Vermilion Realty - Frequently Asked Questions

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We began compiling questions and answers a few years ago. Perhaps you have a question about real estate and the answer lies here.

At the request of one of our web users we added a new section about expired listings. We had a number of questions from people who had their property listed but they did not find a ready, willing and able buyer. If this is your situation, this section may be beneficial.

If you have a question not listed here, contact us and we will reply to you and post your question here.

Clicking on a question will take you directly to the answer

FINANCING

BUYERS

SELLERS

GENERAL INTEREST TO BUYERS AND SELLERS

EXPIRED LISTING

Ok, your listing expired and you did not achieve your goal. What went wrong? How can you do better the next time? Here are some frequently asked questions.

Click on a question below to go directly to the answer. Or scroll down and read the whole document. Some of these questions may be similar to ones above. They are included here for completeness.

FINANCING

1. How do I go about buying my first home?
If you are currently renting congratulations for taking this first step in converting your rent payments into equity and tax deductible interest payments. A couple of suggestions:

Meet with a mortgage broker. A broker has knowledge of and access to a number of lenders who can finance your purchase. The mortgage broker will ask you a number of questions and will request a lot of documentation. A good mortgage broker ought to be able to give you a quick indication of what you can afford to buy.
Select a professional REALTOR® to help you locate a property you can afford. You can also join the millions of people who now begin their search for a home via the Internet. The fact that you are looking at these FAQ means you are on a site that gives you visibility into all MLS listings as well as free reports to help you understand the process of buying a home.

2. How much loan can I afford?
The best way to answer this question is to meet with a mortgage broker or loan officer. A mortgage broker has access to many different lenders and is familiar with their many programs. The mortgage broker will look at your assets, income, debts and credit score and can advise you on what ought to be affordable.

3. What is the difference between "pre-qualified" and "pre-approved?"
"Pre-qualified" means that you have met with a lender or mortgage broker and based upon the information you provided, the lender has agreed to lend you money to buy a home up to a certain amount. However, the data you provided has to be verified and once the lender has completed an investigation, the actual amount they will lend you could be less than the pre-qualified amount.

Good news is that "pre-approved" is nearly the same as cash in your pocket and will strengthen your negotiating position with a seller. When you are "pre-approved" the lender has completed its investigation and is set to loan you an amount up to the "pre-approved" limit. The only uncertainty is the value of the home and its appraisal. Usually lenders will place a time limit on the approval, typically 60 days.

4. Can I use my IRA to buy real estate? Yes, your IRA funds can be used to purchase real estate but be extremely careful to not violate IRS regulations in these transactions. You can get more information from our free report "IRA Real Estate Investments" under the "Buyers tab" on this web site. Also, consult with your financial or tax advisor before embarking on an IRA purchase.

5. What documentation is required to get a loan?
Expect to gather a lot of information. Lender requirements vary but figure you will need copies of your federal tax returns for the last two years. If you are self-employed expect to provide additional data to substantiate income. If your income has a major component of overtime, commissions or bonuses, expect to provide some substantiation that that income will continue. You will need copies of the last three months of:

bank statements
credit card statements
stock transactions or brokerage statements
IRA or 401k plan statements

If you include alimony in your income you may need to provide a payment history and perhaps a copy of the divorce decree. Also, have all account numbers, addresses and phone numbers for your credit cards and other loans such as current mortgage, equity loans, car loans, etc.

A final word... the higher your credit score the less documentation you may be required to provide.

6. I see different interest rates on loan offers but the best rates often have high "points." Which loan is best?
The "best" loan depends upon a number of factors your mortgage broker ought to review with you. Much will depend upon your financial situation, credit reports, credit score and your plans. You will see loans with lower interest rates with what are called "points." Points are loan discount fees and one point equals 1% of the loan value. You can think of a point as prepaid interest. By paying points up front, your interest rate will be lower. If you plan on keeping the property for a long time, you may want to pay more up front to have a lower payment during the term of the loan. If on the other hand you will keep the property for a short period of time, you may be better off paying a higher rate with no up front interest payment. Discuss it with your mortgage broker.

