Real Estate Basics

Benefits of Home Ownership
Emotion vs. reason in Real Estate
Credit Report
What is Agency?


The Benefits of Home Ownership

Home ownership may be the biggest investment you will ever make. Buying your first home can be both exciting and a bit scary. There are many benefits of buying and owning your own home, which are outlined below.
The most important thing you can do when deciding to purchase a home is to take your time and do your homework. A Realtor® can help you consider all the factors involved in purchasing a home so you can make an informed decision. There are many benefits to owning your home. A few of the main rewards include:

Security: When you purchase and own a home, your mortgage payments will not change drastically over time. Therefore, owning a home protects you and your family against rent increases.

Lifestyle: When you own a home, you have greater freedom to decorate and renovate your home as you wish. In some cases, you might even get a financial return on your renovation or decorations when you go to sell. In addition, owning your own home may afford you more privacy. Lastly, many homeowners get a lot of enjoyment and satisfaction from owning their own home.

A financial investment: Home ownership is often the cornerstone of personal financial wealth. Once you own a home, you can often borrow against this equity when buying future investment properties.

When you carefully choose a home you can afford, the payoff can be great. Each month when you make your mortgage payment, you're building equity. Equity is the portion of the property that you actually own through your payments, versus the portion that you still owe the mortgage lender. The longer you stay in your home and the more mortgage payments you make, the more equity you'll have. Unlike most things you buy, a home will typically appreciate or increase in value as time passes, building more equity. However, there is no guarantee that the home will increase in value.

Tax advantages: If you sell the home at a profit, the capital gains (profit) is tax-free.

Less expensive: In some cases, owning your home may actually be less expensive than renting. Your monthly mortgage payments may be less than what you would pay in rent for a comparable home. However, there are also additional costs associated with owning your own home including insurance, maintenance, utilities, etc. that you will need to consider when determining whether to buy or rent.

[top]

Emotion vs. Reason in Real Estate

If you are selling a home, real estate agents will usually refer to it as a "house." If you are buying a house, agents will often refer to it as a "home."

Why? Because when you are buying a home, it is more than "just" a purchase. It is where you go "home" after a hard day on the job. It is where you raise your children and lovingly watch them grow. It is where you watch the Super Bowl, barbecue in the back yard, or plant flowers every year to admire their blooms. You aren't buying a space to eat and sleep. You're moving into your private "safe haven." A place you can call "home" for years. Someday, you will sell that house, and when you do it becomes someone else's home. If you're still thinking of it as your home, selling is more difficult.

How do you let go? It is very difficult, but necessary. To sell your home effectively, you need to make rational decisions. You need to let go of all the little touches you've added to the property and not be connected emotionally.
Most "home improvements" don't add as much value as you might think -- they might not have as much appeal to a potential buyer as they do to you. The buyer is looking at your house and imagining it as his or her home. You need to help them.

So take your photos off the walls. Remove the sports trophies from the fireplace mantle. Clean the "junk" out of those drawers in the kitchen. Remove whatever you may have accumulated in your garage, basement or attic. If you want to keep it, put it in storage and pick it up when you move.

Sell a house. Help someone else find a home.

© copyright February 2004 by RealEstate ABC. This entire page and all interior items protected by copyright

[top]

Credit Report

A credit report is a record of how you have paid your credit card debt and other loans. A credit report shows how much debt you have, if you have made payments on time, or if you have not paid back some loans at all. Credit reports do not show information about your race, religion, medical history, personal lifestyle, political preferences, criminal record or any other information unrelated to credit. Credit reports are compiled by national credit-reporting agencies.

The typical credit report includes four types of information:

1. Identifying information: your name, current and previous addresses, telephone number, Social Security number, date of birth, and current and previous employers. This information comes from your credit applications.

2. Credit information: specific details about your credit cards, student loans, and other loans. This information includes the date opened, credit limit or loan amount, balance, and monthly payment. The report also shows your payment history during the past several years, and the names of anyone else responsible for paying the account, such as a spouse or a co-signer. Late payments, skipped payments, accounts turned over to a collection agency, and repossessions appear here. This information comes from companies you do business with.

3. Public record information: bankruptcy records, foreclosures, tax liens for unpaid taxes, monetary court judgments (such as lawsuits), and, in some states, overdue child support. This information comes from public records.

4. Inquiries: The names of those who obtained a copy of your credit report and how often you have applied for credit in the past two years. When you order a credit report, you may also see the names of companies that have reviewed your report for "pre-approved" credit offers. However, these names will not be given to creditors who request a copy of your report. Creditors only see the inquiries you initiate (by applying for a new credit card, for example). Creditors rely on this information about how you've handled your loans in the past to decide how likely you are to repay a new loan.

When you apply for credit or a loan, you give the creditor permission to order your credit report from a credit-reporting agency.


[top]


Agency is defined as "the legal relationship that exists between a principal and his agent arising from a contract in which the principal engages the agent to perform certain acts on the principal's behalf."
The importance of a client relationship for you, the consumer, is fair representation, loyalty and protection; similar to that between doctor and patient, or attorney and client.

What Can I Expect as a Customer? The Real Estate Professional you are working with can:
* Provide honest information in good faith;
* Assist you in preparing offers and help you to close the transaction;
* Use reasonable skill and care; and
* Disclose any adverse material facts the salesperson actually knows, or should reasonably have known.

You should NOT expect the real estate professional to:
* Conduct detailed inspections of the property for you, or verify information given by the buyer or seller.
* Keep your bargaining information confidential if the real estate professional's brokerage company is representing the other party (buyer or seller).

What Can I Expect as a Client? The Real Estate Professional you are working with will:
* Reasonably act to negotiate the best price and terms for you;
* Tell you important information the agent knows, or should reasonably have known which would influence your decision to buy or sell;
* Keep information about your bargaining position confidential in the marketplace; and
* Promote your interests with good faith, honesty and fair dealing and use reasonable skill and care in business dealings with you.

What is a Limited Dual Agency without an Assigned Agent? Dual Agency exists when both the Buyer and the Seller are clients of the Listing Agent. Since both have different needs; the seller wants the highest price, the buyer wants to pay the lowest price, you do NOT have to agree to limited dual representation. If you DO agree, a limited dual agent will still provide most client services. However, without your permission, your agent won't reveal to the other party:
* Personal information about your motivation to buy or sell;
* That, as a buyer, you will pay more than the offered price;
* That, as a seller, you will take less than the listing price; and,
* That you will agree to terms or price other than that listed.

A limited dual agent will avoid conflicting interests of the two clients and will focus on negotiating a sale or purchase satisfactory to both parties.

What is Limited Dual Agency with an Assigned Agent? When two Group One agents are representing two different principals in the same transaction, they may be assigned agents while the broker remains a limited dual agent. Assigned agency offers the maximum level of service to a client by assigning one agent to exclusively represent the seller and another to exclusively represent the buyer. Through assigned agency and internal policies and procedures established by Group One, Group One sales associates may offer full representation to each client, when showing and selling Group One listings.

[top]