, everyone involved is working toward a common goal: putting the keys in the hands of the new owner. Every buyer wants to find their dream home, every seller wants their home to go to the perfect buyer, and every real estate agent wants what is best for their client. And that is what the multiple listing service is designed for!
If you have ever been involved in a real estate transaction, then you are probably familiar with the multiple listing service. The multiple listing service is a technology that is in place to help make real estate transactions more efficient. In fact, 64% of National Association of Realtors members have said the MLS is the most valuable technology they use in their business.
Buyers and sellers should both have a good understanding of the MLS and why it is valuable. Through the multiple listing service, brokers can more easily connect buyers sellers for mutual benefit.
In this post, we will examine the history of the multiple listing service, what it is and what it does!
In the late 1800s, real estate brokers would regularly gather together at the offices of their local associations to share information on the properties they were trying to sell. They agreed to pay the other association members who helped them sell their properties, and the original Multiple Listing Service was born. It was based on a principle that is unique to real estate... "help me sell my inventory, and I'll help you sell yours."
Today, there are more than 800 MLSs where brokers share information on their properties and invite other brokers to cooperate in the sale in exchange for a commission if they produce a buyer. Sellers benefit by gaining widespread exposure for their property. Buyers benefit because they can obtain information about all the properties listed on the MLS while working with only one broker.
According to the National Association of Realtors (NAR), the MLS is a private database created and maintained by real estate professionals (agents, brokers, etc) to help clients buy and sell a property.
The MLS is a tool to help listing brokers find cooperative brokers working with buyers to help sell their client's homes. The MLS is a powerful force for promoting competition. MLSs level the playing field so the smallest brokerage can compete equally with the largest multi-state firm. Buyers and sellers can work with the real estate professional of their choosing, confident that they have access to the largest pool of properties for sale in the marketplace.
In most cases, MLS listing information is provided to the public free of charge by participating brokers.
Today, most of the MLS process takes place online. The database provides information on properties for sale and includes pictures and detailed descriptions along with documents like seller disclosures. The MLS is updated throughout the day, so brokers can find homes their clients will love almost immediately.
The MLS provides buyers with more homes to choose from and helps sellers get their listings in front of a bigger pool of buyers. Today there are multiple regional MLS networks. Each network must follow the regulations set by the NAR and can only be accessed by licensed real estate professionals who pay a membership fee.
This means that sellers cannot list their homes on the MLS on their own, and buyers cannot search the database. The seller's agent can list their homes on the MLS, and buyer's agents can search the database to find potential homes that meet homebuyer's needs. Both buyer and seller's agents use the MLS to prepare comparative market analyses.
Every listing on the MLS is different. The information it contains depends on what the listing agent chooses to include. The most common information most listings include is:
While listings may also be available on other online real estate sites, the MLS includes additional information that is not always available to the public on those sites.
The MLS benefits everyone involved in a real estate transaction – buyers, sellers, and real estate professionals. As previously mentioned, it can level the playing field by allowing small firms to compete with larger firms. The MLS helps real estate agents provide the best experience for their clients. Whether that is helping a buyer find the right house or helping a seller market their home.
With the help of their agent, buyers can find the home that best meets their needs. They can also find additional options they may not have considered. The MLS gives agents access to homes almost immediately when they are listed, allowing them to beat other potential buyers to the property.
The widespread sharing of information helps to simplify the selling process for homeowners. The MLS can increase your property's visibility getting it in front of more potential homebuyers. For both buyers and sellers, the MLS helps you understand market dynamics and can help with pricing a home strategically by providing in-depth information on the local market.
The MLS can help all parties in a transaction by providing valuable information on the homes for sale in your local market, and getting them more exposure. However, it is crucial to understand that it is only accessible to real estate professionals. If you work with an agent, they can provide you with access and help you to search the database and compile a list of homes that check off your boxes.
The Multiple Listing Service provides valuable information that can help move buyers, sellers forward.Educating yourself on the process of home buying, and home selling can also help with any transaction. Understanding the multiple listing service and how it works help make it easier to navigate your local real estate market.
Pets are a part of the family in many Northern New England homes!
And July 15th is National Pet Fire Safety Day, a great reminder to fine-tune your family's fire safety plan so that all your family members are protected.