7. What is an impound account?
FHA backed loans, VA loans and some conventional loans require that the borrower pay monthly installments to cover property tax and insurance premiums into an impound (sometimes called escrow) account. The lender then pays the taxes and insurance premiums from this account. By collecting this money monthly, the borrower does not have to come up with a lump sum at one time to fulfill the obligation. This protects the lender in that funds are available to pay taxes and insurance when due.

BUYERS

1. What advive can you give to a buyer purchasing property in Arizona?
The best advice we can give is to go to a "Buyer Advisory" offered on-line by The Arizona Association of Realtors. This site has a lot of information and web links essential to a buyer.

2. Should I have my home inspected?
As a buyer you want to have the home you are considering inspected by a licensed inspector. In most states an inspector is a licensed contractor and they know what to look for in a home to be certain it is in a good condition. As a buyer, you probably do not have the skills to conduct a thorough inspection.

A home inspection is a written report typically 15 pages or so in length. An inspection report covers all appliances, electrical service, plumbing, heating and air conditioning, doors, windows, locks and other critical components of the building. Things not physically associated with the building such as sprinkler systems are not inspected. The cost for an inspection is borne by the buyer and typically runs $300 to $400 depending upon the size and complexity of the property.

It is possible your inspector will suggest you have further inspections. For example, if your inspector suspects there may be a problem with the roof, he may suggest that you have the roof inspected by a licensed contractor. Also, the county, city, town or lender may require an inspection for wood destroying pests (termites), a test of smoke/fire alarms and an inspection of the septic system.

You should have as much information about the property as possible so you can first, make a reasonable offer, and second, not have a big surprise after you move in.

3. How should I take title on my property?
The answer to this is to see your attorney. By all means do not assume you know. For example, in Arizona, "community property" does not mean that a surviving spouse automatically gets the deceased spouse's half. Either spouse holding title as "community property" can will their share to someone else. As a surviving spouse, you may discover that you are sharing the property with the deceased spouse's offspring, best friend or former spouse. Please, see an attorney. Your agent is not legally able to advise you on this.

4. Is a property survey necessary?
A preliminary title report on the property will give you information on lot dimensions. If after looking at the property you suspect something is amiss or verification of property lines is critical to you, go ahead. A survey may also reveal any encroachments that may not be obvious. You may want to consult with a real estate attorney first for surveys can be costly.

5. Should I offer a "lowball" price on a home I am interested in?
As a buyer you are free to offer whatever you wish but be cautious when offering a "lowball" price. You may have found a property you really want but you can alienate the seller very quickly by offering a ridiculously low price. We have seen situations in which a seller took one look at an offer and outright rejected it with no counteroffer. Your REALTOR® will give you comparable sale data in the neighborhood. If you make a low offer, couple the low price with something to the seller's advantage such as a quicker close. By understanding the seller's motives, you will know how to satisfy his non-monetary objectives while perhaps getting a lower price.

6. Once I am in escrow, can I still loose the deal?
Once you have a sales agreement with a seller, the contract stays in force until it is executed or terminated. A seller may continue to accept backup offers in case you (as buyer) fail to meet the contract contingencies or otherwise fail to meet purchase contract conditions.

If the seller accepts a backup offer, then you have an obligation to meet all the contract requirements and close on time. By so doing, you will close and the backup offer becomes void.

7. How negotiable is price on a property?
This depends upon the motivation of the seller. If the seller of a single family residence is relocating to a new job, the seller may be more open to negotiations so the move can be made quickly. There are a few things you can do:

Have a pre-approval letter from your lender so the seller sees that you have financing already arranged and do not have to delay a closing while you find financing.
Learn as much as you can about the seller and his or her motivation for selling. Then try to tailor your offer to satisfy the seller's motives. For example, offer a 21 day close instead of a 30 day close if the seller is eager to move.
Are you looking at a vacant house? Sometimes the seller of a vacant house will be more motivated as they may be paying a mortgage on two homes.

8. How does a buyer negotiate with strength?
A few tips:

Know the seller's motivation or reason for selling and meet as many of the seller's needs as possible
If not a cash purchase be pre-approved
Minimize the number of contingencies you place in your offer to purchase
Use a skilled REALTOR® who has negotiating experience to represent you

9. Is there a best time to buy a home?
Are you looking for the best time of year for a "deal?" If you are the answer is, "no." Yes, families with children try to sell and purchase during school vacation but not all families have this luxury. Sometimes the wage earner has to move to a new job and cannot wait until summer vacation. Also, there are many families without school children who are buying and selling throughout the year. December is supposed to be a slow month but there are agents who will tell you they write a lot of contracts in December. In summary the best time to buy is when you have financing arranged and find a property you like.

