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Real Estate

Yes, you can use two realtors® to sell your house. Actually, more than two. You can use how many you’d like.

It’s what is called an Open Listing. In it, the home seller pretty much says “Hey, realtors®! Whoever brings me the best offer first, wins”, which, in paper, looks great, wouldn’t you agree? Having several real estate agents searching for potential home buyers will make the whole process faster; they’re bound to find a buyer for your house faster than if you would rely on only one. Competition is great, right?

Well, not most of the times, and definitely not in this case. The problem is that most realtors® shy away from Open Listings. At least the very good ones. They ask themselves: why waste my already scarce time to find a home buyer for this property only for the seller to choose another offer? They prefer working with an Exclusive Right to Sell Listing, which guarantees them a reward for their work.

There are two scenarios that are best suited for the use of two realtors® or more to sell a house. One is if your house is very unique. So much so that even well-established real estate agents will bid for it because they have clients looking for that house and the supply of houses like yours is almost non-existent. And the other one is if you are in a hurry. Then it *might* be a good idea because you want the most real estate agents trying to sell your house you can – even if they are not particularly the most sought-after.

So, as you can see; it’s not a matter if you can use two realtors® to sell your house. Yes, you can. But *should* you? That’s up to you to answer…

Get ready for a non-answer. Or a super-answer. It’s a half-full/half-empty situation.

The thing is that both the home buyer and the home seller pay the real estate agents involved with the sale of a property but if you want to get too technical and literal, it’s the home seller.  

Confusing? Ok, let’s go step by step of a sale and after we’ll comment and set things straight:

If Home Buyer Sam and his agent Steve close the deal with Seller Diane and her agent Roxanne, Home Buyer Sam pays up Home Seller Diane, who is obligated to give Agent Roxanne her real estate commission of 6%, that will be, then, split 50-50 with Agent Steve.

So, as you can see, the 6% commission is included in the payment done by the buyer and passed on by the seller. It’s a matter of point of view if you want to look at it as one specific party paying for that commission. And, of course, many greedy people see it this way: home buyers complain they could have spent less for the property if it wasn’t for the real estate commission and home sellers complain they could keep more of the money in their pockets if it wasn’t for the real estate commission.

But the truth is that they are both wrong. What is positively correct is the exact opposite: going about a house sale by way of a For Sale By Owner with no real estate agent involved will make you lose money. Whether you are the seller – by pricing it below (or even worse: above!) its true market value potential – or if you are the buyer – by not knowing how to detect and negotiate through the pitfalls of real estate and failing to avoid problems with paperwork and home inspection that will come to haunt you later and cost you lots of money.

Contact one of our local real estate agents right now so you don’t have to worry who pays for the real estate agent. Actually, you know what? We’re adding another answer to the question of who pays for the real estate agent! It’s not the seller or the buyer or the combination of the two… if you think about it, the agent actually pays for himself through the great work and return over your investment in hiring him! Do it!

Hey, don’t feel ashamed for not knowing what is the difference between a real estate broker and a real estate agent. This is truly one of the most common real estate confusions out there. And the reason is that telling what is the difference between a real estate broker and a real estate agent is not so simple; there’s a lot of conditions and no straight answer.

But we’ll do our best!

In a general sense, this little wordplay can help: all Brokers are Agents but not all Agents are Brokers.

And the reason why not all agents are brokers is that, typically, brokers are required to have more education and professional experience than real estate agents. All the way to certification, Brokers need to go through bigger lengths to exercise the position.

The real estate agent is the one home sellers and home buyers usually deal with. He or she is individually licensed by the state to work aiding the public in housing transactions. However, it is the broker that’s the one who’s allowed to list your property on the Multiple Listing Service (MLS) and the one who has the license to deal with all the closing process. The agent might (and will) be the interface with you, but the one allowed to sign the papers and overviewing the process is the broker. Because of that, all agents must work under brokers; otherwise, they cannot collect their commission.

