Frequently Asked Questions

Got a question? Chances are we have the answer. We've compiled the most commonly asked questions about buying or selling a home here.

Q: What's the difference between a real estate agent and a REALTOR®?

"REALTOR®" and "real estate agent" are not interchangeable, although some real estate agents might like them to be. The term REALTOR® is a registered certification mark that identifies the quality of services rendered by licensed real estate agents who are members of The Canadian Real Estate Association (CREA). All real estate agents are not REALTORS®, but all REALTOR®members are real estate agents. REALTOR® members are committed to a strict code of ethics known as the REALTOR® Code, and are the only ones who have the right to list your property on the MLS® Systems of their local real estate boards. To correctly be referred to as a REALTOR®, a real estate agent must be a member of CREA.

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Q: How do I figure out what mortgage I can afford?

Determining the mortgage you can carry is based on a relatively simple calculation of loan amount, down payment, interest rate and amortization period.

A good rule of thumb when figuring your monthly housing cost is that it should not exceed 32% of your gross monthly family income or 40% of your gross monthly income.

Visit our Mortgage Calculator, plug in a few numbers and see what you end up with.

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Q: What questions should I ask when looking for a REALTOR®?

Here are 10 smart questions to ask. But remember, this is just a starting point. Your REALTOR® should be willing to answer any questions you have. After all, that's why you hire the pros.

1. How long have you been in the business?
2. What is your average list-to-sales-price ratio?
3. How will your marketing plan meet my needs?
4. Will you provide references?
5. What separates you from your competition?
6. May I review documents that I will be asked to sign?
7. Can you help me find other professionals?
8. How much do you charge?
9. What if I'm unhappy with the service?
10. What haven't I asked you that I need to know?

For more elaboration on each of these questions, visit our 10 questions to ask when hiring a REALTOR® tool.

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Q: Why should I hire a REALTOR®?

You're trusting a REALTOR® with your most valuable possession, your home. REALTORS® take this responsibility very seriously. Here's what we promise you:

1. Your REALTOR® is a trained professional

   REALTORS® take extensive pre-licensing courses in order to obtain credentials for practicing in real estate.

2. Your REALTOR® is continuously trained

   REALTORS® keep pace with the times by taking continuing education courses to upgrade their knowledge on a broad range of real estate related issues in order to be able to continue to provide consumers with current advice.

3. Your REALTOR® does everything by the book

   A REALTOR® must be registered under provincial laws that govern exactly how real estate can and cannot be traded. These regulations are your legal guarantee of professional behavior.

4. Your REALTOR® is an ethical businessperson

   REALTORS® must adhere to the extensive Code of Ethics of the Canadian Real Estate Association. Several provinces have additional codes of ethics governing real estate professionals. Your interests must always be put first.

5. Opportunity for recourse

   Should you have concerns about the professional behavior of a REALTOR®, provincial regulators and your local real estate board or association take these matters very seriously and work quickly to resolve any issues.

6. Your REALTOR® has access to a local Board's MLS® System

   A Board's MLS® system is the single most powerful tool for buying and selling a home. Your REALTOR® can provide you with exclusive features of the Board's MLS® System, such as immediate notification when new properties are listed. You don't have to wait for it to be posted on a web site.

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Q: What should I expect when I enlist the help of a REALTOR® to sell my house?

REALTORS® help you get the most for your home and they remove stress and confusion from the process. Here are just some of the advantages.

Your REALTOR® becomes your home's champion

When you sign a "Listing Agreement" with your REALTOR®, this is their promise that he or she will use all their skills and resources to get the most for your home.

REALTORS® know how to attract the most potential buyers

Your REALTOR® is an expert home promoter, connected to a network of agents and their buyers. He or she knows how to write compelling ads for your home, and only REALTORS® can place your home on a Board's MLS® System.

REALTORS® will help you increase your homes "sale-ability"

You probably have an emotional attachment to your home, and therefore can't view it objectively. Your REALTOR® will help you present your home in the best light, so buyers will fall in love with it more easily.

Market Knowledge - to help you get the most for your home

REALTORS® are masters of reading the market and pricing your home for maximum return. A REALTOR®'s experience literally pays!

Negotiation Skills - to keep the deal on track

REALTORS® are indispensable when it comes to bargaining with buyers. Tempers can flare and heels can dig in. Your REALTOR® is an expert at smoothing things out.

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Q: Do I really need a REALTOR® to sell my home?

Many people who try to sell their own home end up using a REALTOR® in the end anyway. Before anybody decides to fly solo through this complex, time consuming and financially perilous process, they should consider these questions.