10. What are asking price (or list price), selling price and appraised value?
Lets do the easy one first. Selling price is the price at which a property sold. This is the price an appraiser will use when looking at "comparables" assuming, the sale was not a forced sale (a sale under duress) or some other factor is involved (such as selling to a relative). A selling price is what a ready, able and willing buyer paid for a property.

The asking price is what a seller hopes to sell a property for. The asking price can be higher or lower than the selling price. We saw in the recent past when properties were tight (sellers' market) that sellers got bids within hours of listing their property with bids sometimes going over the asking price.

An appraised value is the value assigned to a property by a licensed appraiser. There are different ways an appraiser may determine appraised value. For a single family residence an appraiser will look at "comparables." That is, they will look at similar properties that recently sold in your neighborhood and then make adjustments for differences such as pool or no pool, two or one car garage, general condition, etc.

11. What are contingencies and what do they accomplish?
As a buyer you may place contingencies in your offer to purchase. The two most common contingencies are a finance contingency and an inspection contingency. What a contingency does is it lets you out of the purchase contract if a contingency cannot be met. If you cannot get a loan, the finance contingency kicks in and you are let out of the contract. With the inspection contingency, if the home inspector finds a material defect in the home and the seller will not repair it, you are let out of the contract.

Contingencies have a time period and once the time period has passed, your contingency is voided. For example, you have a finance contingency that states that you will have financing arranged within 21 days. Once 21 days have passed you cannot come back and say you were unable to get financing. Of course without financing you will not be able to purchase the property so you will be out of contract. But the seller has the right to keep your earnest money deposit.

12. What is a HUD home?
The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), provides insurance to lenders. When you purchase a home that meets FHA requirements, your lender may take out insurance with the FHA to protect them in case you default on the loan. If you default, the lender will foreclose and the FHA will make up any losses to the lender. The lender then transfers ownership to HUD and HUD will then sell the house through a HUD registered broker.

HUD homes are typically in need of repair. They are priced with this in mind. A HUD home can be an exceptional opportunity for an individual who is not afraid of contributing sweat equity.

Buying a HUD home is not the same process as a normal residential transaction. You can get a lot of information from HUD's web site http://www.hud.gov. Vermilion Realty is registered with HUD and can submit your bid.

13. Should I buy a new home or one previously owned?
This is a mater of personal choice. Some people want a new house. They get to choose flooring, color scheme, cabinets, counter tops, etc. And with a reliable contractor, they are assured that any problem with the house will be resolved.

Others prefer a previously owned home. They see the character of the neighborhood, landscape plants are mature and there is a feel of being "established" that is comforting. Sometimes, a previously owned home can be less expensive than an equivalent new one.

14. Can I have an agent represent me in the purchase of a new home?
Some builders will work with a REALTOR®, even if they have an in-house sales staff. What this means is they will pay the REALTOR® a commission. By doing this, the builder is increasing the number of opportunities to sell a house.

Other builders may not work with a REALTOR®. They have their own in-house sales staff, are unwilling to pay an outside REALTOR® and want total control over the purchase process. In this situation you can still hire a REALTOR® but you will have to pay any fees or commissions.

A builder's in-house sales staff is compensated by the builder. So whose side do you think they will be on when negotiating? And they make their living negotiating new home sales.

If you want representation, contact a REALTOR® before visiting a model home. A builder will only cooperate with a REALTOR® if your REALTOR® is with you on your first visit. With a skilled negotiator on your side, you have a good chance to get what you want for your new home.

15. I am buying a house that recently had numerous major repairs. Should I be concerned?
An assumption is made here that the repairs are not the result of structural defects. If so, a home inspection is definitely called for.

Is the seller is marketing the home by mentioning it has a new air conditioning system or a new roof or new "Arizona room" ask to see that the work was done by a licensed contractor, that permits were obtained (if required) and that the bills are paid. Here is what could be happening...

