Shane Maki

It bears repeating that a home is most people's largest single investment. With that in mind, the primary purpose of a Realtor is to provide you with PEACE-OF-MIND in the purchase of your home. The most important quality you are looking for in a real estate agent is TRUST. You want to be able to TRUST your agent to work hard on your behalf, to be very knowledgeable about the market, to listen carefully to your needs, to provide you with information and creative alternatives, and to always keep their promises. You can rest assured we take this commitment seriously! The following is our pledge to you:

Be a good listener and understand your real estate needs

Help you determine the price home for which you can qualify.

Direct you to and encourage showings of, properties that fit your criteria: agency listings, MLS listings, For Sale By Owner listings and also properties that are not yet for sale.

Connect you with a mortgage consultant should you desire

Connect you, at your request, with a title insurance company which usually conducts the closing

Provide information and contacts on home inspection companies

Provide information and contacts on home insurance companies

Explain all of the forms that will need to be signed as they assist you in writing up the legal contract that constitutes your offer.

Represent you in all negotiations

Problem-solve and coordinate all parties to the transaction as you work toward a successful close in a timely manner.

AGENCY RELATIONSHIPS

Some state laws require that early in any real estate relationship, real estate brokers or salespersons discuss with consumers what type of agency representation or relationship they desire. An agency relationship is based on one person representing the interests of another person, and Real Estate Sales Associates, who are licensed by the State with a broker, represent a person for the sale or purchase of a property.

The type of relationship formed between the Sales Associate and the client is called a fiduciary relationship. A fiduciary relationship is one based on TRUST, as evidenced by the seven duties owed to the client: Loyalty, Diligence, Confidentiality, Reasonable Care, Obedience, Disclosure, and Accounting. The source of compensation does not determine agency, in that compensation can be paid by the buyer, seller, both, or neither (subject to restrictions under applicable state law).

Currently, there are several categories of agency relationships; the available options for MN are as follows:

I. Seller's Broker: A broker who lists a property, or a salesperson who is licensed to the listing broker, represents the Seller and acts on behalf of the Seller. A Seller's broker owes to the Seller the fiduciary duties described below. (2) The broker must also disclose to the Buyer material facts as defined in MN Statute 82.22, Subd. 8, of which the broker is aware that could adversely and significantly affect the Buyer's use or enjoyment of the property. If a broker or salesperson working with a Buyer as a customer is representing the Seller, he or she must act in the Seller's best interest and must tell the Seller any information disclosed to him or her, except confidential information acquired in a facilitator relationship (see paragraph V below). In that case, the Buyer will not be represented and will not receive advice and counsel from the broker or salesperson.

II. Subagent: A broker or salesperson who is working with a Buyer but represents the Seller. In this case, the Buyer is the broker's customer and is not represented by that broker. If a broker or salesperson working with a Buyer as a customer is representing the Seller, he or she must act in the Seller's best interest and must tell the Seller any information that is disclosed to him or her. In that case, the Buyer will not be represented and will not receive advice and counsel from the broker or salesperson.

III. Buyer's Broker: A Buyer may enter into an agreement for the broker or salesperson to represent and act on behalf of the Buyer. The broker may represent the Buyer only, and not the Seller, even if he or she is being paid in whole or in part by the Seller. A Buyer's broker owes to the Buyer the fiduciary duties described below. (2) The broker must disclose to the Buyer material facts as defined in MN Statute 82.22, Subd. 8, of which the broker is aware that could adversely and significantly affect the Buyer's use or enjoyment of the property. If a broker or salesperson working with a Seller as a customer is representing the Buyer, he or she must act in the Buyer's best interest and must tell the Buyer any information disclosed to him or her, except confidential information acquired in a facilitator relationship (see paragraph V below). In that case, the Seller will not be represented and will not receive advice or counsel from the broker or salesperson.

