Who’s Who and Common Real Estate terms

This is the interest rate plus the costs of doing the loan (origination, points, processing, underwriting, closing, etc) and adding them to the interest rate… then spreading the total out over the term of the loan.

A real estate agent is one who has completed educational classes involving rules, regulation and laws related to real estate in the State they practice. In addition, they must be knowledgeable about State andFederal fair housing and discrimination laws. Most will have good marketing skills and possess excellent negotiating skills as well. Verses, there are 3 types of brokers in real estate. The real estate brokers of which there are three types. A “Principal Broker” would be the owner of a real estate company. Some are active in the daily operation; others may not be. But regardless, they are responsible for the policies of their company. “Broker/Manager” is a person who runs a real estate office for a Principal Broker if, the principle is not always available. They oversee the day-to-day operation of a real estate company and enforce the policies set by the principle. An Associate/Broker is an individual who primarily is a sales agent with a higher level of training.

A real estate agent must be licensed as such for a minimum of 2 years before being eligible to apply for the real estate brokers exam.

New Hampshire, Massachusetts and Maine require that all real estate agents and brokers attend continuing education classes and testing to renew their licenses every two years.

The appraisal of the property is key to the loan. The lender needs to know the property is worth what the buyer is paying for it and what they are lending on it. Although the appraisal primarily serves the lenders interest, the buyer must pay for it and is entitled to a copy at the closing. The appraiser is totally independent. So, the buyer, seller, lender and any agents involved in the transaction have no save in it.

Condo Documents are nearly as important to a condo owner as their deed. The reason being they are the written rules and regulation set forth buy a group of people who have decided what will done and not done, acceptable and not acceptable and paid for and not paid for at the place that you’re going to call home for the next however many years! A copy of these documents along with any revisions or addendums to it over the years as well as budget statements showing the financial condition of the association is given to a prospective buyer to review for a certain number of days before a purchase and sale is made final to make sure they agree to abide by these rules and regulations and then a permanent copy is given to the buyer at the closing to keep until they eventually sell the condo. Too often condo owners don’t appreciate the importance of their condo docs until they want to sell their condo, and they can’t find their documents, then they get upset when the condos management company charges them $300.00 for another set.

Is a condition that must be met for the loan to proceed or stay together. Examples might be, financing, inspections, sale of another property, closing dates, etc.

Sometimes referred to as, Good Faith Deposit. This is your deposit on the property so the seller can take the house off the market while you perform “due diligence” (get you financing done, the inspection etc.) Most common today is a 2% of the purchase price. If a home is $350,000, then you may be asked for a $7,000 E.M.D., or deposit. The deposit is deducted from the sale price. Buying a home is serious business. Therefore, buyers should know that if they do not follow thru with their commitment to buy a property, (aside from previously agreed contingency’s) they risk losing part or all their deposit.

On the surface it almost sounds self-explanatory, and it is certainly a conversation best had with a loan officer, but basically if you’re buying a home for what you believe is going to be a long-term part of your life,  choose the stability of a fixed mortgage. If it’s a short term or interim situation or investment situation, then you may want to give strong consideration to an adjustable mortgage.

It is highly recommended that any buyer, cash or financed, have a home inspection done on a property to assure the home has no major structural or mechanical defects. Your New Day  buyer agent will make your purchase of the home a contingency contingent upon a successful home inspection. Other inspection you may want to have done are, well water quality, private septic condition, radon, a lead paint test in homes built before 1978, etc.

That is the rate that your charged for the loan amount borrowed.

The loan processor gathers the documents submitted by the loan officer and confirms the buyer’s employment, income, credit worthiness, orders an appraisal of the home you’re buying and other tasks. They put all that information together and forward the loan “loan package” to the lender’s underwriter.

This person is the face of a Mortgage Company. As such he or she is your direct contact to the mortgage company and will pre-qualify or pre-approve you for a mortgage so you may begin you home search. They will also inform you of the necessary paperwork you will need to put together for their loan processor. In the event you are not able to qualify for the home of your needs, the mortgage officer along with your buyer agent will work with you to get you to the place you need to be to go forward and buy the home of your dreams. Mortgage Originators are highly knowledgeable in different mortgage programs and an asset to your home buying process.

