Provo, UT

By: Robert A. Hulme - Realtor

The Real Estate Purchase Contract involves more than just price. You will have to discuss personal property possession, rent, tests, inspections, closing dates and more. The one term that throws most buyers, especially first time buyers is Earnest Money Deposit. What is it? Why do I need to pay it? Why do I have to pay so much?

Not the Down Payment

Many buyers show up to write their offer and announce to their agent that they do not have to put an earnest money deposit because they are getting down payment assistance or 100 percent financing. Communication is very important, it is not difficult to see where an inexperienced buyer would confuse one deposit for another, so do not feel bad if you, too, just learned something new.

Returned at Closing

Unlike the down payment, the earnest money is returned at closing. Whether you actually get the cash back or have it applied toward your closing costs depends on the situation. Once you submit your earnest money it is held in a non interest bearing account until closing. The purpose of earnest money is provide insurance to the seller that once he starts to take action toward closing, for himself or for the buyer, that the buyer will not lose interest and walk away from the sale. If the buyer does walk without good reason, the seller gets to keep the earnest money, to help offset any expenses the seller may have incurred meeting the buyer's terms, as well as any inconvenience.

Earnest Money can be Negotiated

Just like the sales price the earnest money can be negotiated. The seller would like to see as much earnest money as possible before putting his home under contract. If multiple offer situations, sometimes, the offer with the larger amount of earnest money is more acceptable to the seller. So it is important to give a full deposit when you can.

Everyone thinks that the primary concern is the dollar, but when it comes right down to it, a successful transaction with minimal drama is what everyone really wants. A buyer who is not serious, is a buyer who could walk away a week before closing and no seller wants that. When you find your dream house, make your offer stand out and leave no question as to your seriousness if you want the best chance of receiving an acceptance.

New Home Wants and Needs

By: Robert A. Hulme - Realtor

There are many homes available in today's buyer market. At times it may become difficult to find the right home. There are some very beautiful homes, but which one is just right for you? Here are some ideas to find the best home for you.

•· Write down everything that you want in a new home and everything you need (absolutely have to have). Do you want a large kitchen? What about an attic? Do you want a back yard, but do you need a large back yard? What about a driveway or a garage?

•· Write down what you want in the house. Do you really want a concrete porch with an overhang? Do you want wall to wall carpeting or just hardwood floors? How about the number of Bedrooms and Bathrooms?

•· Write down the style of home you want. The style of home is very important to some people. If you want a Rancher write it down.

•· Write down where you want to live. Is it important to be near schools, church or work, or do you have to be close to them?

•· Look for your homes in the newspaper or online. This will help lead you in the right direction. You can do a lot of things to a home to make it the way you want it, but it is very hard to move it.

•· Get pre-approved for your loan while you are looking for your home. Having a pre-approval will help to make sure you don't waste a lot of time looking at homes that you can't afford to purchase.

•· Make sure you look at foreclosed or bank owned homes. These homes are on the market simply because the previous owners could not afford the house payment. There is typically nothing wrong with the home, but at other times, there can be a lot wrong with the home. It is very important that you have one of these homes inspected prior to your purchase.

Home Buyer Representation - Buyer Agent vs. Seller Agent

By: Robert A. Hulme - Realtor - Buyer Agent

During the past 25 or so years, home buyers have been able to choose between Buyer agents or the Sellers agent representing the Seller, to buy a home from. Many buyers didn't even know that they could use a buyer agent or even if they were available. Most home buyers assumed the agent showing the home represented them. Seller agents were obligated to represent the seller's interest unless they had a separate written agreement with the buyer to represent them.

The FTC did a study of the Real Estate brokerage industry in 1983 and determined that most home buyers actually thought that the Real Estate agent showing them homes was working in their best interest, the vast majority were wrong. The FTC started putting pressure on the states to have real estate agents disclose in writing to the consumers whose side they were representing. In the early 1990's most stated adopted agency disclosure laws requiring real estate agents to finally tell consumers the truth about who they were working for. The NAR endorsed buyer agency as an alternative in 1993.

Today agency is broken down into 3 categories. Seller, Buyer and Limited (Dual). The Real Estate agent has to disclose in writing, which he is representing in the transaction and the other party has to acknowledge their understanding of the representation during the process of buying and selling of a home.

There are three big advantages of having an Exclusive Buyers Broker agreement when you are purchasing a new home.

