WME Buyers

IMG_0752Anyone in the market to purchase real estate should always be represented by their own broker to ensure that their interests are protected. Prospective buyers should always remember that the listing broker works for the seller, representing their best interest and not the buyer’s. The buyer’s broker fee is typically paid by the seller with no out-of-pocket cost to the buyer. Buyer representation is one of our specialties at WME, and we take great pride in helping our buyer clients realize their real estate dreams.

S4684637WME has developed an extensive network of real estate owners and agency contacts allowing us to seek out quality real estate meeting our buyer client’s criteria that are not listed or are listed with other brokers. We work one-on-one with each buyer to find that special property with the potential to meet their specific goals and objectives. WME provides our buyer clients with a professional evaluation and information about a property’s overall value, quality, and potential, to allow them to make informative decisions prior to making a purchase.  Contact WME today for more information or to set up a free no-obligation consultation.

Real Estate FAQ’s for Buyers:

I want to buy a home or other type of real estate, where do I start?

  1. Hire a Real Estate Broker and/or Agent that you can trust to represent you and only you. It is vitally important that you do this before you go rushing off looking for homes that are listed on your own or you may end up with no representation at all. A reputable Realtor will protect your best interests and be an invaluable source of knowledge and information throughout the buying process.
  2. Familiarize yourself with the mortgage process, pre-qualify with a lender, get your financial picture in focus, and determine a realistic budget. Now is not the time to buy a new car and open up lines of credit!
  3. Provide your Realtor with your real estate needs, wants, and location. Schedule an appointment with your Realtor to start looking at potential properties that meet your criteria.

What is a Buyer Representation Agreement? A Buyer’s Agency Agreement is a contract signed by a Real Estate Broker and Buyer. It forms a principal-agency relationship between the Broker and Buyer 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.

What is a Listing Agreement? A listing agreement is a contract signed by a Real Estate Broker and Seller (property owner). It forms a principal-agency relationship between the Broker and Seller in which the Broker is the Agent for the Seller, with fiduciary responsibilities to the Seller. The Broker represents the Seller under the law of agency.

What is the difference between a loan and a mortgage? A loan is a sum of borrowed money that is generally repaid with interest. A mortgage is a conditional transfer or pledge of real estate as security for the payment of a debt. Also, it is the document creating a mortgage lien.

What is a pre-approval letter? It is a letter from a lending source stating that based on the information regarding income, credit, job history etc. that you provided to them, that you will be able to obtain a loan with terms stated in the letter.

Who pays the Realtor? The seller typically pays the Realtor’s commission. Generally, the agent who lists the house “for sale” and the agent who “procures the buyer,” split the commission. The commission is paid at closing and taken out of the seller’s proceeds.

Who pays for a home inspection? The buyer hires and pays for an inspector.

What is earnest money? Money deposited by a buyer under the terms of a contract, as good faith money, to be forfeited if the buyer breaches the terms of the contract. These funds are applied toward the purchase price at closing.

How much money is needed as a down payment on real estate? Most buyers typically put down 20% of the purchase price. However, there are many “creative financing” options out there, some that may require little or no money down. It is best to talk to your lender openly about your personal situation so they can find appropriate financing for your needs. By putting at least 20% down, the buyer avoids mortgage insurance, which can save you a considerable amount on your monthly payment and over the course of the loan.

What are the differences between mortgage pre-qualification, pre-approval and final loan approval? Pre-qualification is where a lender will look at a basic copy of your credit report and use the information you supply to determine how much of a mortgage payment you can afford based on your income. No financial accounts or employment information is verified. Pre-approval is subject to the appraisal of the property you have chosen to buy. Your credit information and financial accounts are verified. Final loan approval occurs when the property has been appraised, all documentation requested from the lender has been received, and all contingencies have been met.

After you are pre-qualified, do you need to do anything else with your lender prior to making an offer on a house? No, but after the offer is accepted it is imperative that you follow through with your lender and make a formal “loan application”. At this point you will need to provide specific documents to your lender, dependent on the type of loan.

What are closing costs? Closing costs are the miscellaneous expenses that are incurred with loan processing and finalization of the real estate transaction.

Who pays for closing costs? And, just how much are closing costs? The party who pays for closing costs is negotiable in the contract, but it is assumed that the buyer will pay for them unless it is negotiated in the contract for the seller to pay or help with a portion of them. The total costs could vary, but a good estimate is 2.8% of the loan amount. Ask your lender to be sure!

I am looking at new subdivisions, and at some other resales in the area, the agents are really nice, do I still need my own agent? First of all, in virtually all situations, the buyer does not pay a commission, so the services of an agent working for you are paid for by the seller. Always remember, the listing agents represent the seller (builder) and not the buyer. Without an agent working for you, you may be missing valuable information regarding the transaction and representation of your best interests.

