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As a homebuyer in today’s fluctuating market, you might be hesitant to commit until interest rates stabilize. However, a temporary buydown could be your secret weapon for making homeownership more affordable now while keeping your options open for the future.

How Temporary Buydowns Work to Your Advantage

A temporary buydown, like a 2/1 buydown, lowers your interest rate for the first two years of your mortgage. This means lower monthly payments when you need them most … right after purchasing your home.

The Hidden Benefit: Potential Refund on Early Payoff

Here’s an exciting feature many buyers don’t know about: If you sell your home before the buydown period ends, you may be entitled to have the unused portion of the buydown applied to your loan principal. This means you don’t lose out on the benefits you’ve paid for, even if your situation changes.

Flexibility in a Changing Rate Environment

If interest rates continue to drop, you can still take advantage by refinancing. The temporary buydown gives you lower payments now, and you might even get a bonus reduction in your loan balance if you refinance early.

To illustrate how a 2/1 buydown works and its potential benefits, let’s consider a practical example:

• Home purchase price: $400,000
• Down payment: 10% ($40,000)
• Loan amount: $360,000
• Loan term: 30 years
• Current mortgage rate: 7.04%
• Buydown cost: $8,406

Year 1: Maximum Savings

• Buydown rate: 5.04% (2% lower than the standard rate)
• Monthly savings: $463.40

Year 2: Continued Benefits

• Buydown rate: 6.04% (1% lower than the standard rate)
• Monthly savings: $237.12

The Refinance Opportunity

Suppose rates drop after the first year, prompting our homeowner to refinance. Here’s where the unique advantage of a temporary buydown comes into play:

Unearned buydown fee: $2,845.44

Benefit: This amount is applied to reduce the principal balance of the existing mortgage

This example demonstrates how a 2/1 buydown can provide immediate savings and flexibility. Even if market conditions change and refinancing becomes attractive, the homeowner doesn’t lose out on their initial investment in the buydown. The unused portion of the buydown fee effectively becomes a bonus principal payment, further enhancing the benefits of refinancing.

By understanding these mechanics, homebuyers can make informed decisions about whether a temporary buydown aligns with their short-term affordability needs and long-term financial strategy.

While this feature of the unused portion of the buydown applied to your loan principal is common, it’s crucial to verify the specific terms with your lender. Every loan agreement can be different, so always discuss the details of your buydown and refinancing options with your mortgage professional.

By using a temporary buydown, you can make your dream home more affordable today while keeping the flexibility to benefit from future rate drops. It’s a smart way to enter the market with confidence in these uncertain times.

The Multiple Listing Service, through its collaborative approach, has streamlined property sales and increased efficiency beyond what individual agents or companies could achieve independently. This cooperative system enables more transactions to be completed in less time, benefiting both real estate professionals and their clients.

These comprehensive databases, maintained by real estate professionals, provide a centralized platform for property listings, creating a more efficient and transparent marketplace. By facilitating the sharing of information between real estate agents, MLSs have become an indispensable tool in the home buying and selling process.

For buyers, MLSs offer unparalleled access to available properties in their desired area. Through their real estate agent, buyers can easily search for homes that meet their specific criteria, including price range, location, size, and amenities. This streamlined approach saves time and energy, allowing buyers to focus on properties that truly match their needs and preferences.

Sellers benefit from the extensive exposure an MLS provides for their property. When a home is listed on an MLS, it becomes visible to a vast network of real estate professionals and potential buyers. This increased visibility often leads to faster sales and potentially higher offers, as more interested parties become aware of the property.

The MLS system also promotes fair competition among real estate agents, which ultimately benefits both buyers and sellers. By consolidating listings from various brokers and agencies, MLSs create a level playing field where properties can be evaluated based on their merits rather than the size or influence of the listing agency. This transparency helps ensure that buyers have access to all available options and that sellers’ properties receive equal consideration.

Another advantage of MLSs is the accuracy and reliability of the information they provide. Real estate professionals are required to adhere to strict guidelines when submitting listings, ensuring that the data is up-to-date and comprehensive. This reliability gives buyers confidence in the information they’re using to make decisions and helps sellers present their properties in the best possible light.

MLSs also facilitate cooperation between real estate professionals, which can lead to smoother transactions for both buyers and sellers. MLSs encourage agents to work together to close deals, resulting in a more efficient process for all parties involved.

For sellers, the MLS system often translates to reduced time on the market. The widespread exposure and efficient matching of properties to potential buyers can accelerate the selling process, helping homeowners move on to their next chapter more quickly. Additionally, the competitive nature of the MLS can sometimes drive-up prices, potentially resulting in better offers for sellers.

Multiple Listing Services offer numerous benefits to both buyers and sellers in the real estate market. By providing a centralized, accurate, and comprehensive database of property listings, MLSs streamline the home buying and selling process, increase exposure for sellers, and offer buyers a wealth of options. This powerful tool continues to shape the real estate industry, making transactions more efficient and transparent for all involved parties.

When a home appraises for less than the sales contract price, it can create challenges for both buyers and sellers. However, there are several options available to move forward with the transaction.

One of the most common solutions is to renegotiate the sales price based on the appraisal results. In this scenario, the seller may agree to lower the price to match the appraised value, allowing the deal to proceed without requiring additional funds from the buyer.

Alternatively, both parties could meet in the middle by agreeing to split the difference between the appraised value and the contract price. For example, if there’s a $20,000 gap, each party could cover $10,000.

If the seller is unwilling to reduce the price, the buyer has options to make up the difference. One approach is for the buyer to bring additional funds to closing to cover the gap between the appraised value and the contract price. This would increase their down payment but allow the sale to proceed at the agreed-upon price.

In some cases, challenging the appraisal might be appropriate. The buyer can request a second appraisal or a "re-review" of the original appraisal from their lender, especially if there were factual errors in the initial report. If time allows, waiting for a comparable home to sell at a similar price and then requesting a new appraisal might yield a higher value.

The presence of an appraisal contingency in the contract provides important protections for buyers. With this contingency in place, buyers can typically renegotiate the price or terminate the contract without penalty if the appraisal comes in low. However, buyers should be cautious about waiving appraisal contingencies, as this could leave them obligated to cover any shortfall or risk losing their earnest money deposit.