Our real estate agents also recommend making a few changes around your home so that your furry family members don't inadvertently start a fire. Here are some valuable tips to help keep your pet safe in case of an emergency.
So you have done the rounds shopping for just the right New England dream home for you. You're finally in the home stretch, having found your dream home. However, there is a problem. Other buyers have decided it is their dream home too, and you've found yourself having to compete for your new home. So what do you need to know about duking it out with competing home buyers to increase your odds of coming out on top?Our real estate agents have some tips and tricks that can help you get to your dream home fast and easy.
Use a buyer's agent
Having an agent that works directly for you is a big advantage when buying a home. A good buyer's agent will have extensive experience in the market you're shopping. They will also have access to more information about listed homes, and will be looking out for your best interests, rather than those of the seller. Having an expert in your corner to guide you can make a big difference when it comes to competing with other buyers to purchase the home you have your heart set on. According to the National Association of Realtors, 88% of buyers purchased their dream home through a real estate agent or broker—a share that has steadily increased from 69% in 2001.
It is always best to get a mortgage pre-approval before you begin shopping for a new home. It is essential to do so if you're planning to submit an offer on a house where there are likely to be competing offers from other buyers. You want to be able to show that you can afford the home in question to ensure that the seller takes your offer seriously. Also, if any of your competing buyers have not yet made this step, you'll increase your odds of being seen as the more prepared and serious buyer. Take a look at our blog on the importance ofmortgage pre-approval to learn more.
If more than one buyer is bidding on your dream home, presenting a clean offer, with as few contingencies and demands as possible, can increase the odds that the seller will look upon your offer more favorably than those of more demanding buyers.
Putting a larger than average chunk of cash down for earnest money can sway sellers. This will make it known that you are committed and ready to buy. Putting down a large earnest money deposit will also ensure added insurance on the transaction for both the buyer and the seller.
The personal approach when you deliver your offer can go a long way towards swaying the competition for a home in your favor. Most buyers send offers via email these days, a rather impersonal approach, so presenting yours face-to-face can certainly make you, and your offer, stand out from the crowd.
These five tips will greatly increase your chances of nailing down your dream home. If you could use a few more great tips on coming out the winner when you're buying a home, please feel free tocontact us. You can also check out The Ultimate Home Buyers Guide to learn more about all the steps it takes to buy a home. We're always happy to put our knowledge and experience to work for the benefit of New England home buyers.
The real estate market in many locations has simply been on fire! Today, here in New England and many other areas, homes that typically attract little interest are garnering multiple offers, and bidding wars are common.
Conventional wisdom says that when it comes to real estate, the highest offer gets the house. But the truth is, this is not always the case. Sure, a solid offer is the first thing that every seller wants to see, but an astute real estate agent or REALTOR® will advise a seller that each offer is more than just a number it is actually the sum of all its parts.
Here are seven reasons why your artfully crafted lower real estate offer might just help you beat the higher bidder after all!
If you can afford to pay cash, you just might beat a higher bidder. It might sound impossible to pay cash for your home, but many people do it. According to the National Association of Realtors, 12% of all houses sold in 2019 were all-cash deals.
An all-cash offer is attractive to a seller of real estate for several reasons. First, there are no mortgages or lenders involved, no appraisal to worry about, and escrow can close faster.
Pre-approval is much different than pre-qualification. A pre-approval letter is a confirmation from a lender that confirms you are ready to buy in a set price range and you have been pre-approved for the loan.
In essence, the real estate pre-approval lender turns you into a virtual cash buyer. Other buyers could offer more, but if they are not pre-approved, the deal could fall through. As a result, a pre-approval letter gives you a leg up, even with a lower offer.
Typically, the closing period can last anywhere from 30 to 90 days. Offering to customize closing to meet the seller's needs can sometimes seal the deal over a higher bidder. Sellers almost always want a fast close. If you have all your paperwork together you might be able to get it done! Be flexible! Sometimes the seller might need more time, for example, if the house they are moving into will not be ready for 60 days. Find out what works for the seller and accommodate their needs. Sometimes the lower offer does win.
It might seem cheesy, but much of the home buying process is emotionally based. Sometimes sending the seller a heartfelt letter letting them know you love their house and hope to raise your family in the home can sometimes make the difference!