Lets say the seller hired a contractor to enclose a patio making an "Arizona room." The seller did not pay the contractor and you buy the home. The contractor can put a lien on your new home for payment of the debt. You now must pay the contractor for the work done or the contractor can force a foreclosure. You then have to go after the seller to collect. This is not a situation you want to find yourself in. Not only is there the stress but also the expense of trying to collect payment from the seller.

If there are recent major improvements, ask to see permits, contractor license information and that the debt was paid.

16. Is there a greater rate of return on a new home or an older one?
Regardless of new or old, the return on your investment is driven by market factors; condition of the neighborhood, status of the housing market and the general economy. However, you can increase your return with an older home in need of updating. Buy at a good price, make sensible improvements and you'll get a greater return, especially if you invest some "sweat equity." Why else would some people be looking for a "fixer?"

17. What do I look for in a preliminary title report?
You found your dream home. Or did you?

The preliminary title report gives you a lot of important information about the property. You will see what the boundaries are. It will tell you if there are any restrictions on the use of the property that were set by a previous owner. It defines easements that may have been granted but perhaps not currently used. The easement stays in effect forever, even if not used, until someone has it removed. You may be planning to add onto the house but the title report may indicate there is an easement that will block your construction.

Read the preliminary title report carefully and if you have questions talk with your REALTOR®. He or she will direct you to the right source to get an answer.

18. What is title insurance? Do I need it?
There are three forms of title insurance. The cost of these policies is a one time fee based upon the purchase price of the property.

Owner's Title Policy
The seller normally purchases this policy for the buyer. It protects the buyer against title defects that could be discovered with a search of public records. These defects include forged documents, unknown heirs to a prior owner, a prior seller who may have been incompetent, improper documents or misfiled documents. The policy does not protect the buyer against liens and encumbrances on record, mechanics' liens not recorded, encroachments, etc.
ALTA (American Land Title Association) Title Policy
The ALTA Title Policy is what your lender will want. This is usually paid for by the buyer. An ALTA policy protects the lender against title defects that are a matter of public record as well as defects that would be revealed by a survey. The ALTA policy covers the items covered by an owner's policy and includes coverage for mechanic's liens not yet recorded, possession by other persons (squatters), encroachments or errors that a survey would reveal.
Extended Coverage Owner's Policy
This policy may be available to the buyer and offers the same protection as an ALTA policy.

No title policy will cover existing encumbrances of record, defects known to the insured, zoning ordinances and zoning changes.

19. What repairs should a seller make? When you get the inspection report you will see the items the inspector found that were defective. If you have questions or need clarification, ask the inspector. Hopefully you were with the inspector during the inspection and you understood each issue as it was discovered. You then prepare and give to the seller a "request for repairs."

The seller can agree to all, some or none of the requested repairs. This is for negotiation between the two parties. But you can avoid alienating the seller by not listing many small issues.

For example, if a screen is torn, that is something you can take care of later. If the furnace is inoperable, then you may be justified in requesting a repair. Don't forget, if you are not buying a new home, it is just that... not new. Do not expect everything to be in mint condition. If you are reasonable, the seller will most likely reciprocate with the repairs you want.

SELLERS

2. How do I determine the value of my home?
If you are looking for a very general indication of home value there are Internet sites that will provide you with a very rough estimate. These sites only look at sales of properties close to yours and do not take into account the amenities (pool, spa, landscaping, etc.) your home may offer.

You can do it on your own by talking to new neighbors and looking at near by open houses. This too will be a rough estimate as many folks don't reveal the price they actually paid and an open house will give you asking price, not sold price.

If you are considering selling, a REALTOR® will look at comparable sales in your area and will try to adjust sales prices for differing amenities. This is the best estimate that is often offered as a no charge service.

The last way is to hire an appraiser. You will get a professional appraisal but this will cost you a few hundred dollars. And remember, an appraisal has a short life for property values change frequently.

3. Should I repaint and install new carpet to sell my home?
Unless your home is in really bad shape, the answer is probably no. Most home buyers want to redecorate so paying to paint or install carpet could be a waste of money. Ask your REALTOR® for specific advice. If the exterior paint is peeling the curb appeal could be enhanced by scraping and painting the trim. Your REALTOR® will tell you if a specific room would benefit from repainting. Whatever you decide, keep colors light... with both paint and carpet.

