When you are thinking about purchasing a home, it’s natural to want to just start searching the internet, go to open houses and call the phone number on “For Sale” signs. But, if you want to minimize your disappointment and make home buying a positive, relatively stress-free experience, considering the following guidelines below.
Buyers
Rent or Buy?
The first question… Should I buy or continue to rent?
I’m pretty sure I’m ready to buy. Now what?
The first thing to do once you’ve decided you want to buy a home is to determine your budget. This includes determining how much you are comfortable spending on housing costs each month, how much cash you have to put into the purchase of a home, and how much a bank/mortgage company is willing to lend you.
I've done the math to determine my monthly budget and down payment. Is it time to start shopping yet?
Almost, but first you need to talk to a lender to get pre-qualified. Before they will consider your offer, most sellers will require you to give them proof of funds (ie. bank statement) if you are paying cash for the house or a letter from a lender saying you are “pre-qualified” or “pre-approved” for a loan. This letter will include the amount and terms of the loan they have discussed with you. Pre-qualification and pre-approval are similar with the primary difference being the amount of documentation you need to provide to the lender. With a pre-qualification, generally you can just answer questions about your job status, income and debts over the phone. With a pre-approval, you usually need to provide the lender more information and documentation, so the process may take a bit longer. With either process the lender will check your credit before issuing the letter. If you have good credit and the bulk of your income comes from a long-standing, steady-paying job, then it’s likely you can get pre-qualified over the phone. However, if you’re self-employed, have recently changed jobs, or have less than stellar credit, you will likely be required to provide documentation, and the process of getting pre-approved could take a few days.
Don’t worry too much about which lender you use to pre-qualify you because you are not obligated to use that lender. You can shop around for different mortgage products and rates. Generally you have until 5 days after your Offer to Purchase is accepted to actually apply for a loan. But here’s a word of caution: Don’t use internet lenders (i.e., lenders that don’t have a local presence) for home purchases! While you may know someone who has had a good experience with lenders such as Quicken Loans, they were the lucky ones.
The main issues I have with internet lenders is getting things done on time and understanding local issues. When something goes wrong with one of these lenders it tends to go really wrong! Keep in mind that local mortgage brokers and loan officers rely on referrals from the local REALTOR® community. If they don’t provide excellent customer service then they won’t get business. On the other hand, internet providers don’t rely on their reputation, but primarily on their advertising to get business. (But if you are looking to refinance a home that you own, I think internet lenders can be a great option as they are often the least expensive.) Ask a REALTOR® for several recommendations of local lenders.
Check out our MORTGAGES pages to learn about the different types of mortgages you may want to ask your lender about.
Get Pre-Qualified or Pre-Approved!
Use a local Mortgage Broker or Loan Officer
Why can't I find a house first and then talk to a lender?
There are a few reasons that it is essential to get pre-qualified for a mortgage as your first step. First of all, there is the disappointment factor – most reasonably priced homes sell very quickly in the current market. The really desirable ones might have multiple bids within the first few days on the market. When you find the right house, you have to be ready to purchase or risk losing it. Many people will go months anguishing over the perfect house they saw but lost! It makes it harder to fall in love with another house. Another possible source of disappointment is if you thought you could get a big enough mortgage to afford a $300,000 house, but after looking at beautiful $300,000 homes, you find out you can really only get a $225,000 house. Once you start looking in your real price range, it will be hard to find something that will measure up to those more expensive homes you spent the last month viewing.
Another reason to get pre-qualified before house shopping is because, quite frankly, an experienced REALTOR® will not take you seriously if you aren’t willing to talk to a lender. Although you are serious about buying a home, many (if not most) of the prospective buyers that a REALTOR® meets are what we call “tire kickers”. These people like to imagine and pretend that they are ready to buy a home but often they are not. Although new, inexperienced REALTORS® may be willing to drive you around for days without asking you to get pre-qualified, a good agent has learned that if a buyer is serious, they won’t hesitate to meet with a lender.