However, here comes the stuff that makes it difficult to tell what is the difference between a real estate broker and a real estate agent:

While most brokers essentially work as brokers – with agents under their brokerage, making money off the bulk – there are some who prefer to fly solo and do the whole 9 yards of agency and brokerage alone. Besides that, the definition of both a broker and an agent and their responsibilities can vary from state to state. So it becomes hard to point out what is the difference between a real estate broker and a real estate agent as a whole, because Virginia Beach Real Estate Agents might not be allowed to perform the same duties as Nashville Real Estate Agents, for instance. The number of hours, classes, experience, and whatever other factor determines which is which are set in accordance to each state’s board of professional guidelines. In other words: the “broker bar” can be higher or lower from place to place.

But what’s true anywhere is that a Broker is a higher certification than an Agent.

An opinion of a properties fair market value, based on an appraisers inspection and analysis of the property.

Wondering how to calculate the fair market value of a property?

It helps if you understand that it’s all about an estimate; you’ll hardly bull’s-eye-it.

Fair market value is the highest value a home seller and home buyer can agree to in the sale of a property.

So you can read articles about how to calculate the fair market value of a property – like this one – and try to understand the many factors that can influence not only home buyers but also home sellers and kid around trying to calculate it, but the reality is that the only way of finding out the fair market value is after hand are shaken and the deal is through.

Ok, now that we’ve established that calculating the fair market value is a way of having an “idea” more than a concrete fact, let’s take a look at the most important factors when learning how to calculate the fair market value of a property:

  • Market value: how are similar properties doing price-wise? How much are its owners asking and how much is it actually selling for? An appraisal will give you this information.
  • Home seller’s expectation: what does it matter if home buyer’s will pay $300,000 if the home seller will only accept selling the home for over $4,000? Some home sellers have no problem leaving the house on the market until it reaches the point of which they think the house is worth, so any other calculation is useless.
  • Home buyer’s purchase power: like the last one, what does it matter how many rooms the house has and how much similar houses sold in the past if *right now* (for whatever reason) there’s no one with money to spend?

So if you’re wondering why should I use a real estate agent, now you can see why. With all those factors and the variations within them, it’s fundamental that you find an experienced local real estate agent because he or she will know how to calculate the fair market value of a property and guide you throughout the home buying (or selling) process.

Mortgage / Finance

You saw a property you love and want to buy it, but you have no money to do that. So you ask us how do you buy a house with no money.

Well, that’s a funny question… if you have no money at all, the only way you’re getting the house is by stealing it, and we don’t recommend that. Let’s adapt that question: in a way, most people *don’t* have enough money to buy a house; that’s why mortgages were invented. So you don’t have to pay $300,000 (or whatever the value of the house is) at once; instead, you can fraction this amount in installments.

So the question should be how do you buy a house with no money down. Because although you pay fractions, you have to pay a bigger initial installment – called down payment – so the Lender has your risk reduced, and, yes, some people can’t even afford that, so how can one buy a house with no money down? Is it even possible?

Surprisingly: yes.

First, we recommend going deep into and learning everything you wanted to know about a down payment, as there are other types of it besides the regular “here’s a large amount of cash”. There are other ways to guarantee the lender will be happy.

But aside from that, here are some mortgage options that might be good for you, depending on your specific case:

USDA Loans – does the property in question concerns rural development? If so, the US Department of Agriculture provides zero-down loans for low-to-moderate income families. And it has the best mortgage insurance premium (MIP) around. And don’t think that because your home is not a farm, you can’t benefit off of it. Most areas outside the major cities are considered rural areas to the USDA and are eligible for the loan. It’s really worth it to take a look into that.

VA Loans – are you a military veteran? VA mortgage also has no money down. And better yet; it does not require mortgage insurance, which will save you even more money. In fact, VA loans are one of the most affordable mortgage program available.

FHA Loans – Federal Housing Administration loans do have a down payment but it’s much lower than what you will normally find out there with private mortgage companies. The key here is having the best credit score you can reap the best benefits of the FHA loan, including an adjustable rate mortgage (ARM).

Additionally, if you’re a first-time home buyer, there are some first-time home buyer down payment assistance programs that can reduce the amount of money down needed.

