QUESTION:
"My friend bought a house last year and didn’t care for her agent, but felt she had to stick with him because she signed a buyer agency thing with him. Do I have to continue to work with an agent, if I discover that I don’t like them?"
Here’s what the Buyer Agency Contract in the State of North Carolina says: “ENTIRE AGREEMENT/CHANGES/TERMINATION. This Agreement constitutes the entire agreement between Buyer and Firm relating to the subject thereof, and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Agreement. This Agreement may be signed in multiple originals or counterparts, all of which together constitute one and the same instrument. No modification of any of the terms of this Agreement shall be valid, binding upon the parties, or entitled to enforcement unless such modification has first been reduced to writing and signed by both Buyer and Firm. Buyer acknowledges and understands that this Agreement constitutes a binding contract between Buyer and Firm. Although Buyer may at any time withdraw from the fiduciary relationship existing between Buyer and Firm, the contract created by this Agreement may not be terminated by Buyer or Firm prior to its Expiration Date without legally sufficient cause. Any such termination shall be by mutually-acceptable written agreement signed by both Buyer and Firm. “
In other words, if you’re unhappy with your agent over a misunderstanding, it may not be a legally sufficient reason to end the contract. But if that agent didn’t fulfill their duties, outlined in the contract, then you probably can. However, may I suggest that you have a
conversation with that agent and explain what your concerns are and see if you can work it out. Often, it’s just a misunderstanding or miscommunication that can easily be remedied, so that you can continue working toward your goal of buying a home. On the other hand, If it’s a personality conflict and you just don’t feel comfortable with them, chances are they are feeling the tension also. In those cases (and they do happen) you may want to send them a note, asking to be released from the buyer agency agreement.
QUESTION:
How much money will I need to buy a house?
Here’s the rule of thumb: LET’S USE A $250,000 SALE AS AN EXAMPLE.
Between 3%-5% of the price of the house for a minimum down payment, depending upon the type of loan you obtain and about $3,500 for closing costs, give or take $300-$400.
Sometimes, we can negotiate that the seller pays the closing costs. Sometimes, if you are an incoming Doctor, you may qualify for the doctor loan, which requires no down payment. So, if you qualify for that loan, your down payment would be 0 and if we can get the seller to pay your closing costs, that would also be 0 - not a bad deal. Other loans that require a 0 down payment are the VA mortgage and the USDA mortgage.
However, the USDA mortgage is only for homes outside the city limits. If you have a question about any of these loans listed above, just contact us and we’ll explain them in detail, so that you can make the right choice for you.
QUESTION:
Should I shop for a mortgage first or a house first?
ALWAYS shop for your mortgage first. Make sure you have the money before you purchase or you could lose your Earnest Money Deposit, your home inspection fees, your Due Diligence Deposit and more. A simple conversation with a lender will let you know how much mortgage you can afford. It’s important to know that just because you can afford $1,000 in rent doesn't mean you can afford a $1,000 mortgage payment. The lender looks at your application very differently than a landlord.
QUESTION:
Should I work with several agents?
At first, perhaps. If you meet an agent and aren’t sure if they are the right fit for you, PLEASE DO NOT sign a buyer agency agreement with them. You are under NO obligation to sign a contract, just because you are looking at houses with an agent. You may want to let them know that you are shifting your focus and time frame and do not want to pursue any more properties at this time. That’s a polite way of letting them know you will not be working with them any longer. Then, try someone else. There is, however, a little dark booklet about real estate agents that the State of NC says we must have the buyer and seller sign when we first meet them. However, that little booklet is not an agreement. It’s just a verification to the State of NC that we gave you the booklet to read.
We always recommend our buyers go out with us a few times and get to know us, to see if we’re a good match in helping them find a house. If they are not comfortable for any reason at all, we are happy to discontinue the contact and let them find someone else. If,
after two or three times out together, they feel comfortable with us and trust that we “have their back” in their house hunting process, we then meet at the office and sit down and discuss the buyer agency contract. They may not even sign it then. We suggest they take it home and review it on their own time frame and comfort, so that they feel quite comfortable with what they are signing. NEVER sign a contract under pressure. A good agent should NEVER make you feel pressured. You should proceed on your terms and comfort level.