Do I really need a REALTOR® when I can find houses on the Internet?
While you can find houses for sale on the internet, unless they are listed by-owner you will need a REALTOR® to show them to you. And if you want good service and good guidance, then you really should look for a single REALTOR® to help you through the process. The vast majority of home buyers will just work with whatever REALTOR® first shows them a house and makes an effort to follow-up with them. Some other buyers make the mistake of calling the listing agent on each house they want to see. The latter option is an especially bad approach. While the agent that has listed a house may be more knowledgeable about that particular house, keep in mind that they had a relationship with the seller before they had a relationship with you. Although the listing agent is required by law to disclose all known material defects that are not readily visible, do you think they are likely to tell you any negative opinions that they have of the home they have been hired to sell? Your best bet is to work with a REALTOR® who is dedicated to helping you.
Does it cost me anything to use a REALTOR®?
Traditionally, buyers have not paid REALTOR® fees directly out-of-pocket, although they are essentially paying for it in the sales price of the home. The traditional real estate model has been that the listing agent will negotiate with the seller the total amount of the commission that the seller will pay, and how much of that will go to the agent representing the buyer. That commission is paid to both REALTORS® at closing. However, this traditional model of real estate commissions is currently being challenged in more than one law suit around the country. In the traditional model, the only situation where the buyer might have to pay directly for the services of a REALTOR® is if the buyer signs an Exclusive Buyer Brokerage Agreement. In basic terms, this agreement obligates the buyer to use a particular REALTOR® for a specific time period, and in some cases requires them to pay a flat fee for the agent’s services (which may or may not be refundable if and when there is a closing). Additionally, the Exclusive Buyer Brokerage Agreement may require that buyer to pay their agent commission if the seller isn’t offering a high enough percentage. Click here to see a standard blank agreement.
What’s the difference between a real estate sales associate and a REALTOR®?
All REALTORS® are licensed real estate sales associates (aka real estate agents), but not all licensed real estate sales associates/agents are REALTORS®. To become a licensed real estate sales associate in Florida, an individual has to pass a background check, take a 63 hour course, pass a course exam and then pass a state exam. But even after they receive their license they cannot practice in the profession of real estate until they “hang their license” with a real estate broker. The vast majority of real estate brokers require their licensees to join the National Association of REALTORS®. Once the agent has joined the association they have to then take additional courses and are required to adhere to a high ethical code which is above and beyond what state law requires.
What is the difference between a real estate agent and a real estate broker?
A real estate sales associate is not licensed to practice real estate on their own; they have to place their license under a licensed real estate broker in order to be active in the business. A REALTOR® acts as an “agent” of the broker – hence the term real estate agent. The broker is the one ultimately responsible. To become a broker in Florida, an individual must first be an active real estate sales associate for at least two years, they must take a 72-hour course, pass the end of course exam, pass a state exam, and submit to a background check.
On this website when we talk about agreements with agents or agent’s commissions, please note that these agreements and commissions actually belong to the broker.
What should I look for in a REALTOR®?
When working with a buyer, a REALTOR® should be patient and a good listener. It is their job to help you find a home that will fit your lifestyle and is within your comfort level of price. A good REALTOR® will make an effort to get to know you and learn what’s important to you. They need to be available when you are. If a REALTOR® says they prefer not to work weekends and that’s the only time you’re available to see homes, it’s likely you’ll be frustrated with their availability. The real estate agent you use should be knowledgeable about the area where you want to live. If you are considering condos, they should have experience dealing with condo purchases. Essentially, the more a REALTOR® is knowledgeable about, the more benefit they can provide to you.