This person reviews all the documents submitted by the processor and certifies that not only the information is complete, but it matches up with the requirements for the loan program you are applying for. (Conventional, FHA, VA, Rural Home Loans, Fannie Mae, Freddie Mac) They will then assess the amount of risk your loan poses for the lender. They are the last hurdle before the lender commits to lending you hundreds of thousands of dollars to buy your home.

A pre-approval letter is superior to a pre-qualification because all the verification for income, credit, employment along with length of your job, verification of down payment and a few other key elements of your loan are all done before you get your letter. Pre-approvals are more favorable to your buyer agent as well as the home sellers because you‘ve taken the time to get it in order to save the seller time in closing the transaction. Verses, a pre-qualification letter that you can get over the phone sometimes from a loan officer who pulls your credit report and then based solely on the your word about you employment, income and available down payment, can they give you a letter with an amount that you can use to present to a buyer agent to begin looking at homes that are at or lower than that price you qualify for. But all too often these pre-qualification letters fall apart as the “loan processors” proceed with their job to confirm what the buyer has claimed, and too many times it become clear the buyer misstated their income or other fact, the sale falls apart, and both the broker and agent have an unhappy seller.

It won’t be much longer before pre-qualification a letter is just not going to be acceptable at all when you start home shopping.

The legwork of a pre-approval letter will have to be done before one starts looking to purchase a home and will have to be updated every 30 days as the search proceeds to ensure things like job, income and credit have not changed during the search. This would be a good time to tell would-be home buyers that during your home search, the loan and closing process, “DO NOT” make any changes in your employment or make large purchases or leases or take out or co-sign any loans. The reason being lenders will very often do a last-minute re-check of your credit and employment a day or two before your closing. And if they see any changes that they deem significant to them, they will kill your loan!

(commonly mispronounced as re-la-tor) The Association of Realtors is a national organization whose member Brokers and Agents become part of to validate their commitment to work ethically in the service of home sellers and buyers. However, that does not mean that all Brokers and Agents are Realtors, nor does it mean that those who are, are necessarily ethical. One of the biggest services the Realtor group provides its members are many programs and classes in continuing education and advanced designation. This group is the largest trade group in the United States.

One of the advantages of having been in and around the Real Estate business for nearly 40 years is I’ve seen many changes evolve. Some good, some not, and a few just outright bad. When I started in this business in 1985, the MLS was a weekly book that every agent subscribed to. It was about three quarters of an inch thick, and there was only one black and white photo of a property with some relevant facts and a sales description. And that was all we had to show “walk ins”, buyers who actually came into a R.E. office to see what was for sale in a town. With the internet today, it’s extremely rare that buyers come to a real estate office anymore.

At that time, open houses weren’t all that common. It was more likely to occur with new home construction neighborhood projects, which at the time, there was a lot of those going on in Southern New Hampshire.

As Realtors in our sister towns of Derry and Londonderry, NH,  a group of us from 6-20 or so would get together on set day of the week for breakfast, networking and to talk with each other about our new listings and other business chatter. Then we would pile into 2-8 cars and proceed to “caravan” around town and tour all the latest properties to come on the market that week. That way if we had any prospective buyers for one of these homes, we would have firsthand knowledge about the homes to describe and wet the whistle of our buyers to get them to come and see them. Sounds archaic today… but at the time, that’s what we did, and it worked very well.

Around the mid to early 90’s, real estate franchises were really beginning to explode. Somewhere along the line the agents working with theses franchises who began to pound the public with national TV and radio ads touting how big they were across the country and that more home was being sold by them compared to the smaller local independent real estate companies. An aire of superiority began to develop. Franchise agent suddenly didn’t want to caravan with the independent agents anymore and thus Caravanning faded away. The franchise agents started to do public open houses with most of their own listings every weekend.

Now, one may say, “well, that’s progress”. Or you may think “Great for sellers, more and better exposure of their home for sale”. And “great for buyers because they can now see a dozen houses on a weekend without having to go to any real estate office”. Overall, better for everyone, right? Well… here’s the truth about open houses.

