Are CMA's Free?
CMA’s (comparable market analysis) ARE free.
Can you be held into a service contract or listing agreement?
Yes. Termination of agency can occur by either Acts of Parties, or by Operation of Law. Parties can terminate an
“Agency relationship” by (1) Mutual Agreement (2) Revocation by the Principle (seller) or (3) Renunciation by
the Agent, but not the legal obligation. Agents and Brokers will terminate an agreement since working with an unhappy client
will cause more problems down the road, but the Broker is not required to cancel or terminate prior to the expiration of the
listing period. Anyone who promotes an easy out listing type of agreement is preparing you for their failure to maintain your
trust. There are two different aspects to consider. One is the Agency relationship and the other is the contractual obligation
to fulfill the terms of the contract. For purposes of this question we won’t elaborate on ‘Operation of Law’
How are commissions set?
6%, 7% , as low as 4%. Commissions are negotiable. 4% listing agreements are typically limited
service/discount listings where the seller will market the property other than the MLS exposure provided by the agent. the
only thing the agent does is help with the purchase and sale agreement without representing the seller. No liability. No responsibility.
Commissions should not be added on to the value of a property. Commissions are a cost of doing business much like paying sales
tax when making a retail purchase. The amount is usually determined by the list price of the home. Properties under $100,000
are usually listed at 7% sometimes 6% but there are no set commission structures throughout the real estate community since
it would be considered a violation of antitrust laws to do so.
Are there different types of listing agreements?
Exclusive Right To Sell listing agreements are designed to protect the interests of both broker and seller. With an Exclusive
Right To Sell listing agreement the broker will be paid the commission no matter who brings the buyer to the property and
the listing broker is bound contractually to represent the interests of the seller.
The other type of listing agreement is the Exclusive Agency listing agreement. If after a house
is listed under an Exclusive Agency listing the seller finds a buyer the broker is not due a commission provided the broker
was not the procuring cause.
What is a open house?
An open house is directed to the general public. When an open house is conducted your home is
exposed to everyone who wants to see the home whether they are serious qualified buyers or just looky-loos. Some areas provide
a productive atmosphere for open house but most do not. The safety of your family and personal belongings must be considered
when your home is open to the public considering several strangers can be in your home at one time making it very difficult
for agents to manage them.
Who represents who in a real estate transaction?
It depends. A buyer could have signed a buyers agency agreement with an
agent making that agent their representative. A buyer could purchase a listing listed by their agent and upon approval create
a dual agency. A buyer could purchase a listing from an agent from the same office working under the same broker as their
buyer representative creating a dual agency with the broker. Dual agency is only allowed with prior written consent and should
be explained prior to entering into a purchase and sale. The Law Of Real Estate Agency Pamphlet must be provided prior to
entering into any agreement.
Who pays for an inspection? What kind of
inspection do I need? What does an inspection cost?
There are no requirements
from any jurisdiction for a buyer to have a Home inspection. They are simply for the buyers protection. Lenders may require
certain inspections as a condition of FHA or VA financing and the Pierce County Health Department as of January 1, 2003 requires
a Report of System Status for any property served by an on-site sewage system (septic). Very few buyers purchase homes today
without a Home inspection. They usually consist of a non invasive visual inspection of the structure and it’s mechanical
systems. A report is provided by the inspector and you are left with the option of purchasing the home in it’s current
condition, terminating the transaction based on the report, or asking the seller to make repairs. This combination of options
may vary on your written offer. Remember, a seller does not have to make repairs based on a buyers home inspection.
Pest inspectors must be licensed with the Washington State Department of Agriculture. They will
look for conductive elements that create moisture problems and dry rot attracting pests like termites, carpenter ants, and
wood destroying beetles. If any issues are not repaired the inspector will not issue the Clear report. There are several other
types of inspections that may be required based on your financing. Roof inspections and certifications, chimney inspections,
foundation and drainage inspections, just to name a few. Typically the buyer pays for the inspections but when an offer is
made on a home anything goes! An offer can consist of anything.
about offer/counter offer?
an offer to purchase is written there are some factors to consider, many of which will be handled by a competent Broker. First,
the Broker will determine if the party/parties are competent. A person must be Mentally Competent in order to have the capacity
to contract. If the party/parties are temporarily incompetent (under the influence of alcohol) the contract could be voidable
if he or she takes legal action in a reasonable time after he or she regains competency. The party/parties must also have
Capacity. This is the first requirement. The party/parties must be at least 18 years of age. There must also be mutual consent
for a contract to be valid and is presumed upon the signing of a contract. There must be "Delivery" of the signed
offer/counteroffer within the proper time frame or there is no acceptance. This is very important since an offer/counteroffer
can be revoked prior to acceptance. Flexibility in this case will usually prevail between buyer and seller. Sellers or buyers
do not need to respond to an offer or counteroffer. If an offer/counteroffer, you may choose to ignore the offer/counteroffer
and the time frame for response or acceptance will elapse terminating the offer/counteroffer.
An offer/counter offer can also be rejected either in writing or verbally. When any terms or conditions of an offer
are changed and delivered back to the offeror, a counter offer is made. At that point the original offer is void and the new
offer can be accepted, rejected, ignored, or countered again. This offer/counteroffer process can continue until mutual acceptance
is reached or until either or both parties find no common ground.