Will you really "save" the real estate commission?

When buyers see a home for sale 'by the owner', they see a bargain. They imagine the REALTOR®'s fee going into their pocket, not yours.

How many potential buyers will you reach?

Selling a home takes more than just hanging a "For Sale" sign. How will you promote your home? Will you write your own ads? How will you use the Internet? MLS® and the corresponding web site www.REALTOR.ca have changed the way people search for homes, and it's hard to court buyers without it.

Do you have the time?

Promoting a home is a full time job, and you may already have one. Will you be able to take calls at any time? How about screening the callers to figure out if they're suitable candidates? Not everybody who calls is even suitable to walk through your home, but how do you tell?

Do you know the market well enough to get the most for your home?

Lacking years of experience, the average do-it-yourselfer is merely guessing at their listing price. Often they set the price too low and miss out on thousands of dollars, or they price their home too high and drive away willing buyers.

Do you have the negotiation skills to keep a deal on track?

When an offer comes in, emotions can run high with so much money on the line. This is why direct seller-to-buyer deals often end in disaster. REALTORS® keep it professional and are indispensable when it comes to bargaining with buyers.

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The Most Useful Question to Ask a Real Estate Prospect

What's the single most useful question you could ask a real estate prospect? Is it...

a. What is most important to you about the agent you hire?

b. How many agents have you interviewed? (Or, How long have you been looking?)

c. What's your situation with regards to selling/buying?

The answer is "c," What's your situation with regards to selling/buying. Why? Because that question opens up a conversation that can lead directly to the heart of their objections.

Question "a" isn't a bad question. It's a useful data-point in the sales conversation. It serves me by giving me information I can use to "spin" my presentation towards what works for them. However, it can be seen as a kind of entrapment question because the prospect recognizes that you're asking it so that you can set yourself up for a sales pitch.

Question "b" is also not a bad question. Again a useful data-point. But this question is seen by the prospect as even more of an entrapment question. It does very little of any substance in the sales conversation because it doesn't help them process their decision or understand the situation. It's information you want to know, but by asking it you're focused entirely on yourself, not at all on your prospect. Prospects sense that lack of focus on them and they subtly resent it, making it harder for you to recover your rapport with them.

What happens when you start your sales conversation with question "c" is that prospects tend to get straight to the heart of their key objections or concerns.

For example, one of my coaching clients tells this story. "I met a couple at an open house. We had a nice conversation about what they liked and didn't like about the house, and what other houses they'd seen in the area. They said they weren't working with an agent, but they were reluctant to set an appointment with me. So I asked them, 'What's your situation with regards to buying a house?' They looked at each other and then the dam broke open. They started telling me all about how her ex husband had a lien on her current house, and they couldn't buy until he released it but he was being a...etc, etc."

In my experience, the situation question almost magically lowers a prospect's shields and makes them open up. It's a kind question that says "I'm listening".

Article Source: http://EzineArticles.com/?expert=Linda_Schneider

What Determines Your Mortgage Rate?

Understanding mortgage rates can be frustrating. Maybe you’ve been shopping around for the lowest mortgage rate and are wondering why no one will quote you the rates you’ve seen advertised or read about in the news.

Here are some of the major things that determine the mortgage interest rate charged to individual consumers. Some may be obvious to you, others probably less so.

 

Credit score

 

Most borrowers realize that their credit score is going to affect the type of interest rate they can get. What few of them know is exactly how much.

 

Most lenders group credit scores in brackets, with the top brackets getting the best rates. The highest bracket is typically for FICO credit scores of 740 or 760 and above, the second bracket usually begins at 700 or 720, then on down to 680, 660, 640 and 620, the last being about as low as you can go and still obtain a mortgage with most lenders.

 

Generally, interest rates increase by about 20 basis points each time you go down a bracket. So if borrowers in the 760+ bracket are paying an average of 3.75 percent for a 30-year loan, those in the next bracket down will likely pay around 3.95 percent, though the steps get bigger toward the lower part of the scale. The Fair Isaac Corp., which created the FICO credit scoring system, provides a table on its web site, www.myfico.com, showing what current average interest rates are for different credit scores in various parts of the country.

 

Region

 

Where you live affects your interest rate. Many people aren’t aware of it, but mortgage rates vary from one part of the country to another. There’s no hard and fast rule, but generally interest rates are somewhat higher in areas with a higher cost of living.