So, to sum it all up: there is no answering to “how do you buy a house with no money”. But there are several ways you can buy a house with *not a lot of money*.

When you are prequalified, the lender gives you an estimate but does not formally commit to giving you a loan.

Wondering what is the effect of paying extra principal on a mortgage – if there’s any?

Well, it actually does have a big effect and – if you do have available funds to do it – you should definitely take advantage of that.

By paying more than your set principal, you can shorten the term of your mortgage and, with that, pay less money in the end – since the principal you pay has interest added to it. In the end, by doing that, you can save thousands of dollars in interest. Yes, because when you pay extra to your principal it’s not like you are paying an extra payment. When you pay “extra” you skip the interest that would’ve been applied to that month payment. Plus, there are other effects like building equity faster – you can get to that sweet second mortgage to invest in other stuff – and improving your credit score – because companies will take note that not only you pay it back, but you pay faster than the average.

 This is such an important action that some people nickname it “prepay”.

 But there are drawbacks to it too.

 Well, you asked what is the effect of paying extra principal on a mortgage – you never specified you wanted the positive effects only…

 The one obvious downside of prepaying your mortgage is that you have less money lying around; plus while the benefits of prepaying your mortgage are nice, they are not the quickest of investments. So, sometimes it’s best to invest elsewhere and paying down other high-interest debt. Only you (or a financial adviser) can take a look at all your financial situation to assert the best option for your case.

 With all of that considered, we believe paying extra principal on a mortgage is a good idea when done from time to time. A good idea would be to save money so once a year you pay double the amount of a principal. For instance: say your principal is $2,000 per month. Save money so that every July (or whenever is the month you usually have fewer expenses) and try paying $4,000 or more that month. With the passing of years, you will get all the positive benefits of prepaying your mortgage. Good luck!

This calculator figures your principal balance after any number of payments. Input the beginning principal amount, interest rate, length of the loan, and the number of payments to analyze. This information can be helpful when analyzing an adjustable rate product. After 3 years, your balance will reamortize to the adjustable rate. You can take the principal balance and use our payment calculator to analyze your new payment at various interest rates.

The time is here: you decided you will buy a home. Congratulations!

But soon after you get motivated to do, conscience kicks in and makes you ask yourself: how much income do I need to buy a house?

Well, it will depend first on the location of which this house is located and also on the type of house you want to buy, obviously.

If you don’t know that yet, and that decision is contingent to the available income you have, here are some informational points for you to understand how much income you need to buy a house:

You have two options when buying a home. The easiest one is when you can take the whole amount out of your own pockets at once. All you need to do is find out how much is the asking price of the home you want to buy and see if it won’t hurt your savings. This is not for everybody, of course. Considering that in 2017, the average home price in America was $398,900; you’d have to have a lot of dough to do that without suffering a huge hit on your finances, right?

The second option is the most common: through a mortgage loan in which a lender buys the house at once, and let’s you live in there while you pay monthly until that value meets whatever the value you both set in the bilateral contract of your mortgage. It is here where calculations start to kick in because it’s not so much your decision, but the mortgagee’s. So it’s important to have some of the guidelines behind their calculations to figure out not only how much income you need to buy a house but other aspects as well.

Mortgage companies use ratios to analyze your mortgage payment. The housing payment ratio (or front ratio) used in this calculation is 30%. The housing expense, or front ratio, compares your total mortgage payment to your monthly income. So the total debt expense ratio (or back ratio) is 36%. This total debt expense, or back ratio, compares your total monthly obligations including your total mortgage payment to your monthly income.

Do you know what is a credit score and how does it impact real estate? A solid credit history is of the utmost importance. If yours is weak, lenders might be wary even if your income is solid.

And you can’t forget that once you go the mortgage way, there will be a down payment, so you need to account for 3.5 to 20% of the total value of the home and add to all the calculations done to assert the ideal income to buy the specific house you want.

So, as you can see, there are no systematic formulas to answer the question of how much income one needs to buy a house. Each lender will weigh the several factors differently and propose a different strategy to cover their risk. That’s why it’s important having a real estate agent by your side to advise you of the best safest paths to success in the housing process.

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