Contingencies are typically negotiating tools that allow you to walk away from a deal without consequences. The three most common are inspection, financing, and appraisal contingencies. Every contingency you add can make your offer appear weaker because each can make the deal more difficult to close. Make sure you really need each contingency before building them into your offer.
Be careful what you ask for! If you ask for the custom drapes, the appliances, and the chandelier that was a wedding gift from the inlaws, (and was excluded in the listing) you risk offending the seller and having them walk away. Even if yours is the highest bid!
An escalation clause is an excellent way to make your offer stand out. An escalation clause states that you will pay a pre-determined amount over the highest bona fide offer that does not contain a home sale contingency. While not all agents use this tactic, it's a great way to stand out in a competitive situation.
For example, once all of the offers are reviewed, the seller's agent will contact the buyer's agent and forward them the highest offer. The buyer then has a fixed amount of time, for example, 30 minutes, to accept or reject the highest bid and include their escalation amount. So if the offer is $525,000 and the escalation amount is $5000, the buyer must agree to $530,000.
Sometimes the biggest wallet does not close the real estate deal. These tactics can help you develop a strategy to help make a lower bid more attractive to a seller. The best solution is to work with an experienced real estate agent or REALTOR®. They understand the local market and can help you develop a strategy to compete in a tight marketplace that goes beyond simply making the higher offer.
Remember, every term in a deal is negotiable. In today's market, the seller is in the driver's seat. However, if you understand their needs you can craft a strategy that offers benefits beyond the highest offer. A good seller's agent will compare and leverage all offers to achieve the homeowner's desired pricing and terms. A good buyer's agent will help you craft an offer that benefits you and meets all of the seller's needs.
If you missed part one of this three part series on Making an Offer when Buying a Home, here is the link to part one & two:
When you move, you're not just getting a new house. You're getting a new community. Your new neighbors can help you with everything from showing you where the best grocery store in the area is, to loaning you a leaf blower when it's time for yard work, to calling the authorities if they notice something wrong while you're not there. They can also turn into lifelong friends. First, however, you need to meet and get to know them. Here are a few ways to do that.
Is buying a house on your to-do list? Our real estate agents love helping clients turn their dreams of homeownership into a reality!
It's essential to develop good habits right away, so you're ready when the right home comes along. Here are seven steps you can take right now to help ensure you don't hit any roadblocks during your home-buying journey.
Getting your finances in order is the very first thing you need to do before you can consider buying a home. Start with these tips:
Each of these things takes time. The sooner you start, the better shape you'll be in when you find your new home.
Get a better idea of whether you'll be able to afford the home you want by pretending your bills have already gone up. Set the extra money aside each month to have an emergency fund saved before you buy a home.
Shopping for a home will be much more productive (and more fun!) if you have a clear idea of your goals. Make a list of all the features you want in a home, and any that you don't. This will help keep you from wasting time looking at places that aren't right for you.
While it's fine to make a "dream home" list, make sure you're realistic about your "must-haves." Trying to buy a champagne house on a bottled water budget will only lead to disappointment.
Whether you're a first-time or experienced home buyer, working with a great real estate agent can have a considerable impact on a successful home buy. It's essential to be picky about who you choose. Ask for recommendations from friends and family, check references, and read reviews before committing to a contract.
Buying a home is a huge commitment. The last thing you want is to jump into something without thinking it through or feel pressured to buy something that's not quite right. Make sure this doesn't happen to you by leaving yourself plenty of time to explore your options.
Homes come on and off the market, so plan to set aside some time every week for home shopping. Visit plenty of open houses to have a good idea of what types of homes are currently available on the market.
The housing market moves fast, and if you're not ready, you could miss out on your perfect home. Ensure you're prepared by shopping for a mortgage ahead of time and making sure you're pre-approved. Organize your tax and financial documents, so you're ready when it's time to submit your mortgage application.
While it's great to have an idea of the type of home you want, don't be too rigid about it. If you're willing to have an open mind, you might find the perfect home wasn't what you expected at all. Going with the flow and being flexible is a key component to a successful home buy.
Buying a home can seem like a scary task. With the right resources and guidance, you can and will be successful in buying a home. You can check out TheUltimate Home Buyers Guide to learn more about all the steps it takes to buy a home. If you're ready to start house hunting, we're here to help. Contact us at The Masiello Group to get started.