 

It’s not a huge difference – for customers with good credit, about 10 to 15 basis points more (0.10-0.15 percentage points) if you’re getting a mortgage in a high-cost state like California or New York versus lower-cost areas like Kansas, Idaho or Louisiana, according to the Fair Isaac Corp., creator of the FICO credit scoring system. That’s about equal to an additional $10-$20 a month on a $250,000 30-year loan.

 

Points

 

One of the reasons you may not be able to obtain the same interest rates you read about or see advertised is that those rates often include points. Points are a form of pre-paid interest that can be used to lower your interest rate.

 

Each point costs a fee equal to 1 percent of the loan amount and typically reduces your mortgage rate by about one-eighth of a percentage point. So if you’re borrowing $250,000 and the standard interest rate is 4.00 percent, you can buy a point for $2,500 and reduce your rate to 3.875 percent.

 

Negative points are sometimes used as a way to pay for closing costs and other fees. So, in the example above, taking a single negative point would raise the interest rate to 4.125 percent to defray $2,500 in closing costs and fees.

 

Down payment

 

The size of your down payment may affect your interest rate. For lenders, a smaller down payment means a riskier loan, so they tend to charge higher rates. However, if you put less than 20 percent down, you’ll have to buy private mortgage insurance (PMI) . This gives the lender some protection in the event of a default, making the loan less risky. In fact, in some cases you may even get a better interest rate than someone who puts down 20 percent.

 

Keep in mind, though, that the annual charge for PMI is equal to about one-half percent of the amount borrowed, so it’s like raising your interest rate by half a percent. Also, the rate will likely vary for both PMI- and non-PMI loans. For example, someone putting down 5 percent may pay a higher rate than someone putting down 10 percent while someone putting down 30 percent will likely get a better rate than if they’d put down 20 percent.

 

Lender

 

Some people overlook this, but the interest rate you pay will vary according to the lender you go with. Lenders participate in different lending programs and structure their loans and fees in different ways. The lender who provides the lowest interest rate for a friend may not have the best deal for you. This is why it pays to shop around for a mortgage – you don’t know who will have the best deal until you compare several offers.

 

Notice too, that you’re looking for the best deal – not necessarily the lowest mortgage interest rate. Because of the way different fees and closing costs get folded into a loan, a mortgage with a seemingly low rate could actually end up costing you more over the long run than another with a slightly higher rate, because you’re paying more fees up front. A convenient way tocheck this is to compare the annual percentage rate (APR) on different loan offers, which is a way of estimating the total cost of a loan.

http://www.mortgageloan.com/what-determines-your-mortgage-rate-8908

What is a credit score and why does it matter?

Your credit score is a three-digit number derived from detailed information about your credit history, and it can be one of your most valuable assets.  Your credit score will play an important role in your financial future: it can mean the difference between being able to purchase a home with a mortgage or having to continue renting.  It can also drastically affect the rate of interest you pay on your loans (car loans, home loans, privately consolidated student loans, etc.). The higher (and better) your credit score, the less interest you will have to pay each month and overall. Your credit risk is evaluated, largely by reference to your credit score, any time you apply for a credit card or any type of loan. Keep in mind, though, that landlords, utility companies, and potential employers may also take this information into account.  A poor credit score may mean having to make a large deposit in order to open an account with the electric company or to sign a new lease.  It could even mean the loss of job opportunities.

Various organizations provide different credit scores, though all are similarly calculated.  The FICO score is the best know and most widely used credit score.  A FICO score ranges from 300 to 850, and those with scores of 740 and higher are typically entitled to the best interest rates.   

http://personalfinance.duke.edu/manage-your-finances/credit-scores/what-credit-score-and-why-does-it-matter

5 Options for Staging Your Home

For many sellers, the word “staging” conjures images of an out-of-reach home in an upscale design catalogue with a giant price tag. The assumption is they can’t afford staging, or their homes don’t need it. Many sellers believe their homes already show well, they have nice furniture, and they’ve carefully chosen their paint colors — all of which will help sell their homes.

The reality is, most sellers would benefit from at least some level of staging. And staging doesn’t have to involve a high-end designer who takes over your home, removes all your stuff and completely transforms it. There are many ways to stage a home. It can be as simple as a one-time, slight design and furniture placement consultation, or it can involve a complete renovation of your home in anticipation of your sale.

Don’t be turned off immediately if your agent suggests staging. The goal is to turn your home into a marketable “product,” and just a little bit of work can go a long way. Here are five options for staging that sellers should consider before listing their home for sale.

1. A one-time consultation

Most home stagers are actually designers. They know what looks good, what sells and how to best showcase a home. Your home may need a good paint job, could use some new carpet or might even need some landscaping or help with curb appeal. A designer can offer advice about your current home and suggest paint colors, types of carpets, new light fixtures and all kinds of feedback to help you get your home ready for sale.