IV. Dual Agency: Broker Representing both Seller and Buyer: Dual agency occurs when one broker or salesperson represents both parties to a transaction, or when two salespersons licensed to the same broker each represent a party to the transaction. Dual agency requires the informed consent of all parties, and means 1hat the broker and salesperson owe the same duties to the Seller and the Buyer. This role limits the level of representation the broker and salesperson can provide, and prohibits them from acting exclusively for either party. In a dual agency, confidential information about price, terms and motivation for pursuing a transaction will be kept confidential unless one party instructs the broker or salesperson in writing to disclose specific information about him or her. Other information will be shared. Dual agents may not advocate for one party to the detriment of the other. (3)

Within the limitations described above, dual agents owe to both Seller and Buyer the fiduciary duties described below. (2) Dual agents must disclose to Buyers material facts as defined in MN Statute 82.22, Subd. 8, of which the broker is aware that could adversely and significantly affect the Buyer's use or enjoyment of the property.

V. Facilitator: A broker or salesperson who performs services for a Buyer, a Seller or both but does not represent either in a fiduciary capacity as a Buyer's Broker, Seller's Broker or Dual Agent. THE FACILITATOR BROKER OR SALESPERSON DOES NOT OWE ANY PARTY ANY OF THE FIDUCIARY Duties LISTED BELOW, EXCEPT CONFIDENTIALITY, UNLESS THOSE DUTIES ARE INCLUDED IN A WRITTEN FACILITATOR SERVICES AGREEMENT. The facilitator broker or salesperson owes the duty of confidentiality to the party but owes no other duty to the party except those duties required by law or contained in a written facilitator services agreement, if any. In the event a facilitator broker or salesperson working with a Buyer shows a property listed by the facilitator broker or salesperson, then the facilitator broker or salesperson must act as a Seller's Broker (see paragraph I above). In the event a facilitator broker or salesperson, working with a Seller, accepts a showing of the property by a Buyer being represented by the facilitator broker or salesperson, then the facilitator broker or salesperson must act as a Buyer's Broker (see paragraph III above).

The fiduciary duties mentioned above are listed below and have the following meanings:

Loyalty - broker/salesperson will act only in client(s)' best interest.

Obedience - broker/salesperson will carry out all client(s)' lawful instructions.

Disclosure - broker/salesperson will disclose to client(s) all material facts of which broker/salesperson has knowledge which might reasonably affect the client's use and enjoyment of the property.

Confidentiality - broker/salesperson will keep client(s)' confidences unless required by law to disclose specific information (such as disclosure of material facts to Buyers).

Reasonable Care - broker/salesperson will use reasonable care in performing duties as an agent.

Accounting - broker/salesperson will account to client(s) for all client(s)' money and property received as agent.

If Seller(s) decide(s) not to agree to a dual agency relationship, Seller(s) may give up the opportunity to sell the property to Buyers represented by the broker/salesperson. If Buyer(s) decide(s) not to agree to a dual agency relationship, Buyer(s) may give up the opportunity to purchase properties listed by the broker.

You should feel free to discuss these agency representation options with your agent since it is important that you have a thorough understanding of every aspect of the real estate transaction.

Recently buyers have become aware that real estate Sales Associates have considerable knowledge that could be of great assistance in deciding what property to purchase. It is important for you to understand that a seller's agent works for and represents the seller, per the listing contract that is signed by both parties (the Broker, represented by the agent, and the seller) at the time of the listing agreement. In many areas of the country, buyer representation in the form of a contract signed by both the potential buyer and the Broker (represented by the agent) has become as prevalent as the traditional listing contract.

A buyer's agent works for and represents the buyer. When a buyer is represented by a Sales Associate and their Broker via a Buyer Representation Contract, the seven fiduciary duties of Loyalty, Diligence, Confidentiality, Reasonable Care, Obedience, Disclosure, and Accounting are owed to the buyer as well.

When you hire us by signing a Buyer Representation Contract, you're hiring us to protect your interests, negotiate, and represent you in any real estate purchase transaction. We guarantee a commitment to make every reasonable effort to locate the property described by the buyer and provide the seven fiduciary responsibilities to the buyer alone.

Next: Find a Home

©2008 Midwest Realty of Minnesota. All rights reserved

WHY SHOULD I HAVE A BUYER REPRESENTATION CONTRACT?

WHAT DOES A REALTOR DO?

HOW DO I FIND A LENDER?

Remember, a home is most people's largest single investment, so count on recommendations from people you trust; family, friends and companies we have a great history working with. Start with financial institutions and their staff that you may have already established a long-term relationship with, but by all means don't limit your options to just one lending institution. It is often wise to get a second (or third) opinion, since some lenders have more avenues open to them than others and are better able to tailor a loan to fit your personal needs. We work with many lenders that can offer very competitive rates and still offer quality full service.