It turned out that open houses were really more of a marketing tool for the real estate agents themselvesrather than a way to get to showcase a home and sell it quicker. By having attendee’s sign in with their names, phone numbers,  (and a few years later, their Email addresses ) they would collect a list of potential buyers and sellers to fill up their “marketing pipelines” so they could later follow up and solicit business.  And the timing was right because this was a way for agents to get around those pesky “do not call” lists implemented by the government because, if you freely gave up you name and phone number in exchange for a cookie and a tour of a house, you were fair game for a friendly phone call from the agent who showed you that house.

So, from a sales and business point of view, this was a great idea! But like with a lot of things that start off good and well intentioned, people find a way to abuse it and take advantage. And so, more than a few bad elements began to develop.

Aside from the expected curious neighbors who would stop by the open houses, a good number of people would show up who were not financially qualified for the purchase of the home. I don’t know about you, but my feeling is if someone can’t afford to buy my home, why are they walking around checking it out? The answer in a lot of cases was to see if the house had any valuables and/or an alarm system so they could come back later and rob it. And on occasion, it would happen.  Even if the house was empty of occupants and furniture, there could be new and appliances, copper piping, and so on that could easily be stollen and sold. You see, agents weren’t asking for people’s ID’s because they didn’t want to offend them. So, they relied on people to sign in with their right name and contact information. In addition, small item like nic-naks or a watch now and then would go missing as people would go room to room usually on their own. I know of one agent who got a call from a very upset home seller that her family’s third generation silver crucifix that hung over her bed was gone. That was indeed a big emotional loss for that home seller. The sentimental value of that item was priceless. Add all that to a rise in assaults and robberies of real estate agents, both on men and women across the country, and what you have today is really not a very good idea for homeowners to have. Who knows who’s walking through their home. Or for the serious buyers who value their phone and online privacy. And sadly, it didn’t fare well for a number of unlucky real estate agents either.

If you doubt any of this, some of you who were fans of the TV show “Breaking Bad” might remember in season 4, episode 3, titled , appropriately, “Open House”. It was about one of the main characters visiting open houses to steal items for fun. So, if it’s a common enough event to be a part of a Hollywood storyline, then it’s two common for me.

Now, here’s a fact.… back then as now, only a real small percentage of homes end up being sold as a direct result of the open house that was held for it! Remember, it’s more about the agents gathering attendee’s names and personal information for future marketing. Or, getting an attendee to look at another property with the agent doing the open house. Selling the subject house would be frosting on the cake of all those names, numbers and email addresses that were gathered.

Today, we still use the MLS in its online form and other E sources that draw on MLS information for all to see. They now allow up to 40 color photographs of a home along with much more detailed information about the properties. Prospective buyers today really have a far better idea about a particular home before they even pick up the phone to make an appointment to go and see it.

In addition to that, personal and property security for all has been improved by requiring prospective buyers to be pre-approved financially and have a pre-approval letter in hand from a mortgage lender before they can make the appointment to see a home. To this day some buyers still have a problem with this request. They see it as intrusive and inconvenient. But when presented to them by a strong, experienced Real Estate professional like me, and presenting it to them from the prospective of the home seller, it goes something like this. “Sir/Ma’am… would you want me to bring people into your home, walk them through every room, seeing everything else you own, if I wasn’t sure that they could afford to buy it?” ……… I usually get a few seconds of dead phone air, or a pondering look as the thought of that settles into their minds.

The title company is responsible for the assembling of your loan documents as outlined by your lender. They are also in charge of certifying that the sellers deed is good to transfer to the buyer less any mortgages or liens put on the deed that will be paid off at the closing.

If you have a mortgage, this insurance is required by your lender. It has nothing to do with homeowners’ insurance. It covers the lender in the unlikely event that the Title Company either made a mistake or missed something during their search, or an unforeseen occurrence happening after the closing. The home buyer is required to pay for the lender’s protection. The protection of the buyer’s investment and equity is an option that the buyer is offered at the closing by the title company. Unlike other insurance policies, this is a one-time purchase (charge). Cost varies on the price of the home but generally it is very small compared to what the property is worth. But more importantly, what it might be worth in the future! Once again, it’s a one-time purchase.

Most States have a tax on the transfer of property from one owner to another. Currently in New Hampshire the tax is $15.00 per $1000,00 of the purchase price of a home, land, or other real estate. Customarily it is split between both sides of the transaction. The money received goes into the State’s general fund.