In rare cases, more unconventional approaches might be considered. For instance, a seller might offer a rent-to-own scenario where the buyer rents the property until they can satisfy the difference between the sale price and appraisal. Additionally, seller financing could be an option where the seller offers to finance the gap amount privately outside of the main mortgage but with complete disclosure.

Ultimately, when faced with a low appraisal, open communication between all parties is crucial. Buyers and sellers should work closely with their real estate agents and lenders to explore the best solution for their specific situation. While a low appraisal can be a hurdle, it doesn’t necessarily mean the end of the transaction; with flexibility and creativity, many deals can still move forward successfully.

Homeownership has long been considered one of the most effective ways to build wealth, and for good reason. According to data from the Federal Reserve Economic Data (FRED), homes have appreciated at an average rate of 5.56% over the past 60 years, consistently outpacing inflation, which has averaged 3.7% over the same period.

This significant difference is one of the key reasons owning a home is a powerful wealth-building tool. When combined with mortgage amortization, homeownership not only increases your net worth over time but also provides the added benefit of an asset that you can live in and enjoy with your family and friends.

Real Estate’s Proven Track Record of Appreciation

One of the most compelling aspects of real estate is its historical trend of appreciation. As noted, homes have appreciated at an average rate of 5.56% over the past six decades. This means that even in the face of economic downturns or short-term market volatility, real estate generally trends upward over time. When you consider that inflation during this period averaged 3.7%, real estate has consistently provided a better return on investment than simply holding cash or many other types of investments.

This steady appreciation adds to the long-term value of homeownership. By purchasing a home, you’re investing in an asset that will likely grow in value year over year, helping you build wealth with relatively little effort or risk. Unlike more volatile investments, like stocks, real estate offers a tangible, reliable path to financial growth.

The Wealth-Building Power of Mortgage Amortization

A key driver of wealth accumulation through homeownership is mortgage amortization. Every time you make a mortgage payment, a portion of that payment reduces your loan’s principal balance, which increases your equity in the home. Over time, as you pay off more of the mortgage, your equity grows�giving you a larger and larger ownership stake in the property.

This is where the significant financial advantage over renting comes into play. While renters make monthly payments without gaining any equity, homeowners are building wealth with each payment they make. As your home appreciates and your mortgage balance decreases, your equity�your ownership stake�compounds. This gradual wealth-building process, which takes place without needing extra effort or complex financial knowledge, can transform the financial future of homeowners.

The Homeownership Wealth Gap: 38 Times Higher Net Worth

The financial benefits of homeownership are clear when looking at the net worth difference between homeowners and renters. According to the Federal Reserve Board’s Survey of Consumer Finances, the median net worth of a homeowner is $396,000, compared to just $10,400 for renters. That means the typical homeowner has a net worth nearly 38 times that of a renter.

This wealth gap underscores how transformative owning real estate can be. For most people, their home is their largest asset, and the appreciation and equity-building power of real estate make it the cornerstone of personal financial growth. By paying into an appreciating asset, homeowners increase their wealth with each passing year, while renters see little to no financial return from their housing expenses.

Enjoying Your Investment While It Grows

One of the unique benefits of homeownership, compared to other forms of investment, is that it’s an asset you can live in and enjoy. Unlike stocks, bonds, or retirement accounts, which remain abstract until they’re cashed out, your home is a place where you can build memories, create a comfortable living space, and enjoy your daily life. You can personalize it, share it with your loved ones, and experience the personal satisfaction that comes with owning your space.

While your home appreciates and your equity grows, you also benefit from the security and stability that homeownership provides. Owning a home allows you to settle in a community, avoid rent increases, and make decisions about your space that align with your lifestyle and needs. The emotional and social rewards of owning a home go hand-in-hand with the financial gains, offering a holistic benefit few other investments can match.

Leveraging Your Equity for Future Financial Goals

As your home appreciates and your equity increases through amortization, you gain more financial flexibility. Homeowners can tap into their equity to fund significant expenses, such as home improvements, education, or even starting a business. Home equity loans or lines of credit allow you to borrow against the value you’ve built up in your home, often at lower interest rates than other types of loans, providing you with access to funds for various needs.

This ability to leverage your home’s value can be a powerful tool for managing your financial goals. It allows you to maximize the wealth-building potential of your home, using it as a springboard for other investments or life milestones.

A Legacy of Financial Stability

For many homeowners, the benefits of homeownership extend beyond their own financial well-being. A home can become a legacy for future generations, providing children and grandchildren with a solid financial foundation. Whether passed down or sold, a home can play a critical role in ensuring long-term family wealth and stability. Real estate, with its ability to appreciate over time and offer a stable form of investment, is often a key part of many families’ long-term financial plans.

Owning a home is not only about having a place to live�it’s a proven method for building wealth. With an average appreciation rate of 5.56% over the past 60 years, homes offer returns that consistently outpace inflation.

The power of mortgage amortization helps homeowners build equity, steadily increasing their net worth. As highlighted by the Federal Reserve Board’s latest data, the typical homeowner has a net worth 38 times that of a renter�a testament to the financial advantages of homeownership.

And beyond the financial rewards, owning a home provides a place to live, create memories, and share with loved ones, making it a uniquely fulfilling investment that benefits both your financial future and your personal life.

Pricing your home correctly is crucial when you’re ready to sell, but it’s not always easy to determine the right asking price. While you want to maximize your return, overpricing can lead to a stagnant listing and potentially less money in your pocket.

As a homeowner, it’s important to recognize the signs that your property might be priced too high for the current market. Let’s explore several key indicators that suggest your home may be overpriced, helping you make informed decisions and adjust your strategy if necessary.

By understanding these signs, you can ensure your home is competitively priced to attract potential buyers and secure a timely sale.

• The home is priced significantly higher than comparable properties in the neighborhood.
• The home’s upgrades or unique features don’t justify the price difference from comparable properties.
• There have been few or no showings despite being listed for several weeks.
• Open houses have very low attendance or no visitors at all.
• There’s little to no online traffic or inquiries about the property.
• The property has been on the market much longer than the local average days on market.
• The home hasn’t received any offers after being on the market for a month or more.
• The seller has only received low-ball offers well below the asking price.
• Similar homes in the area are selling quickly while this one remains unsold.
• Feedback from showings consistently indicate the home is overpriced.
• The property has expired and been relisted without a significant price adjustment.
• Appraisals for potential buyers have come in well below the asking price.

