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As you pay down your mortgage and your home appreciates in value, you gain equity in your investment. This equity can be a valuable financial tool for the purposes of credit worthiness and financial stability.
Many people view their home as a hedge against inflation. As the dollar looses value Real Estate has consistently appreciated in value over time . As your pay check buys less, your home becomes more valuable.
MORTGAGE INTEREST DEDUCTIONS
Tax laws heavily favor home owners. Interest, the largest part of your payments, is fully deductible on your tax return. Property taxes paid for a first home or vacation home are also fully deductible. Rent is not deductible.
CAPITAL GAINS EXCLUSION
As long as you have lived in your home for at least two years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains taxes when you sell your house.
Consumers can borrow against a home’s equity for a variety of reasons such as home improvement, college, medical or starting a new business.
PRIDE OF OWNERSHIP
This is a central reason people buy their first home. Peace of mind knowing that you can decorate any way you like, paint rooms whatever color you prefer, even make architectural improvements. All this with the knowledge that these projects will increase the value of YOUR property while improving your quality of life.
Agency Relationships (Who’s Who?) Most Realtors you meet, whether at an open house or office, by default, represent the seller of the property. This means they have a duty to the seller to get the most money for the property as possible. All real estate agents are NOT the same and you, as a consumer, should be acutely aware of the legal differences. Listing Agent, Disclosed Dual Agent, Exclusive Buyer Agent; who are they? Who do they represent? What factors should be considered before selecting the appropriate agent to work for me?
The Listing agent is hired by the owner to market and sell their property. They represent the seller’s interests and have a fiduciary duty to the seller. Their obligation is to get the most money they can for the property they are listing. All agents have this duty to the seller unless you have an exclusive buyer agent agreement with a particular agent.
FIRST THINGS FIRST
Exclusive Buyer Agent
An exclusive buyer agent is one who is under contract with you to represent you, to the exclusion of all other agents. An exclusive buyer agent has a fiduciary duty to the buyer to attain the property at the lowest price and owes the highest level of loyalty to the buyer.
Disclosed Dual Agent
A dual agent is a real estate agent who has signed a buyer agency agreement with a buyer who wishes to purchase a listing held by that agent. A dual agent must be loyal to both the buyer and the seller. In Massachusetts, it must be agreed to by all parties, in writing.
The appropriate agent to represent you is the one who owes you the highest degree of loyalty and a fiduciary duty. A Certified Buyer Representative under contract with you, the buyer, assures a level playing field in negotiating and procuring your new home at the best price. Seek out a CBR to assist you.
You have a job and a life. A buyer agent’s job is to search available sources and guide you to properties that fit your particular needs. Your agent will do many things in the course of your home buying experience that will save you time and keep things moving smoothly toward a successful closing leaving you free get on with your life.
PEACE OF MIND
A third party expert can often resolve or deflect issues that might otherwise cause friction or concern in a relationship or among negotiating parties. A buyer agent will know how to get the answers to your questions.
CODE OF ETHICS & BEST PRACTICES
Massachusetts Association of Realtors Certified Buyer Agents are held to these strict standards of performance.
FULL AND EQUAL REPRENTATION
A Certified Buyer Representative will level the playing field in a Real estate transaction. Most Realtors you will encounter whether at an open house, or a real estate office, represent the seller. They have a fiduciary duty to represent the best interests of the seller, including the duty to get the most money they can for the seller’s product. You, the buyer, should also be represented by a real estate professional, working to protect YOUR best interests. The only Agent that represents your fiduciary interests, is a designated buyer agent, under contract with you, the buyer to act as their exclusive representative. An agent certified by the Massachusetts Association of Realtors who has undergone training as a Certified Buyer Representative, is the most qualified to represent you.
Your buyer agent has a fiduciary duty to you, the buyer, that means they have a pledge of ;
Obedience - to carry out all lawful instructions of the client.
Loyalty – to act in the client’s best interest.
Confidentiality – to keep client’s information or discussions confidential. This obligation survives the termination of the agency relationship, but does not apply to legally required disclosures such as known physical defects of property.
Accountability – To protect and account for all money, documents, or other personal property of the client.
Reasonable care & Diligence – to act competently with capability to perform those duties within the scope of license requirements.
OBLIGATIONS OF THE CLIENT
The Buyer will work exclusively with the agent during the term of the agreement . When interacting with other agents make them aware you have engaged the services of an exclusive buyer agent and give them the agent’s card. Buyer shall assist agent in the process of identifying, negotiating and contracting to purchase, lease or otherwise acquire property. Such assistance shall include providing agent with accurate personal and financial information and cooperation in scheduling and attending showings. Buyer shall pay for all out of pocket expenses authorized by buyer, including inspections, surveys, appraisals, title searches, etc. Buyer shall provide any lender’s letter of pre-approval to agent within seven days of receipt. Remember your agent’s area of expertise is Real Estate, they will advise you to seek professional advice in matters outside their area of expertise such as legal, financial or other professional disciplines.
Credit report, FICO score, type of mortgage, shop for the best rates and programs that meet your particular needs. Get pre-approved or pre-qualified before beginning your home search.
DETERMINE YOUR NEEDS
A certified Buyer Representative ( CBR®) will conduct an in depth needs assessment to inform them and help you clarify your particular needs.