4. Why should I interview agents when selecting one to sell my home?
Think of a licensed REALTOR® as your employee. In fact, the listing agreement is really an employment contract with you as the boss and the REALTOR® as your employee. Would you hire an employee without first interviewing a number of candidates to find the best one? Read our report "15 Questions to Ask an Agent Wanting to List Your Property." A good agent will help you understand contracts and disclosures, will negotiate and will advise you throughout the sale process. And a good agent will have many varied tools at his or her disposal to market your property effectively.

5. I am under contract with an agent to sell my home but nothing is happening. What can I do?
The listing agreement is often thought of as an employment contract. And your employee (your agent) should have committed to make every reasonable effort to locate a ready, able and willing buyer for your property. Have prospective buyers come to see your property? Has the property been advertised? Is the agent keeping you informed on a weekly basis of progress on finding that ready, able and willing buyer? If you cannot reply with a "yes" to these questions, you need to talk with your agent. If not satisfied, ask to be let out of the contract. If the agent refuses, speak to the broker. If you have not received the expected service, you will be let out of the agreement. If that fails, you can ask that your home be "withdrawn" from the market for the duration of the contract. As a last resort you can consult with an attorney but that can lead to a lot of expense.

One last point; if your agent has shown the property to someone, that person returns later, makes an offer and you accept it, you may be liable for the agent's commission. When terminating a listing agreement, ask the broker or agent to give you list of names of people they showed your property to and what time limit applies (90 days is not uncommon) during which you will be responsible for commission should you sell to someone on the list. And make certain the list of names is thorough enough to identify the party. An entry of "Mary Jones" is not sufficient. They ought to include physical address and perhaps a phone number.

Once the listing agreement has been cancelled, you are free to hire another agent.

6. I see a lot of FSBO (for sale by owner) homes in my area. Why shouldn't I sell my home myself?
First and foremost, you can sell your own property. There is no regulation that says you must use a REALTOR®. But...

It is not our intent to scare you. You must be careful.

First there are the contracts. You should be familiar with them so you can accurately use them to transfer clear title to a buyer.
You must disclose all you know about the property to a prospective buyer. There are disclosure forms you should use to protect yourself.
Your buyer may be a skilled negotiator. For a start, they probably know the value of homes in your neighborhood and knowing that you are not paying a real estate commission, they will start out at a price that has the commission savings you hope for already excluded in their offer. And if they are a skilled negotiator, expect a tough negotiation.
You hope to get a lot of people coming to see your property. Remember, these strangers have not been qualified by a REALTOR® so you will spend time showing your property to people who are just looking or cannot afford it.
You most likely do not have the advertising resources that a REALTOR® has. You will pay more for print ads and you will not be included in the major real estate sites on the Internet.

7. What is a "property disclosure" and do I have to provide one?
In Arizona a seller is required to complete a "Seller Property Disclosure Statement" or SPDS. It is crucial that the seller disclose all material defects that are known or should have been known with the property. The SPDS will be given to a buyer so they have an accurate picture of the condition of the property. The property owner must complete the SPDS. A real estate agent cannot complete the form for the seller.

Additionally, if a seller goes into escrow and the buyer has an inspection, then backs out of the transaction, the inspection report also has to be given to future buyers for the inspector's report contains defects now "known to the seller."

Selling a property "as is" does not eliminate the need for a SPDS.

8. What has to be disclosed on a Seller's Property Disclosure Statement?
Any known defect is to be listed in the SPDS. Requirements vary by state so do not rely on what you may have been required to disclose in another state. For example, California requires disclosure if a felony (e.g., a murder) occurred in the house. In Arizona, the seller is not obligated to disclose a felony. If you have any doubts, disclose. Disclosing too much is much safer than omitting an item.

9. What items must stay with the house when I sell it?
Anything that is permanently attached to the house should stay with the house.

Do not sell your home and then before moving out, take down your heirloom chandelier in the dining room. Items that are attached include light fixtures, ceiling fans, window blinds and drapes, cabinets, awnings, shutters, etc. Consult with your agent and be certain to list any items that are attached yet not included in the sale are itemized in the listing agreement.