Recognizing these signs of overpricing is crucial for a successful home sale. If you’ve noticed several of these indicators applying to your property, it may be time to reassess your pricing strategy.

Remember, the goal is to find the sweet spot where your home is competitively priced yet still reflects its true value. Consulting with an experienced real estate professional can provide valuable insights into current market conditions and help you adjust your price effectively.

By addressing overpricing promptly, you can reinvigorate interest in your property, potentially leading to more showings, offers, and ultimately, a successful sale. Keep in mind that a well-priced home not only sells faster but often results in a better overall outcome for the seller.

Don’t let an inflated price tag hold your property back … be proactive, stay informed, and be willing to adapt to the market realities for the best possible results in your home-selling journey.

If you haven’t decided to sell yet but would like some information, contact me for a pre-listing preparation consultation.

Finding your dream home is exciting, but securing the right mortgage is equally crucial for long-term homeownership. This is where a mortgage lender becomes your financial ally. They’ll help you navigate your options and determine how much you can borrow.

Now, who exactly is a lender? They’re the financial wizards who provide the funds for your mortgage. Think of them as a key player on your homebuying team, helping you find the right loan, guiding you through the application process, and ensuring you have all your ducks in a row paperwork-wise.

You’ve got four main types of lenders to choose from:

• Banks: The traditional option, offering loans along with other banking services.
• Credit unions: Member-owned institutions, often serving specific groups or communities.
• Mortgage brokers: Independent pros who shop around different lenders for you.
• Non-bank lenders: Companies that offer mortgages but aren’t traditional banks.

Your real estate agent can be a fantastic resource when it comes to finding a lender. They often have relationships with local lenders who are familiar with your desired area. These local lenders typically understand the nuances of the local market better than online lenders, which can be a real advantage. Don’t hesitate to ask your agent for recommendations!

When you’re looking for a lender, it’s smart to shop around. Compare different options to find the best deal and service. Remember, you want someone who offers competitive rates AND great customer service. Buying a home can be stressful, so having the right team makes a big difference!

While shopping for a mortgage, it’s important to remember that finding the lowest interest rate isn’t the only factor to consider. Your credit score plays a significant role in determining the rate you’ll actually pay, and this can only be accurately assessed through a thorough examination of your financial situation.

Beyond the rate, consider other crucial aspects such as the lender’s track record for closing on time, their ability to deliver the quoted rate without last-minute changes, and their transparency regarding closing costs. A reliable lender should provide a clear breakdown of all fees and avoid surprise costs at closing.

Additionally, consider the lender’s responsiveness, their willingness to explain complex terms, and their flexibility in offering loan products that suit your specific needs. Remember, the cheapest option isn’t always the best – a slightly higher rate from a lender who provides excellent service and a smooth, stress-free closing process could be more valuable in the long run.

One last thing: lenders and servicers play different roles. Your lender provides the initial loan, while a servicer handles your payments after you’ve closed on the house. Sometimes they’re the same company, but often they’re not. Don’t worry if your loan gets sold to a different servicer – it’s pretty common and nothing to stress about.

If you ever have trouble making payments, reach out to your servicer right away. They’re there to help you explore your options and keep you in your home.

Remember, your real estate professional is there to guide you through this process. They can help connect you with trusted local lenders who understand your specific market, potentially giving you an edge in your home-buying journey!

Buying a home is just the beginning of homeownership and it’s important to have good resources for all the different things that it involves. That is why you’re going to want to keep the communication channels open between you and your agent.

Follow your real estate professional on social media.

Give your agent a review on Google or Facebook to share the great service you received.

Mark email on your "safe sender’s list" so you won’t miss newsletters, market stats, and other important information about maintaining a home and general market conditions.

When you need an answer about anything having to do with real estate or homeownership, who do you call? Consider your agent your Real Estate Directory Assistance Service. If your agent doesn’t have the answer, they can point you in the right direction.

Feel confident to recommend your friends and relatives to your agent. They’ll appreciate working with a professional you trust, and your agent will be grateful for the referral.

Close to nine out of ten buyers and sellers are satisfied with the service from their agent and say they’ll use them again and refer people to them. When the time comes to move again, make the first call to your trusted agent.

Helping homeowners when they buy, sell, and all the years in between.

Just a few of the things your agent can do for you when you’re not buying or selling a home are:

• Area sales activity on current homes for sale and sold homes
• Current market value of real estate you own
• Service Provider Recommendations
• Help in challenging tax assessment
• Advice on home improvements
• Conversations you should have with your insurance agent
• Refinance Analysis … Does it make sense to refinance?
• Assistance in evaluating a home warranty
• Information on investing in rental properties
• Improvement registers to keep tract of capital improvements

Want help being a better homeowner? Follow us on your favorite social media platform. We’re committed to sharing great homeowner information on a consistent basis.

In today’s challenging real estate market, obtaining mortgage pre-approval is a fundamental step for homebuyers, offering a clear picture of their purchasing power. By first choosing a knowledgeable agent to work with, buyers can benefit from expert guidance in selecting the right lender and mortgage officer, ensuring they secure the best mortgage for their unique situation.

Pre-approval involves a lender conducting a thorough review and verification of a buyer’s financial situation, including credit history, income, assets, and debts. Upon completion, the lender issues a written commitment stating the maximum loan amount they’re willing to offer, subject to certain conditions.

It is our policy to work with your lender to get a property specific pre-approval letter without a maximum loan amount but only stating that you are approved for an amount sufficient for you to purchase this home according to the terms of the offer. This letter will accompany the offer to purchase with the lender’s phone number in case the listing agent has any questions.

This pre-approval letter gives buyers a significant advantage in the home-buying process, as it demonstrates to sellers that they are serious and financially capable of following through with a purchase. Pre-approval typically remains valid for 60 to 90 days and helps buyers shop within their budget, streamline negotiations, and potentially close on a home more quickly.

It’s important to note that while pre-approval is a strong indicator of loan eligibility, it’s not a guarantee of final loan approval, which will still require additional steps such as a home appraisal and final verification of the buyer’s financial information.