Think a designer will cost a fortune? Think again. A designer can come in and charge by the hour (as little as $75/hour and up to $200/hour, depending on your location) and consult with you on colors, fixtures and finishes. This can be one of the best few hundred dollars a seller spends prior to listing.

2. Partial staging

Partial staging is exactly what it sounds like. You may have some outdated furniture or lack good art for your walls. A stager/designer can come in and just do a little bit of work. Maybe you use one bedroom as an office. The stager can bring in a day bed and small dresser to help show this room as an office or a bedroom. You may want to get rid of your oversized sectional sofa and have a stager bring in something smaller to give the appearance of a bigger family room. Have some rooms that seem bare, cold or sterile? A stager can bring in carpets or throw pillows to give any room some life.

3. Fluff staging

Have some nice things but not sure your home shows at its absolute best? Have a stager come in and do some “fluff” staging. Fluff staging might involve moving your current furniture around to best showcase a room or moving big pieces to the basement. You may have some great pieces hidden away or simply mismatched where they currently sit in your home. A stager working with your stuff can save you tons of money because they don’t need to bring in any of their own furniture. You can simply pay the stager by the hour to come in and redesign your current home.

4. Full staging

Do you need to move out before listing your home and don’t want to put your home on the market without furniture? Full staging is the answer.

Buyers sometimes have a difficult time imagining where the furniture goes or how they could potentially live in a home. A home without furniture won’t provide them any ideas or vision and may hold them back from falling in love with your home. Also, a home without furniture often echoes, feels empty, cold and sometimes sad. These aren’t the impressions a smart seller wants to give potential buyers. Full staging costs more, because the stager needs to hire the moving truck and use their furniture. But agents around the country highly recommend full staging on an empty home.

5. Full staging plus renovation

Moving out of your home, and it needs some updating? Have a few thousand dollars to invest? Bringing in a stager and some affordable contractors can be a wise investment, especially in the kitchens and bathrooms.

Stagers tend to work with contractors who don’t cost a fortune and can work quickly. Doing things such as replacing old appliances with new stainless steel ones can go a long way. Have old knotty pine cabinets in the kitchen? A cheap upgrade is to strip them down and paint them white. Take out your old Formica countertops and replace them with granite or Caesarstone.

Some other common renovations or improvements include upgrading outdated light fixtures, refinishing hardwood floors and taking out an old sink in the bathroom and replacing it with a smaller pedestal sink.

It’s all about putting your best foot forward

If you’re serious about selling your home this year, you should put your best foot forward. Any improvements, whether big or small, should be planned well in advance. Work with your real estate agent early in the process so you know how much work you need to do on your home, how long it can take, and what kinds of costs you’ll incur. Nearly all agents can recommend local stagers as well as painters, floor refinishers and contractors if you choose to go it alone.

Related:

• How to Make Your Home a Product
• 5 DIY Tips for Home Staging on the Cheap
• How to Buy and Sell a Home at the Same Time

Brendon DeSimone is a Realtor and one of the nation’s leading real estate experts.  He has collaborated on multiple real estate books and his expert advice is regularly sought out by print, online and television media outlets including FOX News, CNBC, Good Morning America and Forbes. An avid investor himself, Brendon owns real estate around the US and abroad and is licensed to sell in California and New York. You can find Brendon on Facebook or follow him on Twitter or Google Plus.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

http://www.zillowblog.com/2013-06-28/5-options-for-staging-your-home/

Avoid These Common Seller Mistakes

Now that home prices have been rising, and buyers are getting off the sidelines (particularly as interest rates creep up), you may be more inclined to list your home — finally! Just make sure you do it the right way:

Price home to sell

A recent poll shows that 75 percent of homeowners think their agent’s listing price is too low! If you’re trying to cash in on the momentum that’s been building, and you think that a higher price is the answer, think again. It could ultimately slow down the deal! It’s better to price the home in line with comps and generate initial interest and attention. Then, if the market takes it higher in the form of multiple offers, great! But if you overprice it to begin with, you’re setting yourself up for disappointment, as you’ll likely get less than fair market value.

Think: Web appeal

Don’t make the mistake of glamming up your home before the open house. Rather, do it right before you post your listing online, as that’s where 90 percent of buyers start their search — on the Web! — and if they don’t like what they initially see, it’s onto the next house, no questions asked.

Professional photos sell!