Unbiased view of the Real Estate Market

Seller agents want to sell you their own property that they have listed. Buyer agents want to show you as many properties as possible to help you make an educated decision.

Negotiate in Buyer best interest

Seller agents typically try to get the highest price they can for their seller client. The higher the selling price the larger their commission and happier their client is.

Savings on Loans and costs

Once a buyer agent has negotiated a purchase contract, then he works hard to save you money on loans, inspections, repairs and closing costs. The buyer benefits by having his agent focus completely on him and trying to make his experience a good one.

Understanding Mortgages, Getting the best Rate.

By: Robert A. Hulme - Realtor, Mortgage Loan Officer

As a home buyer, it only makes sense to try and get the lowest rate possible when obtaining a Home Loan. After all, the rate is the primary factor in determining your house payment. But how do you get a low rate when applying for a home loan? This is the primary question that most home buyers want to know. I would like to explain some important ideas that you need to keep in mind.

Credit Score

One of the primary factors in helping to determine your interest rate is your credit score and financial history. In other words the best interest rates are usually reserved for those with the highest credit score. So if you credit score is not very high the chance of getting a lower interest rate is not very good. It is very important, that, prior to applying for a home loan, you pay all of your bills on time and that you do carry some line of credit so you can show the lenders that you pay your bills.

Type of Loan

Recently, I am sure you have noticed that the home loan market has taken a dramatic change. There are not nearly as many programs available as there used to be. Most banks require that the home buyer contribute more down payment. They feel that with the higher down payment , the buyer will be less likely to default on their loan. But there are still a few loan programs available, so make sure that your loan officer takes you through all the types of loans that you have available to you based on your financial situation.

Yield Spread Premium

The one factor that most home buyers are not familiar with is Yield Spread Premium. Yield Spread premium is usually disclosed to the home buyer in the good-faith estimate as being between 0% and 4%. The loan officer doesn't have to tell you the exact percentage, mainly because he/she does not know for sure, because rates are constantly changing. Most states are now required to disclose the final Yield Spread Premium on the closing documents. Make sure you understand this concept thoroughly prior to going to closing, because you could be real surprised if you don't. Avoid any problems at closing by having your loan officer explain this program in detail during the transaction. Yield Spread Premium is where most loan officers make the bulk of their commission. The balance comes from the Loan Origination fee. Most important, is become informed, ask many questions of your loan officer throughout the entire process.

Purchasing a home can be a wonderful experience, if you are not prepared prior to entering the process it can be a bad a one. Make sure you keep your credit in good standing, save up as much money as possible for a down payment and become informed and everything will go great. Good Luck.

Common Buyer Mistakes - Utah County Real Estate

By: Robert A. Hulme - Realtor

When it comes time to shop for a new home in Utah County, many new experiences start to happen. It can be a very emotional time. It can also be very time consuming and usually comes with a myriad of details. Some buyers however, get caught up in the excitement of buying a new home that they tend to overlook some items. Their home purchase turns into an expensive process. Common mistakes generally fall into three areas.

Paying too much

Losing a dream home to another buyer

Buying the wrong home

When you have a systematic plan before you shop, you'll be sure to avoid these costly mistakes. Here are some tips on making the most of your home purchase.

Bidding without sufficient information

What price do you offer a seller? Is the seller's asking price too high? Is it a good deal? Without research on the market and comparable homes, you could lose thousands of dollars. Before you make that offer, be sure you have researched the market. A professional Realtor, can offer an unbiased opinion on the value of a home, based on market conditions, condition of the home and neighborhood. Without knowledge of the market, your offer could be too much. Or worse, you could miss out on a great buying opportunity.

Buying a mis-matched home

What do you need and want in a home? Clearly identifying your needs and bringing an objective view to home shopping, leaves you in a better position. Sometimes, home buyers buy a home that is too large or too small. Perhaps they didn't consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view.

Unclear Title

Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a Realtor can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements.

Unexpected Repairs

A professional inspector should conduct an inspection of the home. This way, you will have an idea of the cost of future repairs. Make your final contract subject to what you may find in the inspection.

Shopping with pre-approval

Getting a pre-approval with a Loan officer is essential. This gives you a lot more power; a seller is more likely to consider an offer from a serious pre-approved buyer.

Additional Fees at Closing

Beside the funds for the purchase of a home, you will need funds for items such as loan fees, insurance, legal fees, surveys, inspections, etc.

Rushing the closing

Before you sign, ensure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don't rush. You could lose money, financing or even the sale.