Home Seller’s Guidebook Liz & Justin Thayer – Eugene Area Realtors® Re Team Thayer – Keller Williams Realty 2644 Suzanne Wy Eugene, OR 97408 541-543-7287 -Justin 541-914-4785-Liz www.TeamThayer.com Deluxe Marketing Plan – 6% or higher commission Print Advertising • Homeseekers: We run until sold • Flyers sent to every Realtor in your area • Flyers for your home (If deemed beneficial) Web Advertising • RMLS (Multiple Listing Service) • Placement on our websites; Thayersells4u.com, Teamthayer.com and integrityhomesonline.com • Listing on Cragslist.com • Listing on Homesandland.com • Listing on KW.com • Listing on Justrealestate.com • Listing on Oodle.com • Listing on Classifieds.com • Listing on Googlebase.com • Listing on Realtor.com • Listing on Registerguard.com • Listing on Zillow.com • Listing on Windowslive.com • Listing on Facebook.com • Your home will also be on every web site using the IDX system to search for homes. The number of sites using IDX searches is infinite. • Automatic Feedback System with mass email to all agents who have shown house announcing changes Optional Services • Open House with announcement on website and through Registerguard.com • Broker Open Houses • Register Guard Open House ads (When Necessary) TOP 10 Reasons to choose Team Thayer 1. We are full time real estate professionals who are in the top 10% of all agents in Lane County 2. We Have a combined 25 years of Sales & Marketing Experience so we can sell your house for more money because we know how to negotiate and overcome objections 3. We have a marketing & technology specialist within our team to customize (Pictures, Ads, Website, and Flyers). We know how to reach today’s Internet- Savvy Home Buyers with our comprehensive website, TeamThayer.com 4. We use an automated feedback system so that you & I will know what potential buyers & agents think of your home and can make any adjustments that are needed 5. We are Successful Real Estate Investors actively buying, selling, building & renting homes. We can provide our knowledge & expertise within these areas of Real Estate as an added free service. 6. We are experienced at staging homes to sell. We can offer you our free home staging advice so your home will show at it’s best 7. We work as a team so all of your needs will be met through teamwork. You will have the use of a Listing Specialist, Buyer's Specialist and Marketing Expert & Office Manager 8. We have years of experience with real estate financing, so we can assess buyer’s ability to afford your property & help them locate the best places to obtain financing 9. We keep ourselves informed on the market in your neighborhood & price range so we have the market knowledge to price your home competitively. 10. You will receive personalized service from a member of Team Thayer. We will keep you up to date on what is happening with your real estate purchase or sale. Team Thayer’s Automated Feedback System Works!! • Our promise is to put in place a feedback system that keeps you informed and in the loop with 24/7 access. • We will sell your home faster and for more money if we can make adjustments to price, staging, showing instructions, etc. based on feedback from agents and potential buyers • Both of us can see what potential buyer feedback has been left on your home, and are then able to make adjustments based on that feedback. *Above is an example of what your feedback will look like itemizing agents who have shown your property and listing their detailed feedback. GETTING YOUR HOME READY Insiide Ins de Outsiide Outs de CLEAN!CLEAN ! Have the carpet CLEAN!CLEAN Walk the property with a pad and shampooed; pencil. List anything that you think is Wax the floors; wash the walls, windows, blinds, drapes and lighting fixtures. Consider less than satisfactory without regard to engaging a cleaning service, recognizing that it cost or time. You can review the list is a justified moving expense. afterwards to determine what you can and can’t repair. KITCHEN AND BATHROOMS KITCHEN AND BATHROOMS Clear off counter tops. Leave your canisters and little else. Maximize the available counter space. These THE HOUSE THE HOUSE Take a close look as you walk the rooms should be gleaming. If unsightly, have the property. Clean anything that looks unkempt or dirty; tub re-caulked and remove mineral deposits and repair or replace anything that looks loose, dingy, rusted or broken. Make sure the door bell works. grime from the shower walls. Clean the stove, Replace a tired-looking mail box; clean the exterior microwave and refrigerator. light fixtures and wash the windows. Try to spot hanging or rusty gutters, crooked antenna, loose PRIMARY STORAGE AREA Like the PRIMARY STORAGE AREA shingles or shutters. garage, its time as come to be liberated. Remember, you can do it now and benefit with a THE YARD more attractive home on the market, or you can THE YARD Turn and weed the beds; trim the do it several months from now, in the process of trees and shrubs. Lay in ground cover. Mend the fence, fix the gate latch. Pick up litter. Consider a moving when there is no advantage. Do it now! landscaping/lawn service. REPAIRS Identify and repair dripping REPAIRS OUTDOOR FURNITURE OUTDOOR FURNITURE Examine and faucets, sticking or creaking doors, etc. When spot paint your out door furniture. If it’s rusty or un- people see areas of disrepair they begin to repairable consider disposing of the pieces. wonder whether there may be other unseen problems. FRONT ENTRY FRONT ENTRY It’s the first thing your buyers CLOSETS Remove out of season clothing. see as they stand and wait for the door to open. It’s CLOSETS worth the extra effort to spruce it up. Organize your clothing and the shoes on the floor. Remove all clutter from cabinets and THE GARAGE THE GARAGE The time has come. Discard closets. virtually everything in the garage that hasn’t been used FURNITURE The less furniture, the larger a for a year. Wash it down. FURNITURE room appears to be. A LIGHT APPEARANCE As a rule, do A LIGHT APPEARANCE • Think in terms of a home everything to lighten the appearance of the home. Raise the blinds, open the drapes and use that is sparkling clean, uncluttered the light colors. Repaint any room beginning to and spacious look shabby. TEAM THAYER SHOWS HOW USING A REAL ESTATE BROKER WORKS! The Reall Esttatte Broker iis fiive ttiimes more successfull The Rea Es a e Broker s f ve mes more successfu tthan an iindiiviiduall iin selllliing homes.. han an nd v dua n se ng homes 8% 