Working With A Buyer Agent and Obtaining a Mortgage
The Process: Working With a Real Estate Agent
Unless you hire a real estate agent designated as a buyer agent, the real estate agent legally represents the seller. A buyer agent is an individual who is legally entrusted to represent a buyer and to maintain confidentiality. As is required by The Commonwealth of Massachusetts’ Professional Standards of Practice, a buyer will always be presented with an agency disclosure form upon their initial meeting with a Metro agent. The form explains the differences between a buyer agent, seller agent, dual agent, designated agent and facilitator. The purpose of this form is to establish the type of relationship and subsequent services that an agent will perform for a buyer. No matter what the relationship, a buyer working with a Metro Agent will always be treated fairly.
A Metro Buyer Agent Will Always:
- Provide insight of the local markets including current values and trends;
- Navigate and advise at every stage of the process;
- Provide an understanding of all contracts, forms and details of the purchase process;
- Guide you through the negotiations, due diligence and closing of your transaction.
The Process: Obtaining Mortgage Financing
Now more than ever, it is imperative to work with an experienced and reputable lender. Your rate is of course important however it shouldn’t’ be the sole factor in choosing a lender. Finding a lender that can follow through on their terms is as important if not more so than finding one that will offer you a rock bottom rate up front but not be able to close the loan. Consulting with a Metro Agent, attorney, friends and family for solid referrals of individuals, banks and mortgage lenders that have delivered successful results in the past is the best way to ensure you’ll get not only a fair rate but also a happy outcome.
If you end up interviewing more than one lender, you will want to be prepared. Some sample questions to ask the lender may include:
- Years of experience;
- Experience with your particular type of purchase, such as: first time buyer, condominium purchase, co-operative purchase, investment purchase, FHA lending, etc.
- Experience with transaction in Massachusetts and your particular city or town. An out of state lender not having a thorough understanding of the process in Massachusetts may seriously jeopardize your transaction or deposits;
- Ask for references. Upon request, an experienced lender will make references available to you of individuals that have used their services in the past.
It is important to remember not to have your credit history checked too frequently within a short period of time because it can have a negative effect on your actual credit score. Instead, have your credit checked once and provide that to a lender for the purposes of determining the rates and terms that a particular lender may offer you. You will want to obtain a pre-approval from one lender and maintain communication with the loan officer or banker you have chosen to work with prior to making an offer.
Once you have decided to move forward with a purchase, check rates AND the availability of the program to which you want to apply. Lenders have been changing programs regularly based on current economic conditions and availability of funding for mortgage loans. It is more important than ever to have full and current understanding of your loan options.
The Process: Finding A Home
When working with a Metro buyer agent, we listen to your needs and take what you say seriously. If what you’re looking for is unrealistic for the current market conditions, we may make suggestions on how to balance your needs vs your wants or make suggestions on how you can find what you’re looking for in alternative areas. What we won’t do is push a property that doesn’t meet your needs or try to make a quick sale for the sake of a collecting a commission. Our business philosophy is long term in nature and our goal is to be your local real estate expert for life. Selling you a house that doesn’t meet your requirements of a home goes against our core philosophy.
By signing up for a Metro sales account and using the free daily updates feature, you can take control of your search by having full access to every property listing on the Multiple Listing Service (MLS). But we know you don’t always have time to monitor the market yourself 24 hrs a day and that’s when you can feel confident knowing that our agents are constantly scanning the market on your behalf. We pay close attention to any new properties that hit the market matching your criteria and will notify you as soon as we find a prospective match. In many instances, we may have advance notice of a new property listing hitting the market which could be the difference between your finding the home of your dreams or being day late and a dollar short.
All Metro agents are on call 24 hours a day 7 days a week. We are available to schedule appointments day or night, on your lunch hour or after work. Finding a new home can be a full time job and if you already have a day job than finding a home can quickly become a daunting task. We work around your schedule and help to pre-screen properties before ever scheduling an appointment to see it. If there is something fundamentally wrong with a property that doesn’t fit your criteria, we’re quick to alert you of the deficiency so as not to waste time or energy thus preventing you from getting discouraged or burnt out from the process.
The Process: The Offer
Once the right property is identified, you’re ready to make an offer. The offer is a legal binding contract that your Metro agent will draw up for you. The main criteria of the offer are price, deposit, mortgage, escrow and closing. In conjunction with the offer itself are the contingencies which accompany it. These may include a mortgage contingency, home inspection contingency, pest inspection contingency, condominium document review, radon contingency, lead paint contingency or any combination of these or other contingencies. Your Metro agent will help you to understand the purpose of each contingency so you can decide which ones pertain to your individual situation.
The most important part of the offer is the value of the home. How much below (or above) the asking price you offer for a particular property will vary widely depending on the situation. For instance, you might find that a seller who has relocated to another state and had their home on the market for an extended amount of time may be willing to entertain an offer much lower than the asking price while a hot property that is undervalued may entice a bidding war in which case you’re likely to pay more than the asking price. Your Metro agent will help you to determine what the true market value of a property is by using a comparative market analysis approach. This method, combined with other objective pricing analysis will help you to feel confident you’re making the right decision.
Once the offer is presented to either the seller or listing agent, there is a deadline of usually 24 hours by which a seller must respond. They can choose to either accept, deny or counter the offer. If a counter offer is made, there is usually a verbal exchange of offers until an agreement of terms can be met. Once mutually agreeable terms are determined, a final written offer is signed by both parties and a “good faith” deposit is placed into the escrow agents account which is usually either the listing broker or seller’s attorney. The amount of the deposit may vary but for most residential properties it is a $1,000 deposit. Having a skilled, trained and experienced negotiator who knows all of the nuances of the process and the art of negotiation can mean the difference of paying a fair price with favorable terms and overpaying or possibly not coming to terms at all.
The Process: Due Diligence
Once your offer is accepted, thus begins your due diligence period which generally lasts about two weeks. This is a busy time for a buyer in which everything from the home inspection to the mortgage application are completed. The inspection(s) will usually occur within the first week after the offer is accepted. If there are issues or concerns that arise at the home inspection that weren’t previously disclosed by the seller or their representatives, than you have the opportunity to renegotiate the terms of the offer or rescind the offer altogether without penalty if the concerns are overwhelming.
Another important aspect of the due diligence period is the negotiation of the Purchase and Sale Agreement (P&S). This is the second legally binding contract that your attorney will negotiate with the sellers attorney. It extrapolates on the basic terms of the offer and incorporates additional terms to account for all situations and scenarios that could occur leading up to the closing. In conjunction with the signing of the P&S comes an additional deposit to be held in escrow. The total amount of the deposit may vary but the standard amount is usually 5% of the purchase price.
The Process: Commitment to Closing
After the P&S is executed, there is but one final contingency to be satisfied before you can pass papers and close on the property. If you’re not buying the property with cash, the mortgage contingency will remain in place until such time that your lender has completed their due diligence and provided you with a written commitment to the loan. Once the mortgage contingency has been satisfied and both parties are prepared to close, the closing will be scheduled to occur most often at the closing attorney’s office or the registry of deeds. The closing consists of the buyer signing numerous mortgage documents and the seller signing over the deed to the property at which time the sale is recorded at the registry of deeds and the buyer is given the keys to the house.