How do I know the difference between good agents and not-so-good agents?
Ask a lot of questions. Don’t be afraid to ask for references. Tell the agent you’re not in a big rush to purchase a home and see if they are still attentive. Most often, you can tell the difference between the agent who is hungry for THEIR paycheck or the agent who is happy
to help you achieve YOUR goals. Pushy, anxious, overly talkative agents are not paying attention to your needs. You want an agent who listens, more than talks, who follows through on what they promise to do and who doesn’t waste your time. Remember, real estate agents do not sell houses. The house will sell itself. The agent is your legal representative in the very detailed, expensive process of purchasing a home. Like an attorney, you want one who will protect you throughout the process, so that you will have made the right investment for yourself.
QUESTION:
Is it smart to buy a home directly from the seller, like a FSBO (For Sale By Owner) ?
That depends. Is the house worth the price they’re asking? Are there structural, mechanical or environmental issues with the home? If you hire a home inspector, are they thorough? If you are comfortable working through your legal rights, knowing all the property issues that could affect your value or your pocketbook, down the road and if you feel you are not overpaying for the house, then yes. There’s a reason you hire a good real estate agent. (Not all real estate agents are good) A good agent will protect you legally, financially and structurally. We have represented many buyers, who want to purchase a FSBO because they like the house, not because they are looking for the best bargain. We often negotiate with the seller to pay our commission, even though we are representing the buyer. Any good agent can do that for you. But if you are a seasoned buyer, who has done this many times before, go for it!
QUESTION:
Is it standard practice for the seller to pay the buyer’s closing costs?
It’s not standard practice, but it is part of the negotiating and most agents will automatically ask for it in the offer, on behalf of their buyer. For a $200,000 purchase, closing costs will range from $3,000 - $4,000. Having the seller pay your closing costs is like financing them. In many cases, we ask the seller to lower the price by $4,000 or pay your closing costs of $4,000. If the seller pays your closing costs, you are financing $4,000 more in your mortgage. However, if your mortgage interest rate is under 5%, financing that extra $4,000 is less than $15 per month; is tax deductible and saves you cash for improving the house. It really depends upon your needs and whether or not you want to keep that $4,000 to go toward furnishing or fixing the house or want to reduce your monthly payments as much as possible. Talk it over with your agent and see which decision works best for you.
QUESTION:
Are all Ardmore homes just money pits?
No, but some definitely are. Older homes have several issues you should look out forbefore deciding to purchase one. Bulging or severely cracked foundation walls, olderwiring (knob & tube) corroded plumbing lines, termite damage, buried oil tanks, asbestos and many other issues. Some sellers have renovated the house and most or all of those issues are taken care of before you even look at the house. Some sellers have taken care of some, but not all. There are basic structural & environmental problems that could be an expensive fix, but for the most part, if the house has been standing for over 50-80 years and is doing it’s job, so to speak, it will probably stand another 100 years.
However, let’s talk about the seller who doesn’t maintain their home. Sometimes these smaller expenses add up to much more than one major issue. Routine maintenance on a home and occasional replacement of old, worn out items is just part of being a home owner. It’s important to have your agent take a good look at the house you are interested in, before you make your offer. Sometimes, the agent can spot some glaring, expensive issues before you spend the money on the home inspector, so that you can decide whether or not you want to proceed with an offer, before spending the money on the inspector.
Note: An agents review of the structure is not the same as a home inspection. The home inspector is trained to look for hundreds of elements of the property. The agent is not. So,please don’t consider the agent’s comments a complete professional analysis. It’s merely a “first look” on your behalf.
QUESTION:
Isn’t it just smarter to rent, rather than buy a house?
That depends upon you. Are you only going to be staying in the area for one or two years? Do you need the tax write off? Are you comfortable not being able to change colors, appliances, fencing, etc. in the rental? Most importantly, we want you to make a sound investment and if you believe you will not be in the area for long, chances are, when you sell, you’ll make little to no profit on the re-sale. However, if your income will be greatly increased, perhaps that’s not an issue for you and it would be more important to live in a house that you have control over. That decision is up to you. We will give you all the information you need to decide whether it’s better for you to rent or to buy. Always keep in mind that if you rent, all that money is spent. If your rent is $1,200 per month, after a year, you would have given the landlord over $14,000 with no opportunity to re-coup that money. If you purchase the property and sell it at a break even with no profit, you will have received approximately $12,500 tax write off each year you owned the house. It’s at least something of value for ownership. Best case scenario is that sell it for a profit and have the tax write off and the profit. If you rent, there will never be the possibility of a profit.