4% 4% 15% LISTED AND SOLD BY REAL ESTATE AGENT 69% D D LD E LISTE AN SO BY R AL ESTATEAG N ET LD SO IT MYSELF R E VE O E YIN O P Y TU N D IT O R TO H M BU G C M AN TR D AG N BU SO IT M IE E T T LD YSELF IE LL TR D TO SE IT M LF T AD SE E T YSE BU H TO U AG N *Keep in mind that when you are selling your house without an agent that potential buyers will want to automatically deduct 6% off the sales price to compensate for the fact that there aren’t any real estate agents involved, and that other comparable homes most likely sold through a real estate agent. The real estate industry has proven itself to be the very best and most effective system to market residential real estate. We have marketing tools that are not available to a home owner, including; 1) the MLS, 2) Continuing advertising programs, 3) national relocation system and 4) personal contacts with many other professional real estate brokers. PREPARING FOR A SHOWING HOMES TEND TO SELL MORE QUICKLY AND FOR HOMES TEND TO SELL MORE QUICKLY AND FOR HIGHER PRICES WHEN THEY SHOW THE BEST HIGHER PRICES WHEN THEY SHOW THE BEST It’s very important that your home shows well. CLEAN AIR Keep air fresheners in CLEAN AIR We’re also aware that it can’t always be perfect. closets, bathrooms and kitchen. Be After all, you and your family must live there too. especially careful to keep kitchen odors Develop a routine that will allow you to pick up and fresh: coffee brewing or cinnamon coffee be prepared to show in a reasonable period without cakes baking in the oven have a lasting, duress…a 45 minute countdown, for example. This inviting effect. means that certain things must be done in advance. For example, beds should be made up first thing in MUSIC,, MUSIC,, MUSIC Perhaps you MUSIC MUSIC MUSIC the morning and dirty dishes placed in the dishwasher after use so that you needn’t rush can’t have something baking in the oven around tending to this matter at the last moment. every time, but soft, pleasant background This way you can prepare for each showing in an music may be very effective. organized, un-hassled routine. FIREPLACE A warm, cozy fire may be FIREPLACE BEFORE EACH SHOWING….. BEFORE EACH SHOWING… just the extra touch that turns the trick. AIR CONDITIONING If the weather is AIR CONDITIONING PICK UP EVERY ROOM Check counters, PICK UP EVERY ROOM warm and sultry, have it operating. floors, halls and stairs. Straighten up or remove newspapers, magazines, mail, toys, clothing, THE BATHROOMS Keep a set of fresh, THE BATHROOMS recreation gear, snack glasses and dishes. attractive towels in each room that you can change instantly. TURN ON ALL LIGHTS Even those in closets TURN ON ALL LIGHTS and storage rooms. Electric lights have an THE ENTRYWAY It’s the first and last THE ENTRYWAY amazing capability for creating an illusion of impression that your buyers will have of lightness, airiness and largeness. your home – make it a good one! Check it regularly for sharpness. OPEN ALL DRAPES,, SHADES AND OPEN ALL DRAPES SHADES AND BLINDS BLINDS Keep your priivatte iinfformattiion priivatte.. Keep your pr va e n orma on pr va e Do all hat you can to create a bright and light ambiance. THE BEDROOMS Make up the Before you have a showing, lock down your beds, neatly and attractively, early in the family computers, and put away sensitive morning. This is a job you don’t want to have to information, bills, and paperwork. If you do when you learn that the buyers will be there have a cabinet in your home office that within the hour. locks, use it. Although most home buyers couldn't care less whether you're carrying a THE KITCHEN Be sure all countertops are THE KITCHEN $4,000 balance on your Visa card, there are clear and “squeaky clean”. Wipe down people who pretend to be home buyers appliances. Be sure all dishes are in the simply to steal items and information from dishwasher or cleaned and put away. The sink unsuspecting homeowners. should be clear and clean. “THE SHOWING” It is always best to leave your home when it is being shown, but if you cannot then don’t worry. Everything is going to be fine. The agent has called in advance and you have mad your last WHAT SHOULD YOU DO? Read a magazine; WHAT SHOULD YOU DO? minute preparations as indicated in “Preparing for a Showing”. watch a TV program; take a walk outside; continue with a chore. Pick a room and settle RELAX There is nothing more to do. Pick up RELAX down. When they stop to preview that room, you a magazine while you’re waiting. Try to be may leave, but it’s not really necessary. After all, understanding; the agent may have several they don’t’ want to feel that they are chasing you home showings scheduled and he or she may around the house. If there’s a room that you be a bit early or late. It’s very difficult to be should try not to be in, it would be the kitchen perfectly precise. since buyers, generally, spend more time there as they evaluate appliances, counter space, THE DOG Keep Fido away. Pet lovers will THE DOG cabinets, etc. be distracted by your fun pet. For those who do not have pets, it may be bothersome or CONVERSING WITH THE BUYERS If you CONVERSING WITH THE BUYERS scary. are asked a question about the neighborhood, schools, etc. by all means answer pleasantly. CHILDREN SHOULD BE SEEN AND NOT However, avoid becoming engaged in a CHILDREN SHOULD BE SEEN AND NOT HEARD This is a new experience for the kids. conversation. Questions regarding terms of sale HEARD Naturally they are excited, but they will should be referred to the agent. If the agent is a disturb the professional flow of the showing. cooperating broker and does not have the Ask them to remain away from the agent and answers, advise him or her that I, your agent, buyers, to go outside, or to watch TV. will contact them. DING DONG Answer the door as you would INCLUSIONS The listing should clearly INCLUSIONS DING DONG identify items that are included and excluded in for any welcome guest. The agent will take the offered property. Don’t initiate conversations care of the introductions. If there is a situation about other personal property that you may be that needs mentioning, perhaps a sick child in interested in negotiating. It rarely is a deal the second bedroom, do so now. You may clincher, may be distracting, and besides there invite the agent to begin showing the home will be time to discuss this at the presentation and then you may excuse yourself. time. LOW PROFILE Discreetly remain away LOW PROFILE LET THE “PRO” WORK As much as you LET THE “PRO” WORK from the buyers. As helpful as you wish to be, love your home, don’t be tempted into doing the your presence will be intimidating. They need agent’s job. He or she has been working with the to be able to discuss the home freely with one buyers and should know what is important to another. And the agent needs to learn from the them. Whether the agent mentions your new buyers how they are responding to your home. refrigerator now, or after they leave, is in their Your presence can limit that free hands. communication as well as the buyer’s ability to envision themselves in your home. You’ve done all that you can. Now, relax as we do our job. Soon I’ll be calling you to say, “Congratulations, we have an offer to show to you”. WHEN AN OFFER IS MADE 1.. PRESENTING THE OFFER Be assured that 1 PRESENTING THE OFFER The lending institution must…. as soon as I am aware that a written offer to 1. Verify that the buyer has the ability to meet the purchase has been signed, I will contact you monthly loan payment. They will examine the immediately. The timing may be inopportune but buyer’s credit history, employment, etc. 2. Verify that the value of your home is enough to it’ usually best to move ahead rapidly to consider ensure the safety of their loan. An appraiser, the contract. Please note that when I call you, I assigned by the lender, will visit your home to may or may not yet be aware of the terms of the affirm that it’s value, based upon a study of offer. When I have the contract in hand, I will comparable homes, adequately secures the loan that study it closely and review each of the terms and they are making to your buyer. The mortgage loan conditions with you to your complete underwriter will approve the loan based upon a understanding and satisfaction. satisfactory review of the above information. B. After the loan is approved, more legal work is 2.. THREE OPTIONS TO CONSIDER When we necessary, though you will have very little 2 THREE OPTIONS TO CONSIDER involvement. The property title will be searched, consider the terms of the contract, remember that title insurance will be ordered and an updated you are in charge. You are free to deal with the survey of the property may need to be ordered. If contract as you choose, and I will be there to assist the property is a condominium, the Association you. Generally, there are three options available to may be contacted. you: C. When the paperwork is in order, the time and A. Accept the offer as presented. I will convey place of settlement will be agreed to by all parties your acceptance and the home is SOLD! involved. We will cooperate totally to insure a B. Make a counter proposal – Propose changes to smooth and timely closing. D. Prior to the time of closing , the buyer may the offer, i.e. price, personal property, closing request a physical inspection of the home. The or possession dates, etc. so that it is acceptable buyers may or may not be accompanied by a to you. Be aware, however, that when you property inspector whom they have engaged at change anything, the buyer is completely freed their expense. from the earlier commitment to buy. I will E. Keys will be delivered to the buyer at the closing, convey the terms of your proposal and the or whenever possession of the property has been prospective purchaser may either accept, agreed upon. reject or offer a new proposal F. At closing, all documents finalizing the sale will be signed by all parties and all funds will be C. Reject the offer. disbursed. MY RESPONSIBILITIES MY RESPONSIBILITIES 3.. DELIVERY OF THE CONTRACT A copy of 3 DELIVERY OF THE CONTRACT My responsibilities are not fulfilled until the the finalized contract will be delivered to both transaction is completed. buyer and seller by their respective real estate A. I will follow the transaction’s progress and agents. inform you of significant developments. B. I will do everything in my power to work with 4..FINALIZING ALL CONDITIONS 4 FINALIZING ALL CONDITIONS your lender, accountant, lawyer, etc. to ensure a timely and highly satisfactory settlement for A. BUYER’S FINANCING: If the contract you. states that the buyer has a specific number of days C. Know that, beyond the above, I am here to to secure financing for the home it is his answer any question and to resolve any problem responsibility to apply for and to secure a loan or uncertainty that you may have. I want this to commitment within the time period. be a positive experience for you. JUST HOW MUCH WILL PEOPLE BE WILLING TO PAY FOR A HOME LIKE YOURS? IT DEPENDS… …..THERE ARE MANY FACTORS! I will prepare a professional Comparative Market Analysis that will consider recently sold, comparable homes as well as homes with which your home may be competing. It will point to a marketing price that will allow you’re the opportunity to sell for top price without pricing yourself out of the market. Team Thayer says, “ Price it Right… at the Beginning!” HOMES SELL CLOSER TO THEIR ASKING PRICE DURING THE FIRST FEW WEEKS Difference between Asking and Selling Price ove time in a national study. -3.00% -5.10% -6.70% -15.20% Month 1 Months 2-3 Months 4-6 Months 6+ I will prepare a professional Comparative Market Analysis that will consider recently sold, comparable homes as well as homes with which your home may be competing. It will point to a marketing price that will allow you the opportunity to sell for top price without pricing yourself out of the market. Top 15 Things to keep in mind while preparing your Home for sale 1. De-personalize your space and de-clutter it. Box up your photos, knick- knacks & souvenirs & put them in the garage or storage facility 2. Give your front yard curb appeal by cutting the lawn, trimming the shrubs, freshening the bark & planting brightly colored flowers by the front door 3. Make your kitchen shine by taking everything off of the counters and cleaning them as well as your stove top 4. Neaten your bathrooms by removing any stains from toilets, bathtubs, sinks & showers. Make sure you put fresh, clean towels out. 5. Check the walls & ceilings for any stains or cracks. If you find them repair them and re-paint the repaired areas. 6. Replace or remove faded curtains & bedspreads with new ones that are modern and have neutral tones. 7. Remove any excess furniture from the main living areas. Remember that we are trying to create an image of spaciousness for buyers. 8. Replace all burnt out light bulbs with bright bulbs. 