The 3rd requirement
for a valid contract is a Lawful Objective. Both the purpose and the consideration of the contract must be lawful. The fourth
element is Consideration. Consideration is something of value exchanged by the contracting parties (the buyer promises to
pay a certain price and the seller agrees to convey title). The fifth element is the Writing Requirement. The Statute of Frauds
is a state law that requires some contracts to be in writing. Each state has it’s own Statute of Frauds and can vary
from state to state. Washington Statute of Frauds require that any agreement to convey real property, any agreement to assume
the dept of another, and any agreement to employ an agent for compensation to sell, buy, lease or exchange real property (listing
agreement) must be in writing.
What is a contingency?
A contingency is a condition or a provision in a contract that
depends on the occurrence or non occurrence of an event. Just about anything could be a condition. EXAMPLE: This offer is
contingent upon the buyers approval of the zoning restrictions that affect this property. This of course is an example of
a possible contingency. More common contingencies are, Home Inspection, Financing, House Sale Contingency, Septic Inspection,
Homeowners Insurance, Review of Neighborhood CCR&R (covenants, conditions, and restrictions) ect.How much earnest money
A deposit by a prospective buyer to show good faith. There are many
misconceptions regarding earnest money. Typically a check is written during the time a buyer writes an offer. The earnest
money is deposited either in a brokers trust account or an escrow companies trust account and will go toward the purchase
of the home or be a refund if V.A. financing is used. It is not there for a seller to simply retain if the buyer doesn’t
buy the house. It is there for a seller to retain as liquidated damages if the buyer fails to complete the transaction without
legal reason. This is a simplistic explanation of earnest money and is not intended to be legal advise. Without a signed rescission,
court order, or arbitrated disposition the broker or escrow company will not release the earnest money to either party particularly
if there is a dispute. If a seller desires to retain the earnest money you must prove that the buyer is in default. The amount
of earnest money usually depends on the price of the home being purchased. The higher the price of the home, the higher the
amount of earnest money.
What are closing costs?
Title insurance is a closing cost to a seller for providing
clear title to a buyer. It assures the buyer that there are no clouds on the title or liens prior to the transfer of ownership.
Title insurance is also provided to the mortgage company from the buyer. Washington is a Title Theory State. In a Title State,
the lending institution holds title to the property in the name of the borrower through a Deed of Trust. If a buyer buys with
cash then the policy will be provided by the seller only. The Escrow fee is usually split between the buyer and seller. If
V.A. is used then the seller will pay the entire fee. This fee is payment to the escrow company for providing the closing
services. The escrow company does not represent anyone in a transaction. They are a third party that provides a mutual service.
Another closing cost for a seller is the county excise tax. Buyers may have a 1% loan origination, appraisal, credit report,
flood determination, processing, and administration fees. All part of doing business.
When does closing occur?
occurs when the money is disbursed to the seller and the recording takes place. Typically a day or two after buyer and seller
sign the closing paperwork, and the lender completes there final review process.
What about first time home buyers?
Generally speaking, First Time Homebuyers are no different than any other homebuyer. These programs
are rarely, if ever, exclusive to people that have never owned a home.
Obtaining a Mortgage Loan is similar to getting
any other loan. How much you receive in financing is always relative to how much you can afford to pay, which is relative
to how much you earn. Your ability to pay is only asimportant as your desire to pay. A check on your credit history is often
a good indicator of this desire. Finally, there must be some type of collateral for the loan. Mortgage loans are attached
to the home you are buying.
Most mortgage loans do require a Down Payment. 100% financing is available in some
cases. You can choose to finance your home with one loan, a combination of two loans or receive a “Gift” or “Grant”
for the Down Payment. Each option has advantages and disadvantages.
sets interest rates?
The Federal Reserve Board, is a non-partisan entity entrusted to set the nation’s
monetary policy. Their efforts are aimed at maximizing economic growth and minimizing threats to the nation’s economy.
The most obvious tool at their disposal is setting the interest rate that the Federal Government charges when it loans money
from the Federal Reserve. Lowering rates is an incentive to the private sector to borrow more money and invest those dollars
in the economy.
Interest rates are currently at 40-year lows. They were lowered 11 times in 2002 in an effort to
stimulate economic growth. Growth is good, too much growth can cause runaway inflation.
Can I use V.A.?
The first thing to do is find out if you are eligible to buy a home using VA insured financing.
Basically if you served in any branch of the military for 24 months and were not dishonorably discharged, you should be eligible.
The length of active duty requirement is less for War Time veterans and veterans that served prior to 1980. Active duty personnel
are also eligible. Go to http://www.homeloans.va.gov/eligibility.htm for full details.
VA financing allows for financing 100% of the Purchase Price for your Primary
Residence. Your eligibility is only available for one home at a time. You may own other properties, but VA will only allow
financing on Primary Residences.
Even though you have V.A eligibility and your loan is zero out of pocket for you,
there is still the closing costs to facilitate the transaction on your behalf. Typically, closing cost are from 2.5% - 3%
of the sales price for both buyer and seller.
If you think you have eligibility, fill out form VA 26-1880 and include
a copy of your DD 214. The process can be handled by your Mortgage Lender and can take 2-3 weeks to complete.
for VA financing is similar to other mortgage loan programs; Employment and Income are verified, Credit is checked and the
application is sent to the loan underwriter. VA, like most mortgage financing programs, requires a solid credit history for
the previous 24 months, it differs however, in that VA does have minimum credit scores. Whether your credit is satisfactory
for VA can often be determined only through a complete underwriting of the loan application.
VA is a fair, easy
way to finance the purchase of a home.