QUESTION:
Why do real estate agents get paid so much money when all they really do is open the door to the house you want to see and write up a contract?
I was just approached yesterday, by a young woman who is finishing the real estate licensing class. She told me that she had no idea how many laws there were in real estate and how responsible we are to our clients and how difficult it is to be an agent. About 30% of the students, fail the tests and have to take the class over and over. She said that although she and her husband purchased three houses, they never knew how much work the real estate agent was doing behind the scenes to make sure the sale went through smoothly.
Most people have no idea that behind the scenes, the agent is working very hard to take care of all the details, the legals issues, the closing procedures, the environmental concerns and so much more, that their client never knows about. It’s just part of the job.If working as a real estate agent were as easy as unlocking the door to houses, everyone would get their license. Real estate is a complex transaction. It takes knowledgable professionals to get the job done right and uphold the law correctly, on behalf of their clients and customers.
QUESTION:
What is the due diligence period?
It’s the buyer’s period of time to get their questions about the property answered, such as: Will it appraise for the price we offered the seller? Will the home inspector find a major problem? Are there termites? Did the lender approve my loan application? The NC law says the buyer should negotiate a time period into their offer, that gives them enough time to gets these questions answered and decide if they want to buy the property or not. If, at any time during the due diligence period, the buyer decides to back out of the contract, they have that right and can just walk away. And if they gave the seller any due diligence fee to hold the property off the market for them, the seller then keeps the fee, but returns the Earnest Money Deposit. The due diligence period ends at 5pm on the date noted in the contract. If the buyer backs out of the sale after that, they can forfeit their Earnest Money and can also be sued for damages by the Seller. So, be sure you arrange your due diligence time period so that you have given yourself enough time to do your “DUE DILIGENCE.”
"My friend bought a house last year and didn’t care for her agent, but felt she had to stick with him because she signed a buyer agency thing with him. Do I have to continue to work with an agent, if I discover that I don’t like them?"
Here’s what the Buyer Agency Contract in the State of North Carolina says: “ENTIRE AGREEMENT/CHANGES/TERMINATION. This Agreement constitutes the entire agreement between Buyer and Firm relating to the subject thereof, and any prior agreements pertaining thereto, whether oral or written, have been merged and integrated into this Agreement. This Agreement may be signed in multiple originals or counterparts, all of which together constitute one and the same instrument. No modification of any of the terms of this Agreement shall be valid, binding upon the parties, or entitled to enforcement unless such modification has first been reduced to writing and signed by both Buyer and Firm. Buyer acknowledges and understands that this Agreement constitutes a binding contract between Buyer and Firm. Although Buyer may at any time withdraw from the fiduciary relationship existing between Buyer and Firm, the contract created by this Agreement may not be terminated by Buyer or Firm prior to its Expiration Date without legally sufficient cause. Any such termination shall be by mutually-acceptable written agreement signed by both Buyer and Firm. “
In other words, if you’re unhappy with your agent over a misunderstanding, it may not be a legally sufficient reason to end the contract. But if that agent didn’t fulfill their duties, outlined in the contract, then you probably can. However, may I suggest that you have a
conversation with that agent and explain what your concerns are and see if you can work it out. Often, it’s just a misunderstanding or miscommunication that can easily be remedied, so that you can continue working toward your goal of buying a home. On the other hand, If it’s a personality conflict and you just don’t feel comfortable with them, chances are they are feeling the tension also. In those cases (and they do happen) you may want to send them a note, asking to be released from the buyer agency agreement.
QUESTION:
How much money will I need to buy a house?
Here’s the rule of thumb: LET’S USE A $250,000 SALE AS AN EXAMPLE.
Between 3%-5% of the price of the house for a minimum down payment, depending upon the type of loan you obtain and about $3,500 for closing costs, give or take $300-$400.