There exist many formal educational opportunities available to REALTORS®, some of which result in certifications such as Accredited Buyer’s Representative (ABR), Senior Real Estate Specialist (SRES), Graduate Real Estate Institute (GRI), etc. Additionally, the local REALTOR® Association offers free classes year round on a multitude of subjects such as homeowners’ insurance, contract negotiation, contract law and home owners’ associations. There is also endless information that can be gathered from research on the internet. Ask a prospective real estate agent what additional training or research they’ve done that benefits you. Have they made an effort to keep up with current mortgage options, insurance requirements, building standards, potential title issues, or contract pitfalls? The bottom line is don’t be shy about finding out what knowledge and expertise your prospective REALTOR® has to offer you.
You should also ask a prospective REALTOR® how much assistance they will give you after you are under contract to purchase a home. This is especially important if you don’t have a lot of free time or if you are moving in from out of town. There are contractual deadlines that have to be met and if you don’t meet them and the deal falls through you could lose your security deposit. The time between the signing of the sales contract and closing on the home is called the “contract to close” period. Inspections have to be arranged, the lending process has to be monitored, homeowner’s insurance must be secured, title insurance must be obtained, a survey completed, etc. Almost any agent will provide you with recommended vendors, but not all of them will go above and beyond and help you make the arrangements.
Another very important characteristic for your agent to have is tenacity. It is a rare occurrence when everything goes smoothly from the time of signing the purchase contract to the closing table. You should feel comfortable that when a problem arises your REALTOR® is someone who will jump in and take charge! And last but not least, be sure to find a REALTOR® you feel you can trust and one that you have a good rapport with. You’ll be spending a lot of time with this person so make it someone who you’ll enjoy being with.
But aren't there a lot of REALTORS® in Brevard County? How can I find the right one for me?
“A lot” is an understatement! Currently there are approximately 4,000 practicing REALTORS® in Brevard County. But don’t let that intimidate you; we have a few suggestions on how to narrow down your choices.
1) Search the internet for reviews of local agents and then read their bios and statements to see if they seem like a good fit. If you go this route, you should choose at least a couple to interview. Don’t be shy about it. Just call, email or text them, let them know your situation and tell them you are interviewing several agents. You can do a phone interview, but a brief in person meeting will allow you to better judge your rapport with them.
2) Go to open houses and ask the hosting agent questions about the house. You’ll determine fairly quickly whether they are knowledgeable and personable.
3) Ask your friends who have bought or sold recently if they loved their REALTOR®, if they did, you might also.
4) Call the phone number on a real estate for sale sign and ask for someone to show you the home. Typically the number on the main part of the sign is an office number. When you talk to the REALTOR® assigned to you, let them know that you have not yet decided on the agent you want to work with. After you meet with them and they show you the house, you should have a good idea of whether or not you feel good about them. The downside to this approach is when you call the main office from a sign, you are generally given a relatively inexperienced agent. Also, be aware that the agent that shows you the home will hope to show you more and win your business. So if you’re not sure they are the one you want to work with, you need to be upfront about that and let them know you’ll contact them if you decide to use them.
5) Call us! We would be remiss to not mention this option. And if we are not the right fit for you, we’ll refer you to an agent at another company. We can also refer you to agents outside of Brevard County and even outside of Florida.
Regardless of how you find your REALTOR® or who that person is, once you’ve told them you want to work with them, don’t contact other REALTORS®. Your REALTOR® works hard for you and they only get paid if and when you close on a home. Even if you’ve been working with your REALTOR® for months and they’ve shown you dozens of homes, if one day they aren’t available and you call another REALTOR® to show you a new property, if you end up buying that property the REALTOR® who showed it to you may be entitled to the commission, even if “your” REALTOR® writes up the offer. If your REALTOR® tells you they will be unavailable for a few days, ask them to give you the name of another REALTOR® you can call in their absence if a new home comes on the market. Your agent will have an arrangement to compensate the other agent who helps you. Having said this, if you’ve been working with a REALTOR® and then decide that you aren’t happy with them for some reason, you have the right to leave them and use someone else – just let them know you’ve decided to make a change.