9. Clean out your closets & storage spaces are not overloaded so potential buyers get the impression that there is adequate storage space 10. Have your carpets shampooed or your wood floors shined up 11. Minimize any odors (pet, smoke, etc.) Odors keep potential buyers from writing offers 12. The front door helps give buyers their first impression of your home so it must be clean & in good condition. If it needs painting or refinishing, get it done!! 13. Keep draperies & shades open to let in the light. Turn on lights in rooms that are darker. 14. Keep pets either outside or in a location that potential buyers can freely explore you home without encountering your pets. 15. Allow the real estate expert to show your house. Don’t tag along. When asked answer questions candidly, but don’t offer answers to unasked questions. Documents Needed to Apply for a Mortgage When you apply for a mortgage, you will need to furnish information regarding your income, expenses and obligations. It will save a lot of time if you have the following items available: • Two most recent pay stubs • W-2s for the last 2 years • Federal Tax Returns for the last 2 years • Long-term debt information (Credit Cards, Child Support, Auto Loans, Installment Debt, etc.) Financing Process 1. Complete the loan 3. The lender may 4. A credit report and 5. The lender evaluates application. The lender 2. The lender begins provide a booklet of verification of the application, along may require an processing the loan information & employment and assets with supporting application fee. application good faith estimate of such as bank accounts documentation, and closing costs. will be required. approves the loan. 6. An estimate of your 7. The lending institution loan costs in the form orders an appraisal of the 9. The lender disburses 8. Sign closing of an initial Truth In home. Once appraisal is the funds to the completed, and documents. Lending Disclosure settlement or closing conditions met, loan (Reg Z) is issued. documents are orderd agent. 10. Appropriate 11. Seller is paid and document recorded at the title to home is the county recorder’s yours!! office. Q. What is included in my house payments? A. Principal and interest on your loan. Depending on the terms of your loan, you can pay your own taxes and insurance if you borrowed no more than 80% of the purchase price or appraised value of your home. Check with your lender to be sure. Q. What do closing cost include? A. Closing costs cover processing your loan, as well as any escrow fees. You will usually be asked to prepay any interest charges to cover the partial month in which you close, and impounds for property taxes, hazard insurance and mortgage insurance. Q. When do my mortgage payments start? A. Usually about 30 days after closing. The actual date of your first payment will be included in your closing documents. Glossary Of Real Estate Financing Terms: 203(b): FHA program Which provides mortgage insurance to protect lenders from default; used to finance the purchase of new or existing one- to four family housing; characterized by low down payment, flexible qualifying guidelines, limited fees, and a limit on maximum loan amount. 203(k): this FHA mortgage insurance program enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan. A Amortization: repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years) Annual Percentage Rate (APR): calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan. Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process. Appraisal: a document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property. Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate. ARM: Adjustable Rate Mortgage; a mortgage loan subject to changes in interest rates; when rates change, ARM monthly payments increase or decrease at intervals determined by the lender; the Change in monthly -payment amount, however, is usually subject to a Cap. Assessor: a government official who is responsible for determining the value of a property for the purpose of taxation. Assumable Mortgage: a mortgage that can be transferred from a seller to a buyer; once the loan is assumed by the buyer the seller is no longer responsible for repaying it; there may be a fee and/or a credit package involved in the transfer of an assumable mortgage. B Balloon Mortgage: a mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower. Bankruptcy: a federal law Whereby a person's assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay. Borrower: a person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms. Bridal Registry: a program supported by the FHA that allows couples to open ('register" for) a bridal registry account into which family and friends can deposit gifts of cash; the funds in this account may then be used for a down payment on a house Building code: based on agreed upon safety standards within a specific area, a building code is a regulation that determines the design, construction, and materials used in building. C Cap: a limit, such as that placed on an adjustable rate mortgage, on how much a monthly payment or interest rate can increase or decrease. Cash reserves: a cash amount sometimes required to be held in reserve in addition to the down payment and closing costs; the amount is determined by the lender. Certificate of title: a document provided by a qualified source (such as a title company) that shows the property legally belongs to the current owner; before the title is transferred at closing, it should be clear an-d free of all liens or other claims. Closing: also known as settlement, this is the time at which the property is formally sold and transferred from the seller to the buyer; it is at this time that the borrower takes on the loan obligation, pays all closing costs, and receives title from the seller. Closing costs: customary costs above and beyond the sale price of the property that must be paid to cover the transfer of ownership at closing; these costs generally vary by geographic location and are typically detailed to the borrower after submission of a loan application. Condominium: a form of ownership in which individuals purchase and own a unit of housing in a multi-unit complex; the owner also shares financial responsibility for common areas. Conventional loan: a private sector loan, one that is not guaranteed or insured by the U.S. government. Cooperative (Co-op): residents purchase stock in a cooperative corporation that owns a structure; each stockholder is then entitled to live in a specific unit of the structure