Before you buy, sell or invest in real estate, know your role and know your goal. There are multiple participants in a typical real estate transaction: the buyer, seller, their respective attorneys, and the title company. Many homeowners seek the assistance of a real estate broker to negotiate the sales price and to bring about a successful closing. Many buyers and investors seek the assistance of a buyer’s agent to help them find properties for sale, negotiate sales price and bring about a successful closing. Mortgage brokers come into play when buyers seek financial assistance to purchase their homes, or when real estate investors seek leverage in the purchase of larger commercial properties. The more complex your transaction, the more participants it will take to bring about a successful closing.
As a buyer or seller, you should know who to call to manage each aspect of the transaction. You should also know your legal rights, obligations and have an advocate to act in your best interest.
As a seller, you may have various motives for selling. Your goal may be to cash in on your equity, or in the event of foreclosure and bankruptcy, clear outstanding debt, or settle a court judgment. As a seller, you can seek the advice of a real estate broker to find the best listing price, based on comparable sales in your neighborhood and the home’s condition, and the best offer to purchase. With a broker, you’re responsible for the payment of the commission at closing. You can agree to the type of listing, whether it’s open, exclusive or a pocket listing. Ask the broker to disclose the nature of your agency relationship before you sign a contract. If you are selling a commercial property, the real estate broker will conduct an analysis of the price based on the net income the property generates. As a seller, you can speak to a real estate attorney to represent you in this transaction from start to end.
Even though most buyers and sellers handle it on their own, real estate attorneys can help you to draft and negotiate your listing agreement with a real estate broker. Oftentimes sellers enter into listing agreements without fully understanding the terms nor the consequences of breaking those terms. Real estate attorneys create and negotiate listing agreements, contracts of sale and they facilitate the clearing of title. Be sure to understand the terms of your contracts and your responsibilities under those contracts.
The real estate attorney and title company assist buyers and sellers with the clearance of liens, violations and other issues on the property. The title company researches the property’s legal history to ensure that no creditors can make a claim against new owners, and to ensure that the new owner won’t be issued fines for the seller’s mistakes. Title companies provide insurance for that purpose, and new homeowners should safeguard their title policy for future transactions. Using the information gathered by the title company, the real estate attorney clears court judgments, negotiates payoffs on liens and mortgages, and can also assist with landlord-tenant matters, so that the house can be vacant for the new owners.
As a buyer you need to be sure that you have financing. If you have enough cash saved up, or you’re downsizing, you can make a cash purchase. You need to be aware however, that you’ll need to hire a real estate attorney and title company to protect your interest. If you can’t make a cash purchase, speak to a mortgage broker or lender and get pre-approved for a loan. Your pre-approval is based on your credit and income, and it will show the price that you can afford. You can get advice from various lenders, before you make a commitment. If you hire the services of a buyer’s agent, understand your listing agreement. Sometimes, you may be liable for the agent’s commission if the seller does not agree to pay it. Most times, the buyer’s agent will find a seller who agrees to a commission split so you won’t be held liable.
Real estate brokers have a fiduciary duty to you, the client. That means they work for you and must work in your best interest whether you are buying or selling. Be sure to understand the term length of your listing agreement with a broker, what commission is owed and what your responsibilities are. You also need to be clear on who the real estate broker of agent works for. Don’t be afraid to ask questions.
Real estate is a fast-paced industry, so it is important to understand your responsibilities and that you won’t endanger yourself and lose your wealth. It’s important to understand your contract with the real estate broker or buyer’s agent, as well as the contract of sale. Finally, even though a real estate transaction can be frustrating, a real estate broker and agent can help bring a smooth transaction because of their knowledge of the field.