Budget Clarity: Pre-approval provides buyers with a clear understanding of their budget, helping them focus their search on homes within their price range and avoid wasting time on properties they cannot afford.

Faster Closing Process: Pre-approved buyers can expedite the closing process since much of the financing groundwork has already been completed, potentially giving them an advantage over other buyers in multiple-offer situations.

Negotiating Power: Sellers are more likely to negotiate and accept offers from pre-approved buyers, knowing that they have already secured financing and are less likely to encounter funding issues during the transaction.

Increased Confidence: Pre-approval gives buyers confidence in their purchasing power, allowing them to make strong and competitive offers with certainty.

Strategic Planning: With pre-approval, buyers can strategically plan their home search and make informed decisions about property selection, offers, and negotiations.

Avoidance of Disappointment: Pre-approval helps buyers avoid disappointment by preventing them from falling in love with homes they cannot afford or losing out on a dream property due to delays in securing financing.

Streamlined Process: Pre-approval streamlines the homebuying process by identifying any potential financing obstacles upfront, allowing buyers to address them proactively and navigate the transaction more smoothly.

Second Opinion: Given the numerous variables involved beyond just interest rates, points, and fees, we recommend seeking a second opinion from another trusted, experienced local lender. This allows you to compare terms and could potentially offer you more favorable conditions.

As you embark on your home buying journey, remember that the path to successful homeownership begins with choosing the right team. An experienced, trusted real estate agent can be your greatest asset, not only in finding your dream home but also in navigating the complex world of mortgage financing.

They can guide you to reputable lenders who will work diligently to secure the best mortgage terms for your unique situation. Don’t underestimate the power of this professional partnership in today’s competitive market.

Take the first step towards your new home with confidence … reach out to a seasoned real estate agent today and set the foundation for a smooth, informed home buying experience. Your future self will thank you for making this wise decision at the very start of your journey.

Single-family rentals (SFRs) are established as a compelling investment opportunity in the real estate market, offering a unique blend of stability and growth potential. These standalone residential properties, rented out to tenants, provide investors with a tangible asset that generates steady income while potentially appreciating in value over time.

As the demand for single-family homes continues to rise among renters seeking more space and privacy, SFRs have become an increasingly attractive option for both individual and institutional investors looking to diversify their portfolios.

The acronym IDEAL encapsulates the primary benefits that make SFRs an attractive investment vehicle:

Income – SFRs provide a steady stream of rental income, offering investors a reliable cash flow. Unlike some other real estate investments, single-family homes tend to attract long-term tenants, resulting in more stable and consistent rental income. This regular cash flow can help offset mortgage payments, property taxes, and maintenance costs while potentially providing additional profit.

Depreciation – One of the significant tax advantages of investing in SFRs is depreciation. The IRS allows property owners to deduct the cost of the building over its useful life, typically 27.5 years for residential properties. This non-cash expense can significantly reduce an investor’s taxable income, potentially leading to substantial tax savings.

Equity – As tenants pay rent, a portion of that money goes towards paying down the mortgage principal, building equity in the property. Over time, this equity accumulation can represent a significant portion of the investment’s return. Additionally, as property values appreciate, the equity in the home increases, further enhancing the investor’s wealth.

Appreciation – Real estate, including single-family homes, has historically appreciated in value over the long term. This appreciation can lead to substantial gains when the property is eventually sold. SFRs in desirable neighborhoods or growing markets may experience even higher rates of appreciation, potentially outperforming other types of real estate investments.

Homes in the United States have appreciated an average of 5.56% per year for the past 60 years.

Leverage – Investors can use leverage to purchase SFRs with a relatively small down payment, typically 20-25% of the property’s value. This allows investors to control a valuable asset with a fraction of its total cost, amplifying potential returns. As the property appreciates and the mortgage is paid down, the investor’s return on investment can be significantly higher than the initial cash invested.

Single-family rentals offer a unique combination of these IDEAL factors, making them a superior investment alternative for many reasons, especially for individuals.

• Lower barrier to entry compared to multi-family or commercial properties
• Easier management and maintenance than larger rental complexes
• Appeal to a wide range of tenants, from young families to retirees
• Potential for higher appreciation rates in desirable neighborhoods
• Flexibility to sell to either investors or owner-occupants when exiting the investment

By leveraging the IDEAL elements of income, depreciation, equity, appreciation, and leverage, investors in single-family rentals can build long-term wealth while enjoying the benefits of passive income and tax advantages. As with any investment, it’s crucial to conduct thorough research and due diligence before committing to a property, considering factors such as location, market trends, and potential rental income.

For more information on Single-family rentals, download our Rental Income Properties guide. We welcome the opportunity to meet with you and explain more about the opportunities that make SFRs such an attractive investment.

The real estate landscape is shifting, with new practices like mandatory buyer’s agreements becoming the norm. While these agreements aim to provide clarity and protection, they can also create unexpected complications.

Imagine signing a buyer’s agreement with an agent, then stumbling upon your dream home during a casual open house visit. This seemingly innocent scenario could lead to a costly mistake, potentially leaving you on the hook for thousands of dollars in out-of-pocket fees.

As the industry evolves, it’s crucial for homebuyers to understand the implications of these agreements and the potential pitfalls of going solo after signing one.

Contacting Listing Agents Directly

Visiting open houses on your own or calling the listing agent is a quick way to discover information and what you like and dislike. Be sure to register with the host agent and inform them if you are currently working with an agent. Keep your excitement in check, as the host agent represents the seller. It’s best to keep your intentions discreet, as anything you say or do can be used against you in negotiations!

Builder Homes

Creating your dream home is an adventure. Many buyers are surprised to learn that a builder’s role is very similar to that of a traditional home seller. Your buyer’s agent will represent you as a buyer and use their expertise to ensure you have the best possible experience and get the best deal. Many builders budget for a buyer’s agent commission regardless of whether you have one, so take advantage of my experience and understanding by following their policies when visiting developments.

For Sale By Owner

If you find a For Sale by Owner property, let your agent know so they can help you maximize the process. They have the expertise to make contact, negotiate, and ensure the entire transaction goes smoothly. Your agent can help you save money in the transaction and, more importantly, save you the headaches of managing the purchase on your own.