SEARCH FOR A HOME
Your agent has powerful search tools to help identify and track properties that fit your profile. The Multiple Listing Service, Raveis Web Site and other tools are available in order to aid you and your agent in the search for the right property .
Your buyer representative will aid you in learning of zoning changes, liens, easements or any other restrictions on the ownership and enjoyment of your property.
PREPARE OFFER & NEGOTIATION
Your agent will prepare a property value study and ask the seller if there are any other offers, his motivation for selling, deadlines and more.
CONDUCT HOME INSPECTIONS
Your agent will help you take advantage of inspection contingencies in your offer and get through inspections, eliminating surprises that can derail the process .
FINAL NEGOTIATION AND P&S
Your agent will use the inspection report to help you re-negotiate, if necessary and sign the Purchase and Sale Agreement .
WALK THROUGH AND CLOSING
The final walk trough is typically done within 24 hours of closing. It is an opportunity to check that all contingencies have been met and the property meets your requirements. After final walk through to check your property, your agent will assist in a hassle free closing.
The Massachusetts Mandatory Licensee-Consumer Relationship Disclosure form is required at the outset of a business relationship between a real estate agent and client. It must be signed by the parties before an agent can discuss a particular property with a consumer. The reverse side of this form spells out the Agency Relationships we discussed earlier. The form stipulates the particular relationship of any given agreement between the parties.
2. Exclusive Buyer Agency Agreement :
If you decide to work exclusively with a buyer agent to procure your home, this agreement spells out the terms of the agreement including the length of time it is to remain in force, the commission, buyer’s obligation and other critical components of the contract.
3. Contract To Purchase :
This document, The Contract to Purchase spells out the terms of your
offer to the seller for the purchase of the property. Note that a deposit of “earnest monies” is expected at this time, usually $1000 in the form of a personal check. A 5% total deposit will accompany the Purchase and Sale Agreement within ten days. 4. Revision to Offer Form The revision to offer form is a counter-offer which codifies any changes to the original agreement in the contract to purchase. This could be a change in the offered price, in order to come to an agreeable price or a conditional change in terms, such as appliances remaining with the property. 5. Affiliated Business Arrangement Disclosure Statement This form is required as a disclosure to inform consumers that while William Raveis Home Services offers several services associated with Real Estate Acquisition, such as Insurance and Mortgage services, you are not required to use them in tandem with the other and there are other companies providing similar services.
One of the most common mistakes people make is failing to get pre-approved or pre-qualified by a mortgage lender. Seller’s and their agents are often skeptical of a prospective home buyer’s ability to obtain a mortgage when the buyer has not been pre-qualified. An offer from a qualified buyer is taken much more seriously than one from a buyer who has yet to begin the process.
NARROW YOUR SEARCH TO HOMES YOU CAN AFFORD
Putting the bulk of your earnings into your mortgage payment detracts from your quality of life. Plan carefully when buying your home and consider that your mortgage payment is not the only monthly payment associated with your home. Taxes, insurance and other monthly obligations must also be met. The mere fact that you can qualify to purchase a particular property does not mean you can actually afford it.
DO NOT RUSH THE PROCESS
Take your time! Find the right home based on sound criteria. Try to remove emotion from the process as much as you can. Remember, when you enter into a contract to purchase a particular home your chances of rescinding the contract without significant expense, is slim.
GET A HOME BUYING ADVOCATE & EXPERT
Employing the services of a realtor makes great sense, since navigating through the home purchase process can be complex and fraught with financial challenges. As the buyer, you should have your own agent who will be fully committed to your best interest. The seller’s agent will always favor the interest of the seller, your buyer representative has the effect of leveling the playing field, making sure your best interests are also represented in the transaction. The commission paid at closing includes the buyer agent’s share, so you should make sure that agent has a fiduciary duty to protect YOUR best interests.
RETAIN THE SERVICES OF AN ATTORNEY
Throughout the process legal questions can and will arise. It is a good idea to retain the services of an attorney. Do not rely on your real estate agent or accountant to answer legal questions. You may also want to have your attorney at closing to ensure your rights and privileges are fully protected during and after the closing.
When looking at open houses or talking to a seller’s agent, play your cards close to your chest. If you are crazy about the place, do not let on, be reserved. Let your buyer agent, who is looking out for you, know how you feel so they can help you aggressively pursue your goals without weakening your bargaining position.
WILLIAM RAVEIS HOME SERVICES WEBSITE The Raveis.com Website is a very powerful tool for finding many of the services and products you will need in the course of your home buying experience. Buyers and sellers alike use this valuable resource to expedite the process using the umbrella of services William Raveis Home Services offers.
The neighborhood mapping feature helps you determine the best location for you based on sound demographic, geographic and socio-economic facts. Not only locating schools, but supplying test scores and other pertinent information about the town you are considering. Many other public accommodations can be located using this resource, like public transportation, shopping and others.
The Insurance division of William Raveis can help you find the most reasonable way to insure your most valuable investment.
You can actually find your dream house right here on the neighborhood mapping feature of the website. This tool allows you to enter the criteria you choose, like price range, number of bedrooms etc. and will show you all of the listings on the MLS in that area, not just the listings held by a particular agency, but all of the listings!
One of the most analytical tools on the website is the mortgage calculator. It allows you to determine how much you can qualify for and afford. Our expert Mortgage planner can show you the intricacies of this powerful tool.