and is responsible for paying a portion of the loan. Credit report: a record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history. Credit bureau score: a number representing the possibility a borrower may default; it is based upon credit history and is used to determine ability to qualify for a mortgage loan. D Debt-to-income ratio: a comparison of gross income to housing and non-housing expenses; With the FHA, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income. Deed-in-lieu: to avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process doesn't allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure. Default: the inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms. Delinquency: failure of a borrower to make timely mortgage payments under a loan agreement. Discount point: normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan. Down payment: the portion of a home's purchase price that is paid in cash and is not part of the mortgage loan. E Earnest money: money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal. EEM: Energy Efficient Mortgage; an FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase Equity: an owner's financial interest in a property; calculated by subtracting the amount still owed on the mortgage loon(s) from the fair market value of the property. Escrow account: a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc. F Fair Housing Act: a law that prohibits discrimination in all facets of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability. Fair market value: the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation. Fannie Mae: Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers. FHA: Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages. Fixed-rate mortgage: a mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change. Flood insurance: insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan. Foreclosure: a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower. Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers. G Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders. Good faith estimate: an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application. H HELP: Homebuyer Education Learning Program; an educational program from the FHA that counsels people about the home buying process; HELP covers topics like budgeting, finding a home, getting a loan, and home maintenance; in most cases, completion of the program may entitle the homebuyer to a reduced initial FHA mortgage insurance premium-from 2.25% to 1.75% of the home purchase price. Home inspection: an examination of the structure and mechanical systems to determine a home's safety; makes the potential homebuyer aware of any repairs that may be needed. Home warranty: offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner's insurance; coverage extends over a specific time period and does not cover the home's structure. Homeowner's insurance: an insurance policy that .combines protection against damage to a dwelling and Is contents with protection against claims of negligence or inappropriate action that result in someone's injury or property damage. Housing counseling agency: provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and home buying. HUD: the U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws. HUD1 Statement: also known as the "settlement sheet," it itemizes all closing costs; must be given to the borrower at or before closing. I Index: a measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage. Interest: a fee charged for the use of money. Interest rate: the amount of interest charged on a monthly loan payment; usually expressed as a percentage. J Judgment: a legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source. L Lease purchase: assists low- to moderate-income homebuyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment. Lien: a legal claim against property that must be satisfied When the property is sold Loan fraud: purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties. Loan-to-value (LTV) ratio: a percentage calculated by dividing the amount borrowed by the price or appraised value of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment. Lock-in: since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time. Loss mitigation: a process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan M Margin: an amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage. Mortgage banker: a company that originates loans and resells them to secondary mortgage lenders like: Fannie Mae or Freddie Mac. Mortgage broker: a firm that originates and processes loans for a number of lenders. Mortgage insurance: a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 20% of the home's purchase price. Mortgage insurance premium (MIP): a monthly payment -usually part of the mortgage payment - paid by a borrower for mortgage insurance. Mortgage Modification: a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments. O Offer: indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing. Origination: the process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal. Origination fee: the charge for originating a loan; is usually calculated in the form of points and paid at closing. P Partial Claim: a loss mitigation option offered by the FHA that allows a borrower, with help from a lender, to get an interest-free loan from HUD to bring their mortgage payments up to date. PITI: Principal, Interest, Taxes, and Insurance - the four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance (homeowner's and mortgage, if applicable) goes into an escrow account to cover the fees when they are due. PMI: Private Mortgage Insurance; privately-owned companies that offer standard and special affordable mortgage insurance programs for qualified borrowers with down payments of less than 20% of a purchase price. Pre-approve: lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase. Pre-foreclosure sale: allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure. Pre-qualify: a lender informally determines the maximum amount an individual is eligible to borrow. Prepayment: payment of the mortgage loan before the scheduled due date; may be Subject to a prepayment penalty. Principal: the amount borrowed from a lender; doesn't include interest or additional fees. R Radon: a radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems. Refinancing: paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate). Rehabilitation mortgage: a mortgage that covers the costs of rehabilitating (repairing or Improving) a property; some rehabilitation mortgages - like the FHA's 203(k) - allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan. RESPA: Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships S Special Forbearance: a loss mitigation option where the lender arranges a revised repayment plan for the borrower that may include a temporary reduction or suspension of monthly loan payments. Subordinate: to place in a rank of lesser importance or to make one claim secondary to another. Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. Sweat equity: using labor to build or improve a property as part of the down payment T Title 1: an FHA-insured loan that allows a borrower to make non-luxury improvements (like renovations or repairs) to their home; Title I loans less than $7,500 don't require a property lien. Title insurance: insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for homebuyers. Title search: a check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property. Truth-in-Lending: a federal law obligating a lender to give fuII written disclosure of aII fees, terms, and conditions associated with the loan initial period and then adjusts to another rate that lasts for the term of the loan. U Underwriting: the process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value. V VA: Department of Veterans Affairs: a federal agency which guarantees loans made to veterans; similar to mortgage insurance, a loan guarantee protects lenders against loss that may result from a borrower default. . The Critical Role of the Realtor® in the Real Estate Transaction Why Was This List Prepared? Surveys show that many homeowners and homebuyers are not aware of the true value a REALTOR® provides during the course of a real estate transaction. At the same time, regrettably, REALTORS® have generally assumed that the expertise, professional knowledge and just plain hard work that go into bringing about a successful transaction were understood and appreciated. Many of the most important services and steps are performed behind the scenes by either the REALTOR® or the brokerage staff and traditionally have been viewed simply as part of their professional responsibilities to the client. But, without them, the transaction could be placed in jeopardy. This publication seeks to close that gap. Listed on the following pages are nearly 200 typical actions, research steps, processes and review stages necessary for a successful residential real estate transaction and normally provided by a full service real estate brokerage and for which they are entitled to fair compensation. Comprehensiveness The list is by no means an attempt to set forth a complete list of services as these may vary within each brokerage and each market. Many REALTORS® routinely provide a wide variety of additional services that are as varied as the nature of each transaction. By the same token, some transactions may not require some of these steps to be equally successful. However, most would agree that given the unexpected complications that can arise, it’s far better to know about a step and make an intelligent, informed decision to skip it, than to not know the possibility even existed. The REALTOR® Commitment Through it all, the personal and professional commitment of the REALTOR® is to ensure that a seller and buyer are brought together in an agreement that provides each with a “win” that is fair and equitable. The motivation is easy to understand. For most full-service brokerages, they receive no compensation unless and until the sale closes. By contrast, there are firms that offer “limited services” in exchange for an up-front flat fee, or perhaps offer a menu of pay-as-you-go or “a la’ carte” options. Some even offer a sliding scale ranging from limited to full service. In these cases, the compensation of the REALTOR® is based on these reduced service levels with the seller bearing full responsibility for all the other steps and procedures in the selling process. In short, the marketplace truism is that “you get what you pay for.” A Variety of Choices The variety of brokerage business models in today’s real estate industry affords the homeowner a greater range of options than ever before. But no matter which option is chosen, before signing a Listing Agreement or otherwise engaging the services of a REALTOR® and agreeing to compensate them, homeowners should understand exactly what services will, or will not, be provided. Why Use A REALTOR®? Not every real estate agent or broker is a REALTOR®. That term and the familiar Block “R” logo are trademarked by the National Association of REALTORS® and can only be used by those are REALTOR® members through their local association of REALTORS®. While all REALTORS® are state-issued licensees as agents or brokers, the major difference between a “real estate licensee” and a REALTOR® is that REALTORS® have taken an oath to subscribe to a stringent, enforceable Code of Ethics with Standards of Practice that promote the fair, ethical and honest treatment of all parties in a transaction. Non-member licensees have taken no such oath and are not morally bound to the ethical practices and principles set for in the REALTOR® Code. For that extra measure of peace of mind, ensure the individual seeking to represent you is both a real estate licensee and a REALTOR®. Visit the Orlando Regional REALTOR® Association’s website, orlrealtor.com, for a searchable list of our REALTOR® members. The Critical Role of the REALTOR® Listed here are nearly 200 typical actions, research steps, procedures, processes and review stages in a successful residential real estate transaction that are normally provided by full service real estate brokerages in return for their sales commission. Depending on the transaction, some may take minutes, hours, or even days to complete, while some may not be needed. More importantly, they reflect the level of skill, knowledge and attention to detail required in today’s real estate transaction, underscoring the importance of having help and guidance from someone who fully understands the process – a REALTOR®. And never forget that REALTORS® are pledged to uphold the stringent, enforceable tenets of the REALTOR® Code of Ethics in their professional dealings with the public. Not every real estate licensee holds REALTOR® membership. Make sure yours does! Pre-Listing Activities 1 Make appointment with seller for listing presentation 2 Send