Example

When a buyer who has signed a written buyer’s agent agreement contacts another agent, it can lead to a complex situation regarding procuring cause and commission payments. Here’s how it might unfold:

The buyer signs an exclusive buyer’s agent agreement with Agent A, establishing a legal relationship and potentially agreeing to pay a fee for their services.

The buyer then contacts Agent B, perhaps at an open house or through another listing, without informing them about the existing agreement with Agent A. Agent B shows the buyer a property, and the buyer decides to purchase it through Agent B.

A dispute may arise between Agent A and Agent B over who is the procuring cause of the sale. This dispute would typically be resolved through arbitration by the local real estate board.

If Agent B is determined to be the procuring cause (for example, if they showed the property and facilitated the sale), they may be entitled to the selling portion of the commission from the transaction.

However, the buyer may still be liable to pay Agent A’s fee separately, as per their written agreement. This is because the buyer’s agent agreement is a contract between the buyer and Agent A, independent of the outcome of the procuring cause dispute.

In this scenario, the buyer might end up effectively paying two fees: one indirectly through the sale (which goes to Agent B as the procuring cause) and one directly to Agent A as per their agreement.

This situation underscores the importance of clear communication between buyers and agents, and the need for buyers to understand their obligations under a buyer’s agent agreement. It also highlights why agents should always ask potential clients if they’re already working with another agent to avoid such complications.

For more information, download our Buyer’s Agent Guide. You should be comfortable talking with a real estate professional how this works and your available options.

Recent policy changes made by the National Association of Realtors (NAR) have shifted the dynamics of buyer’s agent compensation, prompting sellers to reconsider their strategies.

Many buyers, especially first-time homebuyers, have limited savings and may struggle to cover additional costs beyond the down payment, closing costs, and other expenses associated with purchasing a home. Mortgage lenders typically do not allow buyers to include agent fees in their loan amount, meaning buyers must pay these fees out-of-pocket, which can be a significant financial burden.

Requiring buyers to cover their agent’s compensation, as opposed to the traditional seller-offered model, exacerbates affordability issues and limits many buyers’ ability to purchase a home. To maximize market appeal and facilitate a quicker sale at full market value, sellers should strongly consider offering buyer’s agent compensation.

1. Increased Buyer Pool: Offering compensation to buyer’s agents can attract more potential buyers. Many buyers rely on agents to navigate the home-buying process, and agents are more likely to show homes where they are compensated, expanding the pool of potential buyers for the seller’s home.
2. Competitive Advantage: In a competitive real estate market, offering buyer’s agent compensation can make a seller’s property stand out compared to similar listings that do not offer such incentives. This could lead to quicker sales and potentially higher offers.
3. Facilitated Negotiations: Providing compensation can simplify negotiations. Without the need for buyers to negotiate agent fees separately, the transaction process becomes more straightforward, reducing potential friction points that could delay or derail a sale.
4. Legal and Compliance Benefits: Buyer agents help ensure compliance with legal and regulatory requirements during real estate transactions. By compensating buyer agents, sellers can mitigate the risk of non-compliance and potential litigation, which could arise from handling complex paperwork and disclosures on their own.
5. Market Perception: Not offering buyer’s agent compensation might create a perception that the seller is less flexible or cooperative, which could deter potential buyers and their agents. This perception can be particularly detrimental in markets where such compensation is customary.
6. Preservation of Market Norms: While the NAR settlement allows for commission negotiations, many buyers and sellers are accustomed to the traditional model where sellers offer compensation to buyer’s agents. Deviating from this norm might confuse or alienate potential buyers, affecting the property’s marketability.

Sellers who choose to offer buyer’s agent compensation can enhance their property’s appeal and attract a wider range of buyers resulting in obtaining the highest price, in the shortest time, with the fewest problems. In a competitive market, this strategic decision may be crucial for achieving a successful and timely sale.

The U.S. Department of Veterans Affairs, known as VA, issued a policy change that now allows payment to buyer brokers on VA loans. They will be subject to certain safeguards, such as the requirement that all buyer-broker fees charged to veterans "must be reasonable and customary within local markets." The circular is effective Aug. 10, 2024, and is valid until rescinded.

The VA also clarified that veterans can still ask sellers to cover these fees which in most cases will be negotiated in the offer to purchase agreement. As the practicality of the settlement of the lawsuit becomes clearer, VA is expected to issue a permanent policy.

This change in policy will protect veterans in situations where there is competition for a particular property and the seller might select another offer because those buyers were paying their own buyer’s agent fee. Prior to this policy change, veterans were not allowed to pay, "under any circumstances, be charged a brokerage fee or commission in connection with the services of such individuals."

Both the National Association of REALTORS� and the Mortgage Bankers Association have been lobbying the VA to address this prohibition and are thankful for addressing the issue to keep veterans who want to use their VA benefits to purchase as home.

VA mortgage loans have many benefits and options to structure a home purchase to fit your individual situation. Your real estate professional can help you find the home that fits your needs with affordable financing.

For more information on changes with buyer’s agents, download Buyers Agent Guide and contact your agent with any questions you may have.

In today’s fast-paced world, home automation is becoming increasingly popular among homeowners seeking to enhance convenience and reduce energy costs. With advancements in technology, smart home devices offer innovative solutions that not only simplify daily tasks but also promote energy efficiency and sustainability.

Whether you’re looking to upgrade your existing home or are in the process of building a new one, incorporating these home automation trends can significantly improve your living experience while saving you money in the long run.

• Smart Lighting – Automate your lighting to save on energy bills by setting schedules and controlling brightness and color through a smartphone app.
• Enhanced Home Security – Invest in smart security systems with features like facial recognition, motion sensing, and real-time alerts to enhance safety and provide peace of mind.
• Smart Thermostats – Use smart thermostats to learn your schedule and optimize heating and cooling, reducing energy consumption and lowering utility costs.
• Voice-Controlled Assistants – Incorporate voice-controlled assistants to manage daily tasks and control other smart devices, enhancing convenience and efficiency.
• Smart Appliances – Upgrade to smart appliances that offer features like remote control, energy efficiency, and inventory management, particularly in the kitchen.
• Sustainable Living Solutions – Implement energy-efficient appliances and solar-powered systems to reduce your carbon footprint and utility expenses.
• Smart Entertainment Systems – Integrate smart entertainment systems for a customized audio-visual experience that can be controlled remotely or by voice.
• Touchless Technology -Install touchless faucets and smart showers to promote hygiene and water conservation while adding convenience to daily routines.
• Eco-Friendly Smart Toilets – Consider eco-friendly smart toilets that offer features like water-saving flushes and self-cleaning capabilities, contributing to a sustainable lifestyle.

