My Roles and the Process of Purchasing the Property - Essay Example

TOPIC: REAL ESTATE By student’s Name: Code+ Course: Instructor’s Name: University Name: City, State: Date of submission: Abstract Buying a property can be quite stressful especially for first time buyers. Many people have nasty stories to tell of their experience in the real estate market. Real estate agents and brokers play significant roles in the market seeing to it that satisfactory deals to both the buyer and the seller are settled. However, the agents at times have their pendulums of interests tilted only to what they fetch from the process and end up not protecting the buyer. At other times, these same agents end up exhorting the buyer whose protection they had an obligation over. It is no wonder that buyers often get paranoid of the realtors and sellers. Presented with such a buyer, clear education and support is needed so at the end of it both parties benefit mutually. Introduction Owning a property is a dream accomplishment for almost everyone. Actualization of this achievement involves a series of steps and awareness of these steps determines the final satisfaction it brings one. To win the confidence of my new client, whom I shall call Peter I will have to first have him understand that he is under no obligation to pay me anything. The fact that that Peter has no understanding of the real estate process would be a motivation for him to buy my ideas, which I would deliver to the finest details. Once a good rapport is in place, I would first take him through advantage of buying the historic property before turning to the process of successful property purchase. Deciding whether the investment is worth Peter has such a noble investment idea in mind. Virginia has such a rich heritage and a showpiece for this will sounds to be so rewarding in future. However, the understanding of zoning is crucial to know the limits of property usage presently and potential zone changes. Generally, the value of property increases over time but factors like the age of the property and its location must be considered as pointers of appreciation. The location of the historic property sounds perfect for the thriving of the intended undertaking. If the property is very old, the appreciation may be hindered but that can be taken care of by renovation. If well renovated the older it is the more it can even fetch in future. One problem with the location may be the issue of parking space but then with future zoning programs this could be resolved. Once Peter has understood, the potential value in future then will have understood the kind of investment he is venturing into and then the price evaluation will not be so much hard on him. The buyer must also understand the additional responsibilities that come with property ownership such as repair and maintenance, property tax, insurance and so on. I will make him understand all that and then we get into the steps of buying the property and why he needs an agent. The whole process of buying a property is complex and I would make him understand that it is through real estate agent that he gets to understand the sequence, the contracts and the legal terms involved. The steps of buying a property and the real estate agent’s role The first step would be for him to access his financial situation to see the kind of purchase arrangement is best for him. I would make him understand that buying a property can actually cause a financial crisis especially where does not consider his financial situation closely. It is less than likely that the only amount of cost involved is the $300, 000 and so if cash payment is not wise then an evaluation of the amount of loan that Peter should take be worked out. If mortgage is paramount then the first step is to seek for a lender offering the best mortgage terms. A down payment usually five to twenty percent of the mortgage loans must be expected at the lender's bank. A mortgage arrangement will then be worked out stating the amount to be paid each month, the period of payment and the interest. The property tax and insurance payable for the property must also be considered in evaluation of the monthly costs to come with the property purchase. This step is crucial in evading a financial crisis that would be on the loam if ignorance occurred. If the property is to be bought in cash then the bother of looking for the mortgage loan will be avoided. I would then have to educate Peter on the role of the real estate agents so that he knows exactly why he needs one and I can then carry out my responsibility. It would be paramount that he understands that the realtor's major role is the negotiation of a good deal on the buyer's behalf and educating him about the market. Having that in mind what steps I had already taken in educating him Peter will have started appreciating my roles. Before we can get into the negotiation part and the actual signing of anything, I would have him understand that the agents must always possess a written contract between them and the property owner allowing them to sell. As an agent I would have that important tool for his perusal. The buyer then needs to make an offer for the in writing which then the agent is to present to the seller. As an indication of the will to buy the property Peter may also need to make some earnest deposit usually called an escrow deposit especially if the there are other interested buyers. This is another area in which Peter would need an agent for assurance that his prepayments are going to be taken care of at the closing of the deal. The agent must then obtain the property certificate title's copies given the offer is acceptable to the seller. However, before doing any offer it is important to obtain a disclosure from the seller. The disclosure lists the problems the property has to the best of knowledge of the seller and it is a legal obligation. From the disclosure, the buy will then need the agent's guidance into the much he should offer. As a comparison, we would evaluate the sale similar property that might have been sold in the same locality in the recent past if any noting their fetch. I would then tactfully advise Peter on the worth of the property. I hope that by doing so we would arrive at a deal that would please him and grant me a good commission. The buyer would then feel comfortable to go on and place his offer in writing. The next step is the signing contract to buy the property. This happens once the seller accepts the buyers offer. The contract is a legal agreement that obliges the buyer to sell the property to the buyer who is also at obligation to buy the property. However some contract may allow either of the party to walk away from the deal and here as the agent I would educate my client on the best wording of the contract, my ultimate goal being to sell the property to him. In the contract to buy the property the all relevant detail must be clearly indicated. The amount of down payment plus any prior escrow deposit to be made must be stated as well as everything in the property that should be included such as statues, and appliances. The contract must also state the terms of payment and the time over which it is to be effected and when the transaction should close and the title transferred. Provisions for professional inspection and title search must then be allowed and finally when the buyer will take over the property possession. Once the agreement has been signed, the buyer is at liberty to have the property professionally inspected. I would let my client know that this step is very crucial and that it the buyer who pays for it. The good thing is that the inspection is not as expensive as would be skipping the step only to learn of other problems not in the disclosure, roughly $350. An additional problem with the property would mean an extra cost in fixing hence the value of the inspection. If such is noted then the buyer can ask for the lowering of the price in his offer. Walking away from the deal is an option that the buyer has when the issues noted in the inspection are not resolved, hence the importance of proper wording of the sale contract. If there are any issues that the buyer is not happy with regarding the property then it is my role as the agent to address them with the seller. Once the inspection has been done and all issues resolved then the buyer can feel free to pay for the property ownership anytime that would then be agreed upon. If the property is being bought on mortgage then the lender comes in to have an appraisal of the property. This is done just as an assurance that the property is worth what is being paid for. If the lender is not satisfied with the loan amount and it resolves to give the buyer a smaller loan then the buyer has to pay for the upfront. Insuring the property is the next step. There are many risks that are likely to meet any property and the buyer must understand the importance of having an insurance cover against such risks to shield himself from losses should the risks present an event. Peter must also be guided in finding a good insurance agent which advice I would offer him as a discount- free of costs. Having been in the real estate market I would present him with several insurance agents whom I know to offer good terms. It would also be important for him to do more shopping for the insurance agents and compare their prices for him to pick the best. In case of a mortgage the cost of the insuring, the property is added to the closing cost. Once all the steps have been carried out and all the documents are ready to be availed, it would be my role as the agent to schedule the purchase closing date. It would be my role as an agent to ensure that the buyer certifies the entire amount due at the closing of the contract. The purchase is now as good as done and the only thing remaining is the actual closing. The closing of property buying deals is often done at a title company or at an attorney's office. If the property was to be done on mortgage terms then the lender or sometimes the seller selects the closing office where all paper work is finalized. At this point, the buyer must bring the down payment and any other closing cost. A check is needed from the bank for all this if the bank had not already sent it to the closing office. The closing cost can also be sent directly to the closing office by the lender especially for a mortgage loan. At the closing office, the insurance cover must also be presented with at least a year's subscription as required by the law. At the closing office the agent ensures that the ownership is been transferred clear of disputes. After this step, the only thing that is remaining is the exchange of keys to the historic property. The buyer must also be given confidence that the agent is available in case of any further query. This may have to do will property tax matters or any legal matter that would arise after ownership has been transferred. Conclusion Through the education process, Peter will have come to appreciate my roles and the whole process of purchasing the property. By convincing him of my worth in the whole process, I will also have made it to carry my responsibility to the seller and get my commission. This way he would feel supported and protected and his paranoid nature will ease. Read More