Sometimes, we can negotiate that the seller pays the closing costs. Sometimes, if you are an incoming Doctor, you may qualify for the doctor loan, which requires no down payment. So, if you qualify for that loan, your down payment would be 0 and if we can get the seller to pay your closing costs, that would also be 0 - not a bad deal. Other loans that require a 0 down payment are the VA mortgage and the USDA mortgage.
However, the USDA mortgage is only for homes outside the city limits. If you have a question about any of these loans listed above, just contact us and we’ll explain them in detail, so that you can make the right choice for you.
QUESTION:
Should I shop for a mortgage first or a house first?
ALWAYS shop for your mortgage first. Make sure you have the money before you purchase or you could lose your Earnest Money Deposit, your home inspection fees, your Due Diligence Deposit and more. A simple conversation with a lender will let you know how much mortgage you can afford. It’s important to know that just because you can afford $1,000 in rent doesn't mean you can afford a $1,000 mortgage payment. The lender looks at your application very differently than a landlord.
QUESTION:
Should I work with several agents?
At first, perhaps. If you meet an agent and aren’t sure if they are the right fit for you, PLEASE DO NOT sign a buyer agency agreement with them. You are under NO obligation to sign a contract, just because you are looking at houses with an agent. You may want to let them know that you are shifting your focus and time frame and do not want to pursue any more properties at this time. That’s a polite way of letting them know you will not be working with them any longer. Then, try someone else. There is, however, a little dark booklet about real estate agents that the State of NC says we must have the buyer and seller sign when we first meet them. However, that little booklet is not an agreement. It’s just a verification to the State of NC that we gave you the booklet to read.
We always recommend our buyers go out with us a few times and get to know us, to see if we’re a good match in helping them find a house. If they are not comfortable for any reason at all, we are happy to discontinue the contact and let them find someone else. If,
after two or three times out together, they feel comfortable with us and trust that we “have their back” in their house hunting process, we then meet at the office and sit down and discuss the buyer agency contract. They may not even sign it then. We suggest they take it home and review it on their own time frame and comfort, so that they feel quite comfortable with what they are signing. NEVER sign a contract under pressure. A good agent should NEVER make you feel pressured. You should proceed on your terms and comfort level.
How do I know the difference between good agents and not-so-good agents?
Ask a lot of questions. Don’t be afraid to ask for references. Tell the agent you’re not in a big rush to purchase a home and see if they are still attentive. Most often, you can tell the difference between the agent who is hungry for THEIR paycheck or the agent who is happy
to help you achieve YOUR goals. Pushy, anxious, overly talkative agents are not paying attention to your needs. You want an agent who listens, more than talks, who follows through on what they promise to do and who doesn’t waste your time. Remember, real estate agents do not sell houses. The house will sell itself. The agent is your legal representative in the very detailed, expensive process of purchasing a home. Like an attorney, you want one who will protect you throughout the process, so that you will have made the right investment for yourself.
QUESTION:
Is it smart to buy a home directly from the seller, like a FSBO (For Sale By Owner) ?
That depends. Is the house worth the price they’re asking? Are there structural, mechanical or environmental issues with the home? If you hire a home inspector, are they thorough? If you are comfortable working through your legal rights, knowing all the property issues that could affect your value or your pocketbook, down the road and if you feel you are not overpaying for the house, then yes. There’s a reason you hire a good real estate agent. (Not all real estate agents are good) A good agent will protect you legally, financially and structurally. We have represented many buyers, who want to purchase a FSBO because they like the house, not because they are looking for the best bargain. We often negotiate with the seller to pay our commission, even though we are representing the buyer. Any good agent can do that for you. But if you are a seasoned buyer, who has done this many times before, go for it!
QUESTION:
Is it standard practice for the seller to pay the buyer’s closing costs?
It’s not standard practice, but it is part of the negotiating and most agents will automatically ask for it in the offer, on behalf of their buyer. For a $200,000 purchase, closing costs will range from $3,000 - $4,000. Having the seller pay your closing costs is like financing them. In many cases, we ask the seller to lower the price by $4,000 or pay your closing costs of $4,000. If the seller pays your closing costs, you are financing $4,000 more in your mortgage. However, if your mortgage interest rate is under 5%, financing that extra $4,000 is less than $15 per month; is tax deductible and saves you cash for improving the house. It really depends upon your needs and whether or not you want to keep that $4,000 to go toward furnishing or fixing the house or want to reduce your monthly payments as much as possible. Talk it over with your agent and see which decision works best for you.