By integrating these home automation trends into your living space, you can create a more efficient, convenient, and enjoyable home environment. Not only do these innovations enhance your daily routines, but they also contribute to long-term savings on energy costs and improve the overall value of your property.

Embrace the future of home living by exploring these smart solutions and take the first step toward a more automated and sustainable lifestyle.

Pre-approval is a comprehensive process where the lender verifies the buyer’s financial information, including credit history, income, and assets. Pre-approval provides a conditional commitment from the mortgage company to lend a specific amount, pending appraisal of the property.

Pre-qualification is an initial assessment based on self-reported financial information provided by the buyer. It gives a rough estimate of how much a buyer might be able to borrow but it is merely an opinion.

Despite the well-known advantages of getting pre-approved for a mortgage early in the home-buying process, many buyers remain resistant even to their detriment. Here are several reasons why:

Some buyers may not fully understand the benefits of pre-approval or may underestimate its importance. They might see it as an unnecessary step rather than a strategic move that can give them a competitive edge and streamline the home-buying process.

Buyers often perceive the pre-approval process as complicated and time-consuming. Gathering financial documents, filling out applications, and dealing with lenders can seem daunting, especially for first-time buyers unfamiliar with the process.

Potential buyers may fear that they won’t qualify for a mortgage or won’t get approved for the amount they need. This fear of rejection can lead them to delay or avoid the pre-approval process altogether.

The pre-approval process requires sharing sensitive financial information, which some buyers may be uncomfortable with. Concerns about privacy and data security can make buyers hesitant to initiate pre-approval.

Buyers who feel confident in their financial situation might not see the need for pre-approval. They might believe they will easily secure a mortgage when needed and therefore consider pre-approval an unnecessary precaution.

Some buyers may be waiting for the perfect moment to get pre-approved, such as when they have a specific property in mind or when they believe their financial situation will improve. This can lead to delays and missed opportunities.

The belief that mortgage pre-approval will negatively impact their credit score can deter some buyers. Although pre-approval does involve a credit check, the impact is typically minor and temporary, but this is not always clearly understood.

Procrastination and indecision can also play a role. The home-buying process involves many decisions and actions, and pre-approval might get pushed aside in favor of more immediate tasks or simply due to procrastination.

Some buyers believe that they can get pre-approved later in the process without any negative consequences. This assumption can lead to delays and complications, especially in competitive markets where pre-approval can be crucial for making a timely offer.

"Pre-qualification is the crucial first step in the home buying journey, providing buyers with an initial understanding of their borrowing capacity and setting the foundation for a successful and informed search for their dream home."

Among the benefits to buyers are enhanced buying power, competitive edge, negotiating power, streamlined process, confidence, and peace of mind. If there are potential issues identified early in the process, there may be time to cure them without delaying a transaction.

Pre-approval benefits the buyer directly as well as the seller by having a qualified buyer that can close the sale. Download our Buyers Guide and Buyers Agent Guide.

Traditionally in the U.S. housing market, the seller has offered the buyer’s broker and agent a share in the commission specified in the listing agreement between the seller and the listing broker and agent. In a settlement between the National Association of REALTORS�, beginning on August 17, 2024, buyers will have to sign an agreement with their buyer’s agent specifying what services will be available and the fee the buyer’s agent is charging.

Many sellers may continue to offer compensation to the buyer’s broker and agent, maintaining the traditional practice of the seller paying both sides of the commission. However, when no offer of compensation is made, there are several distinct alternative ways to facilitate the buyer agent’s fee, as well as a myriad of variations to suit different scenarios.

In an instance where the seller doesn’t offer compensation to buyer agents regarding a property you’re interested in, there are several options to consider:

1. Negotiation with the Seller
   As your agent I can negotiate with the seller or their agent, on your behalf, to include the buyer agent’s commission in the terms of the sale. This becomes part of the overall negotiation strategy when making an offer.
2. Adjusting the Purchase Offer
   As your agent, I can modify the offer to indirectly cover the commission by raising the purchase price to include the commission and have it included in the financing. For example, if a home is listed at $400,000, and the commission is $12,000, the offer would be for $412,000 with a condition that the seller pays a $12,000 commission to the buyer’s agent.

   This approach ensures the seller receives their expected amount while covering the commission.

3. Seller Concessions
   As your agent, I can negotiate for seller concessions, where the seller agrees to pay a portion of the closing costs. This can include loan origination fees, appraisal fees, points, and other items that are disclosed in the offer to purchase.
   Seller concessions can help offset your out-of-pocket expenses, potentially making the purchase more affordable even with commission obligations.
4. Buyer Pays Commission Directly
   If the seller refuses to pay the buyer’s agent commission and it can’t be incorporated into the purchase price, it may be necessary to pay the commission directly. This would be discussed and agreed on before proceeding with any offer, and it would be clearly stated in the buyer’s agency agreement.

It’s important to note that any combination of these strategies may be used to find the best solution for your specific situation. The overall goal is to ensure you can pursue properties you’re interested in while fairly addressing the commission aspect.

Download our Buyer’s Agent Guide for more information.

Last year, U.S. homeowners faced an average property tax bill exceeding $4,000, marking the highest increase in five years, according to data from Attom Data Solutions, a real estate data firm. Property taxes nationwide amounted to over $363 billion in 2023, reflecting a 6.9% rise, largely attributed to inflationary pressures on local government costs and public employee wages.

States with the highest effective property tax rates included Illinois, New Jersey, Connecticut, New York, and Nebraska, with notable disparities in tax increases observed across different regions, such as a 31.5% increase in Charlotte, North Carolina, and a 15.2% rise in Atlanta.