The best thing to do is to take down your $600 Casablanca ceiling fan and replace it with something less expensive before you list your property. Leaving an item in place that you intend to take may be just the thing that convinced a buyer to make an offer... even though you may have listed the item in the listing agreement. Face it... you are moving and will be packing those precious things eventually so get those items out of the house before you list.

10. My house is too small. Should I remodel or buy a larger house?
There is no pat answer to this question. Generally, remodeling does not increase the value of your home as much as the cost of the remodeling. The best resale value is obtained when updating kitchen and baths but you still will probably not recover 100% of the cost of remodeling.

You need to consider your neighborhood. If most of the homes are 2,000 square feet and you want yours to be 3,000, chances are you will be over building for the neighborhood and the value of your home will be diminished by the value of the smaller homes around yours.

Another consideration is how long you will be in the home. If you plan on living in the home a long time, your return on the remodeling investment will come from added enjoyment of the home.

Decide what you want to do in your remodeling plans and get an estimate. Then look at homes that are for sale that come close to meeting your desire. You can then decide what is best for your situation.

11. After listing my house for sale with an agent I decided I do not want to sell. What do I do?

Tell your agent that you changed your mind. The agent will usually let you out of the contract for they want your business when you eventually decide you want to sell.

Be cautious though. If you do not get the contract back with "terminated" or some such notation on it, the agent most likely will not terminate the contract. The agent will simply remove any signs, stop showing and advertising it. If you do sell your house during the contract period, the agent may come back to you for the commission.

GENERAL INTEREST FOR BUYERS AND SELLERS

1. What are closing costs and who pays them?
Closing costs are all the fees associated with the purchase including loan discount points, loan origination fees, escrow fees, title insurance, recording fees, prorated property taxes, etc. Both seller and buyer have closing costs and who pays what is dictated by local custom and what was negotiated and agreed in the purchase agreement.

2. What is "agency?"
The basic definition states that agency is a relationship created when one person hires another to perform certain duties on their behalf. In real estate agency takes different forms.

As a seller, when you sign a listing agreement you create an agency. You are the principal and the broker you hire is the agent. The agent owes you the duties of confidentiality, accounting, loyalty, obedience, disclosure and must exercise reasonable skill and care in his or her performance. As a principal you owe your agent the duties of compensation, indemnification and performance. A real estate agent working for the broker is an agent of the broker but a sub-agent of the principal. The sub-agent owes the same duties to the principal as the agent (broker).

Agency relationships are created when a seller signs a listing agreement. An agency relationship is also created when a buyer signs a buyer-broker agreement. Under a buyer-broker agreement the same responsibilities of the buyer (principal) and agent apply as stated above.

Dual agency is created when an agent represents both the seller and buyer. States and real estate firms have different rules covering dual agency. For example, Vermilion Realty does not allow a single sub-agent to represent both buyer and seller. Under dual agency it is difficult for a sub-agent to fulfill all of his or her responsibilities to both principals simultaneously. Technically and legally, since the broker is the agent and the agents working for the broker are sub-agents, this is still dual agency... the contracts are with the broker. But having different sub-agents represent the buyer and seller, the sub-agents are able to represent the principals while maintaining the confidentiality, loyalty and other obligations of the agency relationship.

3. What is a home warranty?
A home warranty is a service policy to cover a homeowner in the case of a failure of any of the major systems or appliances in a home. Often times a home warranty is offered as an incentive by a seller. It gives both the seller and especially the buyer a secure feeling knowing that should any equipment or system fail, it will be repaired for a nominal service fee.

Whether selling or buying, check with your REALTOR® about a home warranty. If you are buying a home and the seller is not offering a home warranty, you can still purchase one. Check to see what is covered. Many companies offer a basic policy that covers the plumbing, wiring, heating and some appliances. Coverage of washer, dryer, air conditioner or pool equipment may be offered in an upgraded package for an additional fee.

4. What is a "1031 Exchange?"
The Internal Revenue Code Section 1031 allows capital gains to be deferred when selling one property and purchasing another of equal or greater value. (The 1031 exchange applies to property used for income or investment, not to your personal residence.) This is sometimes referred to as a "like kind exchange." The IRS has many rules that must be strictly adhered to avoid paying a tax. Searching the IRS web site (www.irs.gov) for "1031" will give you a lot of information. Also, consult with your tax advisor and then find a REALTOR® experienced with 1031 exchanges.

