below cited from: "Why use a Realtor" - Realtor.com
What a REALTOR® Can Do for You
The REALTOR® you work with could be one of your most valuable resources.
Unlike many real estate agents who are simply licensed by their
state to do business, REALTORS® have taken additional steps to
become members of the local board of REALTORS® and have agreed to
act under and adhere to a strict
Code of Ethics.
- A REALTOR® can
help you determine how much home you can afford. Often a
REALTOR® can suggest ways to accrue the down payment and explain
alternative financing methods.
- A REALTOR®, in
addition to knowing the local money market, also can tell you
what personal and financial data to bring with you when you
apply for a interest rate.
A REALTOR® is
already familiar with current real estate values, taxes, utility
costs, municipal services and facilities, and may be aware of
local zoning changes that could affect your decision to buy.
A REALTOR® can
usually research your housing needs in advance through a
Multiple Listing Service--even if you are relocating from
A REALTOR® can
show you only those homes best suited to your needs--size,
style, features, location, accessibility to schools,
transportation, shopping and other personal preferences.
often can suggest simple, imaginative changes that make a home
more suitable for you and improve its utility and value.
A REALTOR® is
sensitive to the importance you place on this major commitment
you are about to make. Look for a real estate professional to
facilitate negotiation of a win-win agreement that will satisfy
both you and the seller.
Why Use a REALTOR®
All real estate licensees are not
the same. Only real estate licensees who are members of the NATIONAL
ASSOCIATION OF REALTORS® are properly called REALTORS®. They proudly
display the REALTOR "®" logo on the business card or other marketing
and sales literature. REALTORS® are committed to treat all parties
to a transaction honestly. REALTORS® subscribe to a strict Code of Ethics
and are expected to maintain a higher level of knowledge of the process
of buying and selling real estate. An independent survey reports that
84% of home buyers would use the same REALTOR® again.
Real estate transactions involve
one of the biggest financial investments most people experience in
their lifetime. Transactions today usually exceed $100,000. If you
had a $100,000 income tax problem, would you attempt to deal with it
without the help of a CPA? If you had a $100,000 legal question,
would you deal with it without the help of an attorney? Considering
the small upside cost and the large downside risk, it would be
foolish to consider a deal in real estate without the professional
assistance of a REALTOR®.
But if you're still not convinced
of the value of a REALTOR®, here are a dozen more reasons to use
1. Your REALTOR® can help you
determine your buying power
-- that is, your financial reserves plus your borrowing capacity. If
you give a REALTOR® some basic information about your available
savings, income and current debt, he or she can refer you to lenders
best qualified to help you. Most lenders -- banks and mortgage
companies -- offer limited choices.
2. Your REALTOR® has many
resources to assist you in your home search.
Sometimes the property you are
seeking is available but not actively advertised in the market, and
it will take some investigation by your agent to find all available
3. Your REALTOR® can assist you
in the selection process by providing objective information about
each property. Agents who
are REALTORS® have access to a variety of informational resources.
REALTORS® can provide local community information on utilities,
zoning. schools, etc. There are two things you'll want to know.
First, will the property provide the environment I want for a home
or investment? Second, will the property have resale value when I am
ready to sell?
4. Your REALTOR® can help you
negotiate. There are
myriad negotiating factors, including but not limited to price,
financing, terms, date of possession and often the inclusion or
exclusion of repairs and furnishings or equipment. The purchase
agreement should provide a period of time for you to complete
appropriate inspections and investigations of the property before
you are bound to complete the purchase. Your agent can advise you as
to which investigations and inspections are recommended or required.
5. Your REALTOR® provides due
diligence during the evaluation of the property.
Depending on the area and property,
this could include inspections for termites, dry rot, asbestos,
faulty structure, roof condition, septic tank and well tests, just
to name a few. Your REALTOR® can assist you in finding qualified
responsible professionals to do most of these investigations and
provide you with written reports. You will also want to see a
preliminary report on the title of the property. Title indicates
ownership of property and can be mired in confusing status of past
owners or rights of access. The title to most properties will have
some limitations; for example, easements (access rights) for
utilities. Your REALTOR®, title company or attorney can help you
resolve issues that might cause problems at a later date.
