Lewis Carroll famously said, “If you don’t know where you are going, any road will get you there!” This is especially true for home buying. Personal due diligence in preparing an organized plan with a sound real estate agent will give you countless advantages as you navigate your way through the process. Why work with a licensed agent?
First and foremost, a real estate agent belongs to a professional society. This benefits you immeasurably. How? Once you have established an agency relationship, real estate experts are obligated to you by means of a fiduciary connection – an ethical association of confidence and trust for life. And through their professional connections, they have limitless resources to help you expeditiously locate the home that suits your needs. And through their professional experience, they can provide opportunities to obtain it at the right value and financing. They are also measured in the art of negotiation and have vast skill with the plethora of situations and their related forms. Most importantly, they will allow you to be ready when the opportunity arises. Too many people miss out on their dream property because they are not ready!
How can you prevent unpreparedness? Well, let’s take a look at some key points that can assist you. A contributing factor to readiness is financial preparation. You will have to understand your fiscal strengths and weaknesses. One way to do that is to obtain a pre-approval letter from a lender for the price range you qualify for. Agents have contacts with many lenders who can help you find the right loan to suit your needs.
What will lenders look at? In general, lenders traditionally look at several key factors. First, they will have to know how much cash you have access to and how readily available it is. Available cash will determine the loan type. They also look at current income and potential for income along with debt and credit history. These factors will help determine your loan to value ratio (LTV). Most lenders will allow 28% – 33% of income to be committed to a mortgage and no more than 36% – 41% combined with mortgage and credit debt.
Are you an existing homeowner? Can you own two homes at one time or do you need to make the deal contingent on selling your current home? If buying is dependent on selling your current home, you will have less leverage when negotiating for market value.
What if you can own two homes, should you buy first or sell first? Usually the best option is to put your home on the market and then start house hunting. The goal is to try and limit the time between the closings on selling your house and buying another. Your agent will be invaluable in assisting you with the options associated with this situation.
As you can see, we have just brushed the surface on several considerations that will assist with your preparations in purchasing a home. They ranged from establishing a fiduciary relationship to financing to selling and buying at the same time. Just remember, hope of getting lucky in finding a good deal is a method, but luck comes around a little more often when a “prepared buyer” works with a “real estate professional.”
image courtesy of Life Will Find A Way
I would have never guessed that working with a real estate agent could be so beneficial. It was interesting to learn that working with one can help to market and advertise your home when on the market. I hope this article can help us to avoid pricing our home at a low price.
Yup, working with a real estate agent is definitely the way to go.. I’ve heard so many stories about people trying to work out one of the biggest financial decisions they ever made with no background in the industry. Well written article, great read!
Thanks Sarah.