Steps in Buying
For many of us buying a home is the single largest investment we will ever make. Naturally, we want to make a prudent decision about the home we buy. There are numerous factors to consider, decisions to make, and options to explore. Buying a home generally involves these major steps:
Selecting an Agent
Selecting an experienced real estate professional is your first important decision. A Realtor can help you navigate the “home buying” ocean and bring you safely into “home port.” The real estate professional that you select will help you not only find the home that fits your needs and budget, but will also serve as your guide through the entire home buying process. This will include identifying geographic areas, features and types of homes in which you are interested, as well as assisting you in determining your financial qualifications, closing costs, and financial options.
At Stuart & Maury, Inc., our agents are experienced, extremely well trained, and successful at helping people find “the right home”. Our agents have also developed vital relationships with a wide range of professionals critical to making a real estate transaction run smoothly, including: home inspectors, termite companies, mortgage lenders, title attorneys and a wide range of building contractors and service professionals. Your Stuart & Maury agent will be a valuable resource of information as well as a source of home repair and improvement referrals for years to come.
In the Washington, D.C. area, real estate agents are required to provide you with an Agency Disclosure form. This form is designed to inform you about the different types of relationships you can have with your agent and with other real estate professionals. These disclosures are required by law and have been developed by the area real estate commissions for your protection.
Agents Who Represent the Seller
For over 100 years, all real estate agents involved in a transaction represented the seller. A seller’s
agent works for the real estate company that lists (offers for sale) and markets the seller’s property and exclusively represents the sellers. This means the seller’s agent has a fiduciary responsibility to the seller and his duty of loyalty is only to the seller. That means the agent’s fiduciary duties are to the seller and are mandated by law. This also means that the agent has an obligation of absolute fidelity to protect and promote the interests of the seller. The seller pays the seller’s agent fees as agreed upon in a written listing agreement between the seller
and the listing company (broker). This sometimes caused confusion among the buying public. Buyers were often surprised to learn that the agent they had been driving around with looking at homes, sharing personal and financial details, and generally be befriended by, was actually not their agent after all. This is one of the reasons
why real estate regulations now require Agency disclosure and why the concept of Buyer Brokerage has become so popular.
A cooperating agent works for a real estate company different from the company for which the seller’s listing agent works. The cooperating agent can assist a buyer in purchasing a property, but again his duty of loyalty is only to the seller. The cooperating agent’s fee is paid by the seller’s listing company via a fee sharing arrangement among cooperating real estate companies.
A buyer may enter into a written agreement with a real estate agent which provides that the agent will act on the buyer’s behalf in locating a property to buy. The agent is then known as the buyer’s agent. That agent assists the buyer in evaluating properties and preparing offers, and negotiates in the best interests of the buyer. The buyer’s agent’s fee is again paid by the seller’s listing company via a fee sharing arrangement among cooperating real estate companies. Almost all listing companies offer the same level of compensation to both buyer’s agents and cooperating agents.
That’s what buyer agency or brokerage is all about. Buyer brokerage is a technique savvy purchasers use to obtain representation in the real estate transaction. Here’s what a Stuart & Maury, Inc. buyer’s agent can do for you:
- Show you all available properties (we are members of MRIS, the largest
multiple listing service)
- Discuss and evaluate different types of financing
- Prepare detailed computer generated estimated closing cost and financial analysis worksheets
- Provide you with valuable resale market information (comparables)
- Assist in evaluating a given home relative to comparable sales
- Ask relevant questions, raise concerns, and help evaluate issues
- Refer competent, trustworthy and reliable contractors and professionals
- Prepare your offer to purchase and most importantly,
- Negotiate in your best interest
Your Stuart & Maury, Inc. agent will provide all of the above services and negotiate the best price an terms for you -our client. We call our buyer brokerage agreement buyer broker “lite” because we require only a $1 retainer fee and our clients may cancel the agreement at anytime. Also, under no circumstances may our clients be charged a fee for our services. We are to be paid by the listing company of the property you purchase. Many other firms do require
retainer fees, as well as binding contract terms for the duration of the engagement (i.e., 30,60,90 days or more), and have in the fine print terms upon which the client is actually liable to the buyer’s agent for a commission payment! If you are interested in seeing a copy of our buyer broker “lite” agreement click here.
The possibility of dual agency arises when the buyer’s agent and the seller’s agent both work for the same real estate company, and the buyer is interested in property listed by that company. In essence, in this situation “your” agent becomes the seller’s agent too. Dual agents do not act exclusively in the interests of either the seller or buyer, and therefore cannot give undivided loyalty to either party. There may be a conflict of interest because the interests of the seller and buyer may be different or adverse.
At Stuart & Maury, Inc., we don’t feel an individual agent can represent both the buyer and the seller simultaneously and so, as a policy, do not allow a listing agent to practice dual agency. Our larger competitors do however, because to rescind their status as a buyer’s agent would cause many complications and impact their agent negatively from a financial standpoint. The issue of dual agency is not a major problem for Stuart & Maury, Inc.
for two main reasons. First, we are not a huge conglomerate operating in multiple jurisdictions with thousands of real estate agents. Hence, the probability of one of our agents representing both the seller and the buyer at the same time is greatly reduced. Second, our buyer brokerage clients know that we offer a great deal of valuable
information regardless of our status as either a buyer’s or seller’s agent.