QUESTION:
Are all Ardmore homes just money pits?
No, but some definitely are. Older homes have several issues you should look out forbefore deciding to purchase one. Bulging or severely cracked foundation walls, olderwiring (knob & tube) corroded plumbing lines, termite damage, buried oil tanks, asbestos and many other issues. Some sellers have renovated the house and most or all of those issues are taken care of before you even look at the house. Some sellers have taken care of some, but not all. There are basic structural & environmental problems that could be an expensive fix, but for the most part, if the house has been standing for over 50-80 years and is doing it’s job, so to speak, it will probably stand another 100 years.
However, let’s talk about the seller who doesn’t maintain their home. Sometimes these smaller expenses add up to much more than one major issue. Routine maintenance on a home and occasional replacement of old, worn out items is just part of being a home owner. It’s important to have your agent take a good look at the house you are interested in, before you make your offer. Sometimes, the agent can spot some glaring, expensive issues before you spend the money on the home inspector, so that you can decide whether or not you want to proceed with an offer, before spending the money on the inspector.
Note: An agents review of the structure is not the same as a home inspection. The home inspector is trained to look for hundreds of elements of the property. The agent is not. So,please don’t consider the agent’s comments a complete professional analysis. It’s merely a “first look” on your behalf.
QUESTION:
Isn’t it just smarter to rent, rather than buy a house?
That depends upon you. Are you only going to be staying in the area for one or two years? Do you need the tax write off? Are you comfortable not being able to change colors, appliances, fencing, etc. in the rental? Most importantly, we want you to make a sound investment and if you believe you will not be in the area for long, chances are, when you sell, you’ll make little to no profit on the re-sale. However, if your income will be greatly increased, perhaps that’s not an issue for you and it would be more important to live in a house that you have control over. That decision is up to you. We will give you all the information you need to decide whether it’s better for you to rent or to buy. Always keep in mind that if you rent, all that money is spent. If your rent is $1,200 per month, after a year, you would have given the landlord over $14,000 with no opportunity to re-coup that money. If you purchase the property and sell it at a break even with no profit, you will have received approximately $12,500 tax write off each year you owned the house. It’s at least something of value for ownership. Best case scenario is that sell it for a profit and have the tax write off and the profit. If you rent, there will never be the possibility of a profit.
QUESTION:
Why do real estate agents get paid so much money when all they really do is open the door to the house you want to see and write up a contract?
I was just approached yesterday, by a young woman who is finishing the real estate licensing class. She told me that she had no idea how many laws there were in real estate and how responsible we are to our clients and how difficult it is to be an agent. About 30% of the students, fail the tests and have to take the class over and over. She said that although she and her husband purchased three houses, they never knew how much work the real estate agent was doing behind the scenes to make sure the sale went through smoothly.
Most people have no idea that behind the scenes, the agent is working very hard to take care of all the details, the legals issues, the closing procedures, the environmental concerns and so much more, that their client never knows about. It’s just part of the job.If working as a real estate agent were as easy as unlocking the door to houses, everyone would get their license. Real estate is a complex transaction. It takes knowledgable professionals to get the job done right and uphold the law correctly, on behalf of their clients and customers.
QUESTION:
What is the due diligence period?
It’s the buyer’s period of time to get their questions about the property answered, such as: Will it appraise for the price we offered the seller? Will the home inspector find a major problem? Are there termites? Did the lender approve my loan application? The NC law says the buyer should negotiate a time period into their offer, that gives them enough time to gets these questions answered and decide if they want to buy the property or not. If, at any time during the due diligence period, the buyer decides to back out of the contract, they have that right and can just walk away. And if they gave the seller any due diligence fee to hold the property off the market for them, the seller then keeps the fee, but returns the Earnest Money Deposit. The due diligence period ends at 5pm on the date noted in the contract. If the buyer backs out of the sale after that, they can forfeit their Earnest Money and can also be sued for damages by the Seller. So, be sure you arrange your due diligence time period so that you have given yourself enough time to do your “DUE DILIGENCE.”