5. What does the REALTOR® designation signify?
Displaying "REALTOR®" after a person's name indicates they are a member of the National Association of Realtors (NAR). NAR has a rigorous code of ethics to which every REALTOR® must adhere. Not all real estate agents are members of NAR.

6. What is the significance of the letters following an agent's name?

States have varying continuing education requirements for an agent to keep a license. Some agents will fulfill the minimum requirements while others will pursue higher levels of knowledge.

In general, designations indicate that the individual has gone beyond minimum requirements. However, the fact that a person has completed study requirements does not always signify you will get better representation. That still comes down to your establishing a good personal relationship with a person you trust and one who has a good reputation.

In general, if an agent uses the term "broker" in their title, they have studied for and passed a state's licensing requirements for a broker license. A broker's license requires additional study and experience beyond that of a salesperson's license. Not all brokers manage a real estate firm. Many work for a broker as a "broker associate."

GRI indicates a person is a Graduate [of the] REALTOR® Institute. This too requires rigorous training.

With the growing use of the Internet by buyers and sellers, the National Association of Realtors has established the designation of REALTOR ePRO® to indicate a person has completed extensive training on the use of Internet tools to assist buyers and sellers.

And there are many more designations. When interviewing an agent, ask them what additional course work they have taken. Ask them to explain the significance of any designations following their name.

7. What is RESPA?
RESPA is the acronym for the Real Estate Settlement and Procedures Act. First passed in 1974, RESPA helps home buyers save money for settlement services by requiring full disclosure of all closing fees and any relationships between any of the parties.

It also prohibits any activity by all parties involved in a transaction (REALTOR®, inspectors, lenders, title companies, escrow companies, etc.) from any activity that would increase their fees (for example, a lender paying a title company a referral fee).

RESPA only applies to transactions in which a loan is used in the purchase of 1-4 units of residential property. More information is available on the Internet at this siteRESPA.

8. What is a "reverse mortgage?"
A reverse mortgage is a special home loan that allows a home owner to convert part of their equity into cash. Unlike a home equity loan, the homeowner makes no payments to satisfy the loan until they stop using the home as their principal residence. This can be a convenient way for a homeowner to meet emergence financial needs or to supplement their monthly social security or pension income. More information can be found by following this link www.hud.gov on the HUD website.

9. How do I check my neighborhood for registered sex offenders?
Follow this link to the Arizona web site.

10. How do I check on the license status or complaints regarding a real estate company?
Go to the Arizona Department of Real Estate public database on the web.

EXPIRED LISTING

1. I am frustrated and angry. My home did not sell as I expected. What do I do now?
Before getting into what went wrong, how committed are you to selling? Step back a moment and consider what happened with your listing.

Did your agent work with you and provide sound guidance on price?
What was the price you set in relationship to the guidance your received and in relationship to other homes for sale in your area?
Did you interview different agents so you could select the one that had the marketing tools in place to sell your home?
What is the condition of your home in relationship to others in the area?
Does it have good curb appeal?
Is there clutter inside?
Have you put off routine maintenance?
How easy was it for agent to show your home?
Did you have a lockbox?
Did you require a prior appointment?
Do you have intimidating pets?

2. What are the key elements to a successful sale?
There are four crucial ingredients to successfully selling a home

Price
Marketing
Condition
Ease of Showing

3. How do I use a Comparative Market Analysis to set price?
When you listed your home, your agent should have provided you with a Comparative Market Analysis (CMA). A CMA will show you what has sold in your area over the past six months. It will include the property address, square footage, number of bedrooms and baths, and so on. A CMA will also show you what is pending (in escrow but not yet closed) and what is currently on the market.

What sold is important for it is a real indicator of what people were willing to pay for property in your area. What is less obvious is how these properties were marketed, their condition, and ease of showing. Regardless of these uncertainties, the property did sell so these ingredients must have been acceptable to the buyer.

The information in the CMA relating to homes currently on the market is equally important for helping you to set an asking price. These properties are your competition. If someone wants to move into your area, they will be looking at these properties and comparing them to yours.