Determining Purchasing Power
Your real estate agent can assist you in determining your financial qualifications for buying a home. The first step is identifying your income, assets, and liabilities. Stuart & Maury agents have a sophisticated computer spreadsheet that can quickly summarize your qualifications as well as give a detailed breakdown of your monthly payments and all the closing costs involved. Ask one of our professional realtors to prepare a financial analysis for you.
In addition, our agents have developed extensive working relationships with local area mortgage specialists who can provide assistance and creativity in selecting just the right loan for your needs at the most competitive interest rates possible. Of course we are not compensated for the referrals we give to these mortgage professionals, but we do receive their prompt attention to our clients needs and an exceptional level of service.
Once you have selected your agent and determined your purchasing power, you are ready to begin the search for a new home. Your Stuart & Maury agent will interview you to determine your desires in a new home. We will also assist you in prioritizing those desires as they relate to your budget and comfort level.
At Stuart & Maury we have made a major investment in computer technology in order to take full advantage of the newly implemented MRIS (Metropolitan Regional Information System) computer system. This new computer system comprises the largest regional database of properties available for sale in the world. From the mountains of West Virginia to the shores of Delaware our agents can “surf” the information highway to locate prospective available properties.
Of course your search will likely be relatively narrow compared to the scope of the available MRIS database. Our agents have all undergone required computer training and can identify not only properties our firm has listed in MRIS, but also properties available from more than 100 individual brokerage firms. We cooperate fully with,
and have excellent working relationships with, all the firms who list property in the greater Washington Metropolitan area.
As you begin to look for houses, your agent will assist you with information you need about various neighborhoods, transportation, schools, styles of homes, and features available. Your agent will also educate you about local real estate practices and nuances so that you don’t experience any surprises.
Once you have identified the home that you wish to purchase, you will need to prepare a contract specifying the details of your purchase of the property. Your agent will help you to prepare the purchase contract utilizing the proper forms. These standardized forms are used in order to address all important issues and to assure that both you and the seller comply with the various laws and regulations that govern the home sale and purchase transaction.
Once your contract has been completed and signed, your agent will present it to the Seller’s agent (often times referred to as the “listing agent”) for presentation to the Seller. At this times your contract is considered an offer to purchase, and the Seller may proceed in one of two ways.
- Accept your offer as presented thereby ratifying the contract
- Modify your offer as presented, thereby making a counter offer
This would result in the opportunity for you to:
- Accept and ratify the contract
- Modify their counter-offer, thereby countering the counter
- Reject the counter-offer, thereby closing the negotiations
- Reject your offer as presented, thereby declining to negotiate further
Often times the offer you make is not quite acceptable to the Seller. Perhaps the price was too low, or the settlement date too long. Maybe the deposit was too small, or there were too many contingencies. The Seller will likely prepare a counter-offer. Once your contract has been signed and ratified (delivered) by all parties, it is important to contact a title company to begin preparations for settlement. In order to assure a smooth and timely settlement, it is imperative that the contract be forwarded to the settlement company so that they may begin gathering all the information necessary to conduct settlement. It is not necessary to await approval of your loan before forwarding the contract to the settlement office, in fact doing so may delay settlement.
Shortly after ratification of your Purchase Contract, it will be necessary to make application for the financing of your purchase. Selecting your lender and the loan officer who will oversee the approval of your application for financing is crucial to the smooth completion of the purchase. Your loan officer will be responsible for taking
your loan application and for overseeing the processing of that application as you move toward loan approval.
Working with the loan officer is the loan processor. The loan processor is responsible for gathering the information and documentation necessary to complete your application. He or she will be responsible for gathering the information and documentation necessary to complete your application. He or she will be responsible for ordering your credit report, appraisal, employment verification and several other documents.
Once this information has been received it must be organized by the processor for submission for loan approval. It is important that your Lender, loan officer and loan processor be capable and qualified. Your Realtor will be able to provide you with the names of loan officers with whom they have worked in the past and have had successful transactions. Their are multiple steps involved in the loan approval process. Please request an outline or diagram from your loan officer in order to keep track of your progress through this critical stage.
Settlement is the culmination of your hard work and the time when the purchase of your home is completed. The title company’s role is to coordinate all the parties involved in the transaction, to conduct settlement and to complete the post-settlement work. The legal aspects of your transaction will likely be overseen by an experienced team of attorneys employed by the title company.
One of the settlement company’s main duties is to review the title to the property in order to establish proper ownership of the property, identify the liens and encumbrances that exist with the property, and to insure that those liens are removed so that the Seller is conveying good and marketable title to the Purchaser. As part of the title company’s service, they will offer you title insurance which will protect you from defects and claims against your title. Ultimately, it will be the title company that takes the required documents to the local court house to record them among the public land records.
In order to complete the process of settlement the title company will record the deed, deed of trust (loan documents) at the county courthouse, audit the disbursement sheet (HUD-1), disburse all proceeds, issue title insurance, correspond with Lender, pay off the Seller’s Lender and obtain a release of the Seller’s deed(s) of trust, and disburse any funds required to be escrowed at closing.
Buying a new home could be the single most important investment you will make. It is critical that you understand the process and your options so that you can make an informed and rational decision on every aspect of the home buying process. Your choice of a real estate agent is as important as your choice of which home to buy. Your real estate agent will be the one to assist you in the choice of not only which home to buy, but your choice of lender, loan officer, and title company, as well as any other important companies and individuals you may need. Finding the right professionals who will understand your needs, preferences and resources can make the difference in whether you transaction is smooth and efficient or lengthy and plagued with problems.