Property taxes are determined by the assessed value of the property and applying the tax rates for the different taxing authorities for that year. Generally, homeowners are notified of the assessed value of the property for that year, many times, even before the tax rate is set.

There is often a procedure for disputing the assessment, which may involve various processes. In some states, independent appraisal boards convene to review arguments from the taxpayer and a representative of the taxing authority.

To help further understand the process, here are some helpful definitions:

Assessment Process – The local government assesses the value of your property periodically to determine its taxable value.

Taxable Value – This is the value of your property that is subject to taxation, which may not necessarily be the same as its market value.

Tax Challenge – Homeowners have the right to appeal their property tax assessment if they believe it is too high.

Tax Rates – Typically determined by the taxing authority based on funding needs to generate the necessary revenue.

Tax Exemptions – Some homeowners may qualify for tax exemptions or reductions based on factors like age, disability, or veteran status.

Escrow Accounts – Many homeowners pay their property taxes through an escrow account set up by their mortgage lender, which is included in their monthly mortgage payment.

Tax Due Dates – Property taxes are typically due annually or semi-annually, depending on local regulations.

Penalties for Non-payment – Failure to pay property taxes on time can result in penalties, interest charges, and even the loss of your property through tax foreclosure.

For information about federal income taxes relating to homeownership, download the Homeowners Tax Guide.

Congratulations on your offer being accepted! In many cases, you may have a provision in your sales contract for a satisfactory home inspection. You’re one step closer to owning your dream home. Now is the time to choose a home inspector to take a closer look at the property.

Inspectors are thorough and in some states are required to be licensed. They have extensive training and follow strict rules to inspect the home’s structure, electrical systems, AC and heating, plumbing, appliances, and many other aspects.

Inspectors find things you might not be familiar with or have overlooked. Even in brand-new construction, inspectors will find issues. This way, you know about the problems and can determine how to deal with them.

Inspections help you make decisions. If the inspection uncovers big surprises, you may want to ask the seller to make repairs or lower the sales price. You may also decide to walk away from the transaction.

It’s better to know about problems before you close the sale on a home. No one likes it when an inspector finds deficiencies, but it’s better to know about them upfront than to find out later. An inspection can help you avoid surprises down the road and make an informed decision about your purchase.

Your agent can recommend a qualified inspector and answer questions you may have about the process and what to expect. Another alternative is to ask friends who have purchased a home recently about the inspector they used and any suggestions they might have.

Some additional tips for hiring a home inspector:

• Make sure the inspector is licensed, if required, and insured. Ask if they belong to any professional organizations.
• Ask the inspector about their experience and what they will be inspecting, as well as the type of report you will be receiving from them and whether it includes pictures of items in question.
• Ask if you can be present for the inspection so you can ask questions and watch the process to better understand.

By following these tips, you can hire a qualified home inspector who will help you make a wise decision about your purchase and protect you from unforeseen surprises.

There is a technique that has been attributed to Benjamin Franklin and used when faced with a decision. As the lore goes, whenever Ben was faced with a decision, like you are now, he’d take a piece of paper, draw a line down the middle of it. On the left side, he’d list all the reasons he should do something and on the right side, he’d list the reasons to avoid doing that thing.

Would-be home buyers are faced with the decision of whether to buy in today’s market with uncertainty about inflation, the presidential election, the economy, higher than recent mortgage rates, and increased home prices, just to mention a few.

Some people have been put on the sidelines because they cannot qualify for a mortgage and others have sidelined themselves, even though they have the funds and resources, because of all the "noise" in the market. Looking at the advantages of renting versus buying may bring clarity.

Advantages of Renting:

• Financial Flexibility: Renting typically requires a lower upfront cost, making it more accessible for individuals with limited savings or those looking to manage their finances conservatively.
• Maintenance Responsibility: Renters are often not responsible for major maintenance and repair costs, as these are typically the landlord’s responsibility, allowing for a more worry-free living experience.
• Mobility: Renting provides greater flexibility to relocate quickly if job opportunities or personal circumstances change without the commitment of selling a property.
• Amenities and Services: Many rental apartments offer on-site amenities such as gyms, pools, and concierge services, providing added convenience and luxury without ownership responsibilities.
• Predictable Costs: Renters usually have fixed monthly costs for rent, making budgeting more straightforward as they don’t need to account for unexpected homeownership expenses.

Advantages of Buying:

• Equity Building: Homeownership allows you to build equity over time as you pay down your mortgage, which can serve as a valuable asset and investment for the future.
• Stability and Control: Owning a home provides stability and control over your living environment, allowing you to personalize and renovate the property to your liking.
• Tax Benefits: Homeowners may benefit from tax deductions on mortgage interest and property taxes, potentially reducing their overall tax liability.
• Long-Term Investment: Real estate has historically appreciated in value over the long term, potentially leading to significant wealth accumulation.
• Sense of Ownership: Owning a home often brings a sense of pride and accomplishment, as well as the freedom to make decisions about the property without seeking landlord approval.

The Ben Franklin balance sheet might suggest that whichever side had the greatest number of reasons, that would be the appropriate action. If each item had the same weight of importance that might be logical. However, some reasons might tip the scale dramatically in favor of taking a particular action.

The equity building aspect of homeownership is exactly that type of reason. With each payment made on the mortgage, a portion of it reduces the principal balance due which builds equity in the home. Each month, a larger amount goes to the principal.

Homes on a national basis have experienced a 5.56% annual appreciation over the last 60 years according to the Federal Reserve Economic Data and Bureau of Labor Statistics. During that period, inflation has averaged 3.7%, making homeownership a hedge against inflation. Even if a person continues to rent, they will be paying more because rents have increased during the same 60-year period at 3.88% annually.

The average price of a home in America in 1963 was $19,300 and in 2023, 60 years later, the average price of a home was $495,100. Long term, a home is a powerful investment in an individual’s wealth.

For more information, download our information guide Homeownership Today and run a Rent vs. Own for your particular situation.

Beginning August 17, 2024, many agents will be required to enter into a written agreement with a buyer before touring a home either in-person or through a live virtual tour and buyers should be familiar with what it entails.

There have been buyer agreements for decades in the real estate industry and it was always suggested that the agent have a buyer acknowledge it in their first substantive meeting. The practice of when it was signed was not scrutinized which is why some buyers may not be familiar with the practice.

The agreements benefit both parties specifying obligations and duties. The advantages for the buyer include:

• Dedicated Representation: A buyer’s agreement ensures that the agent is committed to representing the buyer’s best interests throughout the entire home buying process.
• Clear Expectations: The agreement outlines the scope of services provided by the agent, including their duties and responsibilities, helping to establish clear expectations between both parties.
• Priority Access: By signing a buyer’s agreement, the buyer gains priority access to the agent’s time, resources, and expertise, ensuring they receive personalized attention and support.
• Exclusive Representation: The agreement typically stipulates that the buyer will work exclusively with the agent, preventing conflicts of interest and ensuring undivided loyalty from the agent.
• Streamlined Communication: With a buyer’s agreement in place, communication between the buyer and agent is streamlined, making it easier to stay informed and make informed decisions throughout the home buying process.
• Negotiation Strength: Having a committed agent by their side gives homebuyers greater negotiating power, as the agent can leverage their expertise to secure the best possible terms and price for the buyer.
• Peace of Mind: Knowing that they have a dedicated and experienced professional advocating for their interests gives homebuyers peace of mind, reducing stress and uncertainty during the home buying journey.

Since the agreements may not be standardized, this article will familiarize you with the components of a typical agreement.

The agreement should specify and conspicuously disclose the amount or rate of any compensation the agent/broker will receive from any source. The amount must be objectively ascertainable and not ambiguous like "whatever amount the seller is offering to the buyer."

It should be stated that the agent/broker may not receive compensation from any source that exceeds the amount or rate agreed to with the buyer. Additionally, the agreement should note that broker commissions are not set by law and are fully negotiable and any other provisions required by state law.

If mandatory agreements have not been promulgated by state licensing authorities, the broker or agent can develop their own. However, there are some elements that should be included:

• Agreements should be written in understandable terms for all parties in readable font size.
• Types of representation can include those provided by state law.
• Agreements should clearly enumerate the services provided to the buyer.
• Agents and buyers can negotiate and agree to the term of the agreement, and automatic extensions until closing the sale following completing a contract of sale. Other provisions may include termination for cause and without cause by both the buyer and the agent, and whether compensation is owed if the buyer terminates the written agreement.
• Contracts should transparently outline the buyer’s obligations, confidentiality duties, and the Equal Housing Opportunity statement, along with warnings about wire fraud and seller video/audio recording during home tours. MLS Participants may also inform consumers that they’re offering real estate brokerage services and recommend seeking assistance from inspectors, lenders, attorneys, tax advisors, and title agents.
• Agents and buyers may agree to a retainer fee and if that fee is included in the total compensation, credited against other compensation, and whether it is refundable under specific conditions.
• The agreement may address how conflict of interest will be resolved during the term of the agreement including disclosure and consent for representing other buyers submitting offers on the same property, dual agency, designated agency, or transaction brokerage.
• A provision can be included on how to handle disputes such as mediation or arbitration.

Buyer representation offers numerous advantages when purchasing a home. With a dedicated agent, buyers gain access to expert guidance and advocacy throughout the entire process, ensuring their best interests are prioritized.

From navigating the complexities of the market to negotiating the best terms and price, a buyer’s agent provides invaluable support and peace of mind. Additionally, buyer representation streamlines communication, provides access to exclusive listings, and enhances negotiating power, ultimately leading to a smoother and more successful home buying experience.

Buying a home is a sizable investment relative to each buyer. Even if a person has purchased a home in the past, it benefits the buyer tremendously to work with a professional to advise them through the process and the buyer’s agreement spells out the specifics.

Download our Buyers Agent Guide and schedule an appointment to get answers for your questions.

Home insurance rates have increased by almost 20% nationally between 2021 and 2023 and even more in some states like Arizona where rates have jumped 62% in some cases.

The appreciation that homeowners have enjoyed, especially in the past four years, has caused premiums to increase because the values are higher. In addition, insurance is affected by inflation due to the increased cost of labor and building materials used to calculate the replacement cost of the dwelling.

Natural disasters, especially in coastal areas, tornados, fires, and hail are just a few of the things that insurers have paid considerable claims and are driving the prices of premiums higher. Some insurers are pulling out of high-risk areas which make it difficult for homeowners to not only find coverage but at reasonable prices.

There are several things that homeowners can do to lower the cost of their policies.

Increase Deductibles – Opt for a higher deductible to reduce premium costs, but ensure you have sufficient savings to cover the deductible in case of a claim.

Bundle Policies – Combine homeowner’s insurance with other policies such as auto insurance with the same provider to qualify for multi-policy discounts.

Improve Home Security – Install security features like smoke detectors, burglar alarms, deadbolts, and security cameras to reduce the risk of theft and damage, thus lowering premiums.

Upgrade Home Systems – Updating electrical, plumbing, and heating systems to meet current building codes can lower insurance premiums by reducing the risk of accidents or damage.

Maintain a Good Credit Score – Maintaining a good credit score demonstrates financial responsibility and can lead to lower insurance rates.

Shop Around – Compare quotes from multiple insurance providers to find the best coverage at the most competitive price.

Choose a Less Risky Location – Living in an area with lower crime rates, proximity to fire stations, and minimal environmental risks can result in lower insurance premiums.

Stay Claims-Free – Avoid filing small claims, as a history of claims can lead to higher premiums. Instead, consider paying for minor repairs out of pocket.

Reduce Coverage – Review your policy to determine if you have more coverage than necessary and adjust coverage limits accordingly to reduce premiums.

Ask About Discounts – Inquire with your insurance provider about available discounts for factors such as age of the home, non-smoking household, or membership in certain organizations.

Insurance is required on properties with mortgages on them but even when a home is paid for, most homeowners cannot afford the physical loss but also from potential exposure to liability to people who might be injured on their property. It is estimated that the number of American homeowners without insurance in 2024 has increased to 12% from 5% in 2019.

Having an annual review with a property casualty insurance agent ensures homeowners maintain adequate coverage as property values and personal circumstances change, protecting against potential underinsurance. This proactive approach provides an opportunity to discuss lowering premiums, helps identify potential gaps in coverage, offering peace of mind and protection against unforeseen events.