Should I spend the money to have a home inspection? Yes! New or resale! The $250-$300 for a professional home inspection cost could be the best money ever spent on a house. A qualified professional inspector will seek out and expose any defects or potential problems with the home. Many of these potential defects and problems can go unnoticed to the untrained eye.

What is an appraisal? An appraisal is an opinion of the value of the real estate you want to purchase. Virtually every lender will need an appraisal from a licensed real estate appraiser before the loan is approved.

What is a Sellers Disclosure? It is a questionnaire that the seller fills out that gives the buyer the history of the home.

When I find the house I want to buy, how do I know how much to offer? The most reliable indicator of a home’s value is what similar home’s in the area sold for in the past. Ask your Realtor to do a CMA in the neighborhood where you are considering purchasing. The CMA will take into account differences in features and other criteria between the sold homes and the one you want to buy, to come up with an estimated value. These factors may include size, amenities, location, condition, recent sales, competition, and other special circumstances such as a sale due to a divorce, corporate transfer, pre-foreclosure, estate sale, etc.

What is homeowner’s insurance? Do I need to buy it? It is an insurance policy that combines personal liability insurance and hazard insurance coverage for a dwelling and its contents. You are generally required to bring a pre-paid policy to your closing to cover your new dwelling.

What is an FHA Loan? A loan insured by the Federal Housing Administration (of the Housing and Urban Development.) Note: There are certain loan limits. Check with your lender on the guidelines.

What is a conventional loan? A mortgage loan not insured by the Federal Housing administration or guaranteed by the Veterans Administration. In other words no governmental agency approval is required for the lender, borrower, or property.

My lender said that I need to have an escrow account. What is that? An account held by the lender to which the borrower makes monthly installments for property taxes, insurance and special assessments, and from which the lender disburses these sums when they become due.

What is a Survey? Do I need to get one? A survey is measurement of land, prepared by a registered land surveyor. It is quite useful to have and generally recommended to have so you know where your property boundaries are. Most lenders do not require you to have a survey prior to closing on the loan for a home, but do on loans for farm and ranch lands. Be sure to ask your lender if a survey is required and ask your Realtor if one is available on the property (from the seller).

What is a FICO score? A FICO score is a credit score developed by Fair Isaac & Co. Credit scoring is a method of determining the likelihood that credit users will pay their bills. Fair, Isaac began its pioneering work with credit scoring in the late 1950s and, since then, scoring has become widely accepted by lenders as a reliable means of credit evaluation. A credit score attempts to condense a borrowers credit history into a single number. Fair, Isaac & Co. and the credit bureaus do not reveal how these scores are computed. The Federal Trade Commission has ruled this to be acceptable. Credit scores analyze a borrower’s credit history considering numerous factors such as:

  • Late payments
  • The amount of time credit has been established
  • The amount of credit used versus the amount of credit available
  • Length of time at present residence
  • Employment history
  • Negative credit information such as bankruptcies, charge-offs, collections, etc.

There are really three FICO scores computed by data provided by each of the three bureaus Experian, Trans Union and Equifax. Some lenders use one of these three scores, while other lenders may use the middle score.

How can I increase my FICO score? While it is difficult to increase your score over the short term, here are some tips to increase your score over a period of time.

  • Pay your bills on time. Late payments and collections can have a serious impact on your score.
  • Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
  • Reduce your credit-card balances. If you are “maxed” out on your credit cards, this will affect your credit score negatively.
  • If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.

What if there is an error on my credit report? If you see an error on your report, report it to the credit bureau. The three major bureaus in the U.S., Equifax (1-800-685-1111), Trans Union (1-800-916-8800) and Experian (1-888-397-3742). All of these bureaus have procedures for correcting information promptly. Alternatively, your mortgage company may help you correct this problem as well.

How much house can I afford? The answer depends on many factors; such as cash on hand, debt, income, debt to income ratios, FICO, etc.. Try using our mortgage calculator tool.

Why should I get an Inspection? If you are buying a home, you need to know exactly what you are getting. A home inspection, performed by a professional home inspector, will reveal any hidden problems with the home so that they may be addressed BEFORE the deal is closed. You should require an inspection at the time you make a formal offer. Make sure the contract has an inspection contingency. Then, hire your own certified inspector and pay close attention to the inspection report. A home inspection will look at the systems that make up the building such as:

  • Structural elements, foundation, framing etc
  • Plumbing systems
  • Roofing
  • Electrical systems
  • Termites and other pests
  • Cosmetic condition, paint, siding etc