Properties listed in the "Pending" section of the CMA are of least importance in setting a price for your home. The pending section shows what the asking price was at the time of contract. One cannot determine the actual negotiated price. Once the sale is concluded, the data will then reflect the actual sales price.

4. How can I be certain the price is right?
The setting of an asking price is a joint effort between you and your Real Estate professional. The professional will present you with data and will offer guidance based upon his or her knowledge and experience. The final pricing decision however is yours. To help you make this decision with knowledge, go look at open houses in your neighborhood. Look at them as a potential buyer would and ask yourself how the property compares to yours. This is not an easy task. If there are no open houses to view, look for a flyer container on the for sale sign. Even a little information is helpful.

Try not to approach the pricing of your home with the thought that you HAVE to realize a certain price. We recently had contact with a seller who was determined to get a certain price for their home. The seller’s listing agreement expired and they contacted us to list their property. Once we spoke with the seller and realized what their objective was, we realized why the home had been on the market for over a year. And with the goal the seller had set, the home would continue to be on the market for a long time.

5. Should there be automatic price adjustments?
Some people write into the listing agreement a schedule to formally review pricing every thirty or forty-five days. This is an excellent idea if you have the other three elements (Marketing, Condition and Ease of Showing) in place. Homes that have all the elements in place should sell within 45 days. If there is no offer within that time a review of the four elements, including price is in order.

6. What is the best way to market a property? One word… Internet. Buyers today are much more sophisticated than they were just a few years ago. In the "old days" agents put out just a little information on a property then waited for potential buyers to call seeking more information. This no longer works. The Internet has revolutionized the Real Estate industry. Buyers today want to get as much information as they possibly can electronically. They do not want the pressure and aggravation of having to call an agent for information.

A 2005 survey by the California Association of Realtors revealed the following…
Before wide use of the Internet, it took (on average) 8.4 weeks from the time a buyer started looking to enter into a purchase contract. The process of finding a property required a lot of time on everyone’s part. That eight plus weeks has shortened today to 6.4 weeks! Additionally, the "traditional" buyer on average looked at 15 properties with an agent before making a decision. The "Internet" buyer looked at 7.

Buyers today are searching for property on the Internet. They get information on towns and schools on the Internet. They comparison shop lenders on the Internet. And they also compare Real Estate professionals using the Internet. A recent study showed that over 74% of the buyers today did their research on the web before contacting a Real Estate professional. And it is not uncommon for that contact to be in the form, "We found these properties on the Internet and would like to see them."

What we are saying is that to sell your home, information about your home has to be easy to get… it has to be accessible 24 hours a day, 7 days a week, and the Internet is a major tool to accomplish this.

When you interview a Real Estate professional to sell your home, be certain to ask pointed questions about their marketing program. And ask to see traffic reports showing the number of visitors to their web site. This gives you an indication of how effective their web site is in reaching potential buyers. Don’t forget that if everything else is set correctly (Price, Condition and Ease of Showing), a failure in marketing will negate all of that good work.

7. What is your web presence? How and where is my home information available?
We have our own web site to promote your property. And to make our web site a preferred source of information to buyers we offer many tools to make their research easy. For example we offer:

Free reports
Newsletters
Access to all the listings in MLS
An email property search (the visitor can define their criteria for a home and then they are automatically sent an email every time a property meeting their spec comes on the market)
Mortgage calculator
Links to information about the local area; cities, schools and events

8. How can I tell if a web site is good?
One of the things you need to do when selecting a Real Estate professional to list your property is to check their web site. Is it a valuable resource to buyers? If you were in the market to buy, does the web site help you? And ask the agent to show you traffic reports that measure the frequency of visitors to their site.

9. What about the 24 hour info hot lines I sometimes see advertised in front of a property for sale?
As we said before, the provision of information on your property 24 hours a day, 7 days a week is important. People do not want to wait until a Real Estate office is open so they can call an agent for information. They want it now!

Another thing we do to promote your property is to provide a toll free number for recorded information about your home. This information is available 24 hours a day. When a person calls in they can listen to a description of your property. They can then have the call immediately transferred to our agent if they are interested or they can leave a voice mail.

10. Have you other ways to follow-up on leads?
Yes we do. Anytime a person visits our Web site and requests a CMA, or a report, or makes a referral; we capture their name, address and