Home Buying with Real Estate Agents to Minimize Legal Issues
Real estate agents and realtors are essential to the home buying process. They assist you with more than just finding a home. They also connect you with other professionals that are central to the success of your transaction such as:
a home inspector,
an appraiser, and
a contractor if you're going to be needing to make repairs before you go into the home.
Real estate agents and realtors can assist with the many of the steps that you will go through from writing an legal offer on the actual property to the closing. International investors and out-of-state clients can rely on agents to be their boots on the ground, when they're wanting to invest here in the states and can not see their property until closing day.
Real Estate Attorneys
Real Estate Attorneys help to ensure the property closes without any problems in the future. The first essential function is to handle the legal title. What that means is they make sure that your title doesn't have any encumbrances. They help you get title insurance for your property so that no one can come back in a couple of years when you're enjoying your house, saying that this house was promised to me by my great aunt Susan, and they make sure that you're never going to have any liability claims with the property.
The second essential function is contract review and due diligence. This is where attorneys go over literally word for word, line by line, every single detail in the contract that you signed. This is for both purchase of the property and your mortgage. Attorneys are essential because if you don't understand something about the way your mortgage works, you could find yourself in some murky legal waters in the future. So they're very, very essential to your transaction and attorneys are willing to help you even after the transaction has already taken place.
Airbnb is very popular and is used by individuals globally. While Airbnb has some pros and cons, many people are getting into Airbnb across the country and for good reason. It's a great way to generate passive income, with doing a relatively low amount of work. People are either:
Purchasing property, with traditional housing agreements, and holding these properties to renovate and rent out to visitors as they visit their state or
Leasing properties and turning around and taking their money for profit after expenses.
So both ways are working in generating good returns for investors across the country.
It's a great investment tool to add to your portfolio, but it has legal risk. Some of the risks of Airbnb or vacation rentals are unfortunately customers. Customers always posed the biggest risks in any kind of investment because they're unpredictable. As long as you have good clients, you're in the clear. But if you have clients who might be a little bit more dangerous or might like to take a little bit more risk, they're kind of opening you up to liability as well as the property management company to liability for the area in which they are renting out.
Difference between Buyer and Seller’s Agent
In a real estate transaction, there are two sides: 1) a buying side and 2) a selling side. Both sides are represented by two separate interests:
A buyer's agent represents your best interest, if you are the buyer. They will be your go between the selling party for questions, concerns, or anything that might arise out of the transaction.
The selling agent specifically represents the seller's interest. They generally will not give you a lot of information on the property and they generally are not forthcoming with information unless you ask them directly because again, their job is to represent the best interest of the seller.
Many people think a listing agent at a new construction site can serve as their agent. This is not the case. Let me repeat. This is not the case. The listing agent at a new construction site represents the builder. Their job is to represent the builder's best interest.
Buyer’s Agency is Free
So you want to make sure that you always have your own agent on the buying side and remember, buyers agency is free. All commissions are paid out of the seller's profit from the sale. So there's a six percent commission that comes out of every sale, in some cases, seven percent, and it is split equally. Between the listing agent and the selling agent. The entire six percent is paid by the seller. So don't hesitate to take on a buyer's agent because there'll be very essential in your transaction.
Home Buying Process is Important to Know
There are many steps in buying a house. The first thing to do is to shop for a buyer's agent. Once you have had a chance to interview a couple of agents at different companies, you will choose a great agent. Next, you're going to have a buyer's consultation. A buyer's consultation is just a meeting to get a better idea and an understanding of what you're looking for in your purchase such as:
the proximity to where you work,
the things that you enjoy in neighborhoods,
the type of house you want,
Visiting the Property
And once you've narrowed those things down, you're going to move on to going out and actually looking at property. When you go out and look at property, you want to choose the ones that peak your interest the most and kind of visit them and revisit them if you need to. Different times of the day, on weekends, at night so you can really get an idea of what you'll be living around when you narrow down the perfect one.
Pre-Approval for a Home Loan
It is essential that you get pre-approved first. Otherwise, there will not be a definite starting point for your process. Pre-approval is going to let you know good idea of your financial picture with your lender. It's also going to give you the opportunity to know how much home you can afford. You want to make sure that you're shopping within your budget and that you are having terms and rates favorable for what your goals are. When you're actually going out and looking at property, you know all around if it's something that's actually gonna work for you.
After you've done that and narrowed down one house that you actually want to purchase, you're going to ask your agent to help you write an offer. The agents will pull some comparable houses to make sure that what you're offering is in line with the list price, and once you have found that out and you'll arrive on a number that you want to offer and you'll present it to the selling party. They're either going to accept that offer, decline that offer, or counter that offer.
Once you guys have narrowed down all the negotiations and both parties are comfortable, you'll move on into what's called a due diligence phase. Due Diligence is when you have a certain amount of time to check out the property. During this time, you can also walk away from the property free and clear. If you're not satisfied with the findings. During this time, you'll have an inspection where you'll have a licensed inspector to come out, look through the property and make sure there aren't any serious material defects with the property that are going to probably cost you more than what you might be interested in paying.
Final Steps to Home Closing
If everything checks out there, you'll move onto the next phase. If everything doesn't check out, you'll present the sellers with your findings and you'll negotiate again about what they are willing to fix and what they're not willing to fix. Once that smooths out, you will move into your financial due diligence phase. At this time, this is when your a real estate attorney and your lender are going to be working together, working on the title work for your home. And they're also going to be making sure that they've crossed all their t's and dotted their i's for your financial picture, double checking to make sure that your job and everything checks out. They will also double check your credit score before you close. So make sure that in between the time that you have an accepted offer on a property and you actually buy the property, you don't make any drastic changes to your financial picture.
Once your financial due diligence period closes, Your lender will give you what's called a clear to close. And from there you are home free or you have to do is show up to your closing attorney's office with your favorite pen and sign on the dotted line and you're homeowner.