The bottom line is that low-quality photos make bad first impressions. Use only high-quality, high-resolution photos to showcase your house. And more and more people are searching for homes via mobile devices, so make sure your photos look good on a smartphone. In June, 270 million homes were viewed on Zillow Mobile — that’s 104 homes per second. In fact, more homes are viewed via Zillow on a mobile device than on a desktop!

Choose the right agent

When it comes to selling your home — probably the most expensive thing you own — some sellers will hire a friend, a relative who does real estate part time or the agent who is asking for the lowest commission rate. Don’t be foolish. It’s really important that you go with someone who really cares about the transaction, knows how to attract qualified buyers, is a skilled negotiator and understands the complexities of contracts and paperwork. To find the best agent for you, check out agent reviewsonline — Zillow has published nearly 325,000 reviews of local agents by our users.

Consider early offers

Once a property is marketed, it typically gets attention right away — in the first few weeks! Eager buyers, weary of looking at the same old listings, will likely pounce, and perhaps even make an offer right away if your house meets their criteria. Don’t be spooked by early bids, hold out for better offers or second guess yourself, wondering if you should have asked for more. So long as the early offer comes in near the asking price, your property was priced correctly. Entertain the offer — even if comes as a total shock/surprise — and take it seriously. More often than not, that first offer turns out to the best one.

Related:

• 5 Options for Staging Your Home
• How to Avoid Seller’s Remorse
• How to Make Your Home a Product

Vera Gibbons is a financial journalist based in New York City and is a contributor to Zillow Blog. Connect with her at http://veragibbons.com/.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

http://www.zillowblog.com/2013-07-11/avoid-these-common-seller-mistakes/

How to Make a Better Real Estate Investment

Investing in real estate has lots of risks that can derail even the best-looking deals, so you need to make sure you are addressing the known perils and doing the hard work to diminish the chances that something will go astray with your purchase. And here’s the most important part: You must start before making the purchase and continue during ownership.

Financial sense

When you buy real estate, you must make sure that it’s a smart financial decision. Rentals make sense if they are cash-flow positive and provide a fair rate of return on the invested equity. Investors should not purchase negative cash flow properties, period. If you pencil out your rate of return on a negative cash flow property, you’d probably realize it would have been better to invest your money elsewhere in an asset with better returns.

Buy a property in good shape

Skip the fixer-uppers: They almost always cost way too much to repair. Many a buyer has theorized that it would be fun and profitable to buy a property, fix it up and sell it at a profit. Rarely does this scenario come true — usually the buyer ends up losing money. This may work for a construction contractor who is experienced in estimating the costs of repair, but for the Average Joe, chances are you will lose your money.

Secure long-term financing

Make sure to take out long-term fixed interest rate financing. It costs significant amounts of money every time you finance or refinance a property, so try to do just one financing at purchase and enjoy the peace of mind knowing you won’t have to worry about interest rate changes in the future. Go long!

Review your title documents

All buyers should review the title insurance policy, schedule of exclusions, title abstract and a plat or survey of the property. Schedule an hour for your title insurance agent to go through all those items with you, in detail, so you can address any issues before you purchase. Significant issues are rare, but you have to address them before you close escrow.

Property and liability insurance

Make sure to keep the proper insurance in place and for an appropriate amount, as needed for the specific property and your specific circumstances. You should sit down with your insurance agent and discuss your complete financial and insurance picture so that if something does happen — such as a fire, dog bite, flood or slip-and-fall — your insurance company will work with you to reduce the chances it would significantly impact your finances.

Manage rentals well

If your property is a rental, make sure to secure good tenants and keep them for as long as possible. Treat them well, keep your property in good shape, address issues and resolve them quickly. You’ll make the most money with the least hassle by treating your tenants the way you’d like to be treated.

So, if you want to make a better real estate investment, the areas above are good places to start. You’re reducing the likelihood of property issues occurring that could cause you financial pain or take up an inordinate amount of your time. And if you talk to long-term investors — and you should do that, too, to pick their brains — they’ll probably have many “I learned that lesson” stories to share. It’s better to learn these lessons from other investors than to learn them the hard way during your property ownership.

Related:

• Real Estate Investing: Why Cash Flow Is King
• How to Get the Most Value From Your Home Inspection
• Mortgage Shopping: How to Compare Good Faith Estimates

Leonard Baron, MBA, is America’s Real Estate Professor®. His unbiased, neutral and inexpensive“Real Estate Ownership, Investment and Due Diligence 101” textbook teaches real estate owners how to make smart and safe purchase decisions.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

http://www.zillowblog.com/2013-07-12/how-to-make-a-better-real-estate-investment/