HOW MUCH HOME CAN I AFFORD?

We can all find beautiful homes in great neighborhoods that we would enjoy living in. Of course, our ability to make the down payment and monthly payments will probably limit most of us to more modest homes than our super dream home; we may need to look on our home purchase as a stepping-stone to our dream home. The key issues are our earning power, our debts and our assets to support the down payment and monthly payments.

WHAT DO THEY MEAN WHEN THEY SAY I NEED TO BE PRE-QUALIFIED OR PRE-APPROVED?

Pre-qualification

Pre-approval

Names and addresses of employers for the last 2 years

Most recent paycheck stub or stubs (1 month)

W-2 forms from the previous year

Last 2 months bank statements on all checking and savings accounts

Names and addresses of landlords for the past 2 years

Minimum monthly payments on all installment and credit card debt along with any balances remaining.

Monthly child support and alimony payments

Copy of divorce decree (if applicable)

is a much more in-depth process and the most effective prior to shopping for the home you want. You will fill out a complete mortgage loan application and sign all of the required forms. Verifications are sent out to your employer (past and present), landlords, banks, and a mortgage credit report is generated. The completed credit package is then submitted to an underwriter, where they review the loan and approve or deny your application based on your credit worthiness. If they approve the loan, they will make their approval contingent upon a satisfactory appraisal and title search of the property you intend to purchase. This pre-approval will give you a better chance of having a seller accept your offer on a property, because they will know that you are credit approved and their transaction with you is less likely to fall through due to you being denied for credit. If you are asking for pre-approval, be prepared to supply for the lender: is a very simple process and identifies what loan amount you are qualified to obtain provided you fit within all of the established guidelines. It takes into consideration the employment, income and debt information you provide to the loan officer. Your credit situation is NOT thoroughly examined and the loan package is NOT submitted to an underwriter for their review.

TYPES OF MORTGAGES/DOWN PAYMENTS

There are basically 4 common types of mortgages although each category may have a number of variations, depending on which lending institution you're dealing with. They are:

Conventional

Institutional loan that is not insured or guaranteed by a government agency.

Generally speaking the minimum down payment is 20% of the Selling Price of the home

A third party, not a government agency, has agreed to reimburse the lender for losses that result if the borrower defaults

Buyer pays the mortgage insurance premium with monthly payment (Private Mortgage Insurance or PMI)

May require as little as a 5% down payment

A loan made by an institutional lender and insured by the Federal Housing Administration, so that the FHA will reimburse the lender for losses that result if the borrower defaults

Minimum down payment (as little as 3 percent, depending on the particular program and size of the loan)

Seller can contribute towards buyers closing costs

Buyers down payment & closing costs can be gifted by a blood relative

Has more lenient qualifying ratios

Insured Conventional

FHA

VA

A home loan made by an institutional lender to an eligible veteran, where the Veterans Administration guarantees the lender for losses if the veteran borrower defaults

Zero down payment

Funding fee may be charged to the borrower, although it may be financed along with the loan amount

Traditionally, lenders will require that the interest rate be locked in 10 days prior to closing. It is the buyer's option if they want to lock or float at the time of an accepted offer.

Fixed rate loan-----a loan on which the interest rate will remain the same throughout the entire loan term, typically 15 or 30 years

Adjustable-Rate Mortgage (ARM)------A loan in which the interest rate is periodically increased or decreased to reflect changes in the cost of money.

Your lender will probably require as a condition of the loan that the property you are hoping to purchase be appraised by a licensed appraiser. The appraisal is an estimate or opinion of the value of a property as of a particular date and assures both the borrower and the lender that the price being paid is consistent with the selling price of comparable properties in the area.

MONTHLY PAYMENT

It's been said that when you purchase a home, you are in actuality purchasing a monthly payment that you can live with. That payment will include Principal (the amount originally borrowed) and Interest, and escrowed amounts for property Taxes and property Insurance (which the loan servicer will pay on your behalf) and is commonly referred to as your P-I-T-I payment. If Mortgage Insurance is required by your lender, that premium will also be included monthly (P-I-T-I + MI)

Next: Working with a REALTOR

©2008 Midwest Realty of Minnesota. All rights reserved