seller a written or e-mail confirmation of listing appointment and call to confirm 3 Review pre-appointment questions 4 Research all comparable currently listed properties 5 Research sales activity for past 18 months from MLS and public records databases 6 Research "Average Days on Market" for this property of this type, price range and location 7 Download and review property tax roll information 8 Prepare "Comparable Market Analysis" (CMA) to establish fair market value 9 Obtain copy of subdivision plat/complex lay-out 10 Research property's ownership & deed type 11 Research property's public record information for lot size & dimensions 12 Research and verify legal description 13 Research property's land use coding and deed restrictions 14 Research property's current use and zoning 15 Verify legal names of owner(s) in county's public property records 16 Prepare listing presentation package with above materials 17 Perform exterior "Curb Appeal Assessment" of subject property 18 Compile and assemble formal file on property 19 Confirm current public schools and explain impact of schools on market value 20 Review listing appointment checklist to ensure all steps and actions have been completed Listing Appointment Presentation 21 Give seller an overview of current market conditions and projections 22 Review agent's and company's credentials and accomplishments in the market 23 Present company's profile and position or "niche" in the marketplace 24 Present CMA Results To Seller, including Comparables, Solds, Current Listings & Expireds 25 Offer pricing strategy based on professional judgment and interpretation of current market conditions 26 Discuss Goals With Seller To Market Effectively 27 Explain market power and benefits of Multiple Listing Service 28 Explain market power of web marketing, IDX and REALTOR.com 29 Explain the work the brokerage and agent do "behind the scenes" and agent's availability on weekends 30 Explain agent's role in taking calls to screen for qualified buyers and protect seller from curiosity seekers 31 Present and discuss strategic master marketing plan 32 Explain different agency relationships and determine seller's preference 33 Review and explain all clauses in Listing Contract & Addendum and obtain seller's signature Once Property is Under Listing Agreement 34 Review current title information 35 Measure overall and heated square footage 36 Measure interior room sizes 37 Confirm lot size via owner's copy of certified survey, if available 38 Note any and all unrecorded property lines, agreements, easements 39 Obtain house plans, if applicable and available 40 Review house plans and make copy 41 Order plat map for retention in property's listing file 42 Prepare showing instructions for buyers' agents and agree on showing time window with seller 43 Obtain current mortgage loan(s) information: companies and & loan account numbers 44 Verify current loan information with lender(s) 45 Check assumability of loan(s) and any special requirements 46 Discuss possible buyer financing alternatives and options with seller 47 Review current appraisal if available 48 Identify Home Owner Association manager if applicable 49 Verify Home Owner Association Fees with manager - mandatory or optional and current annual fee 50 Order copy of Homeowner Association bylaws, if applicable 51 Research electricity availability and supplier's name and phone number 52 Calculate average utility usage from last 12 months of bills 53 Research and verify city sewer/septic tank system 54 Water System: Calculate average water fees or rates from last 12 months of bills ) 55 Well Water: Confirm well status, depth and output from Well Report 56 Natural Gas: Research/verify availability and supplier's name and phone number 57 Verify security system, current term of service and whether owned or leased 58 Verify if seller has transferable Termite Bond 59 Ascertain need for lead-based paint disclosure 60 Prepare detailed list of property amenities and assess market impact 61 Prepare detailed list of property's "Inclusions & Conveyances with Sale" 62 Compile list of completed repairs and maintenance items 63 Send "Vacancy Checklist" to seller if property is vacant 64 Explain benefits of Home Owner Warranty to seller 65 Assist sellers with completion and submission of Home Owner Warranty Application 66 When received, place Home Owner Warranty in property file for conveyance at time of sale 67 Have extra key made for lockbox 68 Verify if property has rental units involved. And if so: 69 Make copies of all leases for retention in listing file 70 Verify all rents & deposits 71 Inform tenants of listing and discuss how showings will be handled 72 Arrange for installation of yard sign 73 Assist seller with completion of Seller's Disclosure form 74 "New Listing Checklist" Completed 75 Review results of Curb Appeal Assessment with seller and provide suggestions to improve salability 76 Review results of Interior Décor Assessment and suggest changes to shorten time on market 77 Load listing into transaction management software program Entering Property in Multiple Listing Service Database 78 Prepare MLS Profile Sheet -- Agents is responsible for "quality control" and accuracy of listing data 79 Enter property data from Profile Sheet into MLS Listing Database 80 Proofread MLS database listing for accuracy - including proper placement in mapping function 81 Add property to company's Active Listings list 82 Provide seller with signed copies of Listing Agreement and MLS Profile Sheet Data Form within 48 hours 83 Take additional photos for upload into MLS and use in flyers. Discuss efficacy of panoramic photography Marketing The Listing 84 Create print and Internet ads with seller's input 85 Coordinate showings with owners, tenants, and other Realtors®. Return all calls - weekends included 86 Install electronic lock box if authorized by owner. Program with agreed-upon showing time windows 87 Prepare mailing and contact list 88 Generate mail-merge letters to contact list 89 Order “Just Listed” labels & reports 90 Prepare flyers & feedback faxes 91 Review comparable MLS listings regularly to ensure property remains competitive in price, terms, conditions and availability 92 Prepare property marketing brochure for seller's review 93 Arrange for printing or copying of supply of marketing brochures or fliers 94 Place marketing brochures in all company agent mail boxes 95 Upload listing to company and agent Internet site, if applicable 96 Mail Out "Just Listed" notice to all neighborhood residents 97 Advise Network Referral Program of listing 98 Provide marketing data to buyers coming through international relocation networks 99 Provide marketing data to buyers coming from referral network 100 Provide "Special Feature" cards for marketing, if applicable 101 Submit ads to company's participating Internet real estate sites 102 Price changes conveyed promptly to all Internet groups 103 Reprint/supply brochures promptly as needed 104 Loan information reviewed and updated in MLS as required 105 Feedback e-mails/faxes sent to buyers' agents after showings 106 Review weekly Market Study 107 Discuss feedback from showing agents with seller to determine if changes will accelerate the sale 108 Place regular weekly update calls to seller to discuss marketing & pricing 109 Promptly enter price changes in MLS listing database The Offer and Contract 109 Receive and review all Offer to Purchase contracts submitted by buyers or buyers' agents. 110 Evaluate offer(s) and prepare a "net sheet" on each for the owner for comparison purposes 111 Counsel seller on offers. Explain merits and weakness of each component of each offer 112 Contact buyers' agents to review buyer's qualifications and discuss offer 113 Fax/deliver Seller's Disclosure to buyer's agent or buyer upon request and prior to offer if possible 114 Confirm buyer is pre-qualified by calling Loan Officer 115 Obtain pre-qualification letter on buyer from Loan Officer 116 Negotiate all offers on seller's behalf, setting time limit for loan approval and closing date 117 Prepare and convey any counteroffers, acceptance or amendments to buyer's agent 118 Fax copies of contract and all addendums to closing attorney or title company 119 When Offer to Purchase Contract is accepted and signed by seller, deliver to buyer's agent 120 Record and promptly deposit buyer's earnest money in escrow account. 121 Disseminate "Under-Contract Showing Restrictions" as seller requests 122 Deliver copies of fully signed Offer to Purchase contract to seller 123 Fax/deliver copies of Offer to Purchase contract to Selling Agent 133 Fax copies of Offer to Purchase contract to lender 124 Provide copies of signed Offer to Purchase contract for office file 125 Advise seller in handling additional offers to purchase submitted between contract and closing 126 Change status in MLS to "Sale Pending" 127 Update transaction management program to show "Sale Pending" 128 Review buyer's credit report results -- Advise seller of worst and best case scenarios 129 Provide credit report information to seller if property will be seller-financed 130 Assist buyer with obtaining financing, if applicable and follow-up as necessary 131 Coordinate with lender on Discount Points being locked in with dates 132 Deliver unrecorded property information to buyer 133 Order septic system inspection, if applicable 134 Receive and review septic system report and assess any possible impact on sale 135 Deliver copy of septic system inspection report lender & buyer 136 Deliver Well Flow Test Report copies to lender & buyer and property listing file 137 Verify termite inspection ordered 138 Verify mold inspection ordered, if required Tracking the Loan Process 139 Confirm Verifications Of Deposit & Buyer's Employment Have Been Returned 140 Follow Loan Processing Through To The Underwriter 141 Add lender and other vendors to transaction management program so agents, buyer and seller can track progress of sale 142 Contact lender weekly to ensure processing is on track 143 Relay final approval of buyer's loan application to seller Home Inspection 144 Coordinate buyer's professional home inspection with seller 145 Review home inspector's report 146 Enter completion into transaction management tracking software program 147 Explain seller's responsibilities with respect to loan limits and interpret any clauses in the contract 148 Ensure seller's compliance with Home Inspection Clause requirements 149 Recommend or assist seller with identifying and negotiating with trustworthy contractors to perform any required repairs 150 Negotiate payment and oversee completion of all required repairs on seller's behalf, if needed The Appraisal 151 Schedule Appraisal 154 Provide comparable sales used in market pricing to Appraiser 152 Follow-Up On Appraisal 151 Enter completion into transaction management program 153 Assist seller in questioning appraisal report if it seems too low Closing Preparations and Duties 154 Contract Is Signed By All Parties 155 Coordinate closing process with buyer's agent and lender 156 Update closing forms & files 157 Ensure all parties have all forms and information needed to close the sale 158 Select location where closing will be held 159 Confirm closing date and time and notify all parties 160 Assist in solving any title problems (boundary disputes, easements, etc) or in obtaining Death Certificates 161 Work with buyer's agent in scheduling and conducting buyer's Final Walk-Thru prior to closing 172 Research all tax, HOA, utility and other applicable prorations 162 Request final closing figures from closing agent (attorney or title company) 163 Receive & carefully review closing figures to ensure accuracy of preparation 164 Forward verified closing figures to buyer's agent 165 Request copy of closing documents from closing agent 166 Confirm buyer and buyer's agent have received title insurance commitment 167 Provide "Home Owners Warranty" for availability at closing 168 Review all closing documents carefully for errors 169 Forward closing documents to absentee seller as requested 170 Review documents with closing agent (attorney) 171 Provide earnest money deposit check from escrow account to closing agent 173 Coordinate this closing with seller's next purchase and resolve any timing problems 174 Have a "no surprises" closing so that seller receives a net proceeds check at closing 175 Refer sellers to one of the best agents at their destination, if applicable 176 Change MLS status to Sold. Enter sale date, price, selling broker and agent's ID numbers, etc. 177 Close out listing in transaction management program Follow Up After Closing 178 Answer questions about filing claims with Home Owner Warranty company if requested 179 Attempt to clarify and resolve any conflicts about repairs if buyer is not satisfied 180 Respond to any follow-on calls and provide any additional information required from office files.
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