6.Your REALTOR® can help you
in understanding different financing options and in identifying
7. Your REALTOR® can guide you
through the closing process and make sure everything flows together
8. When selling your home, your
REALTOR® can give you up-to-date information on what is happening in
the marketplace and the price, financing, terms and condition of
These are key factors in getting your property sold at the best
price, quickly and with minimum hassle.
9. Your REALTOR® markets your
property to other real estate agents and the public.
Often, your REALTOR® can recommend
repairs or cosmetic work that will significantly enhance the
salability of your property. Your REALTOR® markets your property to
other real estate agents and the public. In many markets across the
country, over 50% of
real estate sales are cooperative sales; that
is, a real estate agent other than yours brings in the buyer. Your
REALTOR® acts as the marketing coordinator, disbursing information
about your property to other real estate agents through a Multiple
Listing Service or other cooperative marketing networks, open houses
for agents, etc. The REALTOR® Code of Ethics requires REALTORS® to utilize these cooperative
relationships when they benefit their clients.
10. Your REALTOR® will know
when, where and how to advertise your property.
There is a misconception that
advertising sells real estate. The NATIONAL ASSOCIATION OF REALTORS®
studies show that 82% of
real estate sales are the result of agent
contacts through previous clients, referrals, friends, family and
personal contacts. When a property is marketed with the help of your
REALTOR®, you do not have to allow strangers into your home. Your
REALTOR® will generally prescreen and accompany qualified prospects
through your property.
11. Your REALTOR® can help you
objectively evaluate every buyer's proposal without compromising
your marketing position.
This initial agreement is only the beginning of a process of
appraisals, inspections and financing -- a lot of possible pitfalls.
Your REALTOR® can help you write a legally binding, win-win
agreement that will be more likely to make it through the process.
12. Your REALTOR® can help
close the sale of your home.
Between the initial sales agreement
and closing (or settlement), questions may arise. For example,
unexpected repairs are required to obtain financing or a cloud in
the title is discovered. The required paperwork alone is
overwhelming for most sellers. Your REALTOR® is the best person to
objectively help you resolve these issues and move the transaction
to closing (or settlement).
What Is a REALTOR®?
A real estate agent is a REALTOR®
when he or she is a member of the NATIONAL ASSOCIATION OF REALTORS®,
The Voice for Real Estate® -- the world's largest professional
The term REALTOR® is a registered
collective membership mark that identifies a real estate
professional who is a member of the NATIONAL ASSOCIATION OF
REALTORS® and subscribes to its strict Code of Ethics.
Founded in 1908, NAR has grown
from its original nucleus of 120 to today's 720,000 members. NAR is
composed of residential and commercial REALTORS®, who are brokers,
salespeople, property managers, appraisers, counselors and others
engaged in all aspects of the real estate industry. Members belong
to one or more of some 1,700 local associations/boards and 54 state
and territory associations of REALTORS®. They can join one of our
many institutes, societies and councils. Additionally, NAR offers
members the opportunity to be active in our appraisal and
international real estate specialty sections.
REALTORS® are pledged to a strict
Code of Ethics and Standards of Practice. Working for America's
property owners, the National Association provides a facility for
professional development, research and exchange of information among
its members and to the public and government for the purpose of
preserving the free enterprise system and the right to own real
Renting vs. Burying: Which is right?
When deciding whether you should be renting or
buying a home, there are several factors you should consider.
The Disadvantages of Renting
As a renter, you have to pay so much every month for rent, but that
money never goes toward ownership.
Also, you're making rent payments, not mortgage
payments. Therefore, you can't deduct mortgage interest from your
Renters generally aren't allowed to fashion
their living space to their preferences, like putting in different
flooring or putting up wallpaper.
Noisy or nosy neighbors can also pose more of a
problem since, in most apartments, you share walls with them.
The Advantages of Renting
Renters generally don't have to do the work in maintaining the
place. They don't have to fix the water heater or a leaky faucet.
Repairs are taken care of by the landlord.
When the lease is up, renters can just move
out. You don't have to take care of making sure someone else is
going to rent that space.
Lastly, up-front costs can be less when renting
than with buying. You generally only have to put up the first and
last month's rent plus a security deposit. After you're done
renting, you get that money back provided the place is in acceptable
Buying a Home
The Disadvantages of Homeownership
While historically, home values across the country have risen,
there's always a possibility that home values in a local area may
If you move, you have to arrange for the sale
of your home.
It's also your responsibility to maintain the
home and bear any costs for repairs.
The Advantages of Homeownership
When you buy a home, part of the money you pay towards your mortgage
every month gets applied toward your principal. This means you build
equity every time you make a mortgage payment, until you eventually
own your home outright. There are also tax advantages to home
ownership-mortgage interest is tax deductible*.
Homeowners also build equity through
appreciation. Your home is typically your largest financial asset
and the value can be positively affected by factors like home
improvements, inflation and the demand for land.
Another advantage to buying a home is that you
don't have to have a large amount of out-of-pocket up-front costs.
loan programs that allow you to buy a home with little or
no down payment. There are even
rate programs, such as interest-only
loans, that allow you to buy a more expensive home than you might
have thought possible.
And because you own your home, you can design
and decorate to your own taste. If you want to add an addition or
remodel the kitchen, the only thing limiting you is your
imagination. And the more you remodel and upgrade, the more you
increase the value of the home.
Ultimately, it's up to you to weigh the
advantages and disadvantages of renting and buying. You must assess
your individual situation to see which makes more financial sense
Should you buy points or not?
Discount mortgage points seem to confuse a lot
of people. Many folks aren't sure what they are, when they should
buy them, or if they actually did buy points when they got their
mortgage. The truth is, points aren't that complicated. In fact,
some simple math can make it really easy to determine if you will
benefit from purchasing points.
First things first. Make sure you understand
what points are. Points (or discount points) are simply pre-paid
interest. One point amounts to 1% of the total mortgage. If you have
a $100,000 mortgage, one point costs $1,000. That's pretty much all
there is to it.
Now, why would anyone pre-pay interest? Good
You pre-pay interest to get a lower
rate for the life of your loan. And because points are pre-paid
interest, you can, in most cases, deduct them from your taxes in the
year that you pay the points. That's a nice one-time tax benefit!
So, if you want the lowest
possible on any given day, you'd have to buy points, which is also
called "buying down your rate." Every day, when rates are issued, a
certain amount of points are tied to certain interest rates. For
example, if you've heard the term "zero point rate," that means that
rate has no points attached to it. You get that rate without
pre-paying any interest. A one point rate would have one point
attached to it and a two point rate, two points attached to it, etc.
If you want a rate below the zero point rate,
you have to pay points to your lender. If you are willing to accept
a rate above the zero point rate, you can actually get money back or
a credit on your closing costs. This is often how "no closing cost"
options are created - you typically get a loan with the highest
rate available and a lender will credit back all your
normal closing costs.
To find out if buying points will pay off for
your situation, here's some simple math you can do (go ahead, whip
out the calculator):
OK, let's assume you are considering two
options on the day you want to lock your mortgage
In this scenario, you would pay 0.75% (3/4 of
1%) less interest on your mortgage each year with the 5.25% option.
To get this rate, you have to buy one point upfront.
Now that you have your basic numbers, it's time
for some basic math. To figure out if buying points makes sense,
divide the total points paid (one, in the example above) by the
difference in rate (0.75) which, in this example equals 1.33 (one
divided by 0.75). This is the number of years it will take you to
break even from your investment in points. In months, this would be
To summarize, it would take you 16 months to
recoup your pre-paid interest money (regardless of your mortgage
amount - it's the same whether you have a $100,000 or a $500,000
mortgage) and from then on you would enjoy your low 5.25% for the
duration of your remaining mortgage. If you think you will be in
your home more than 16 months, you're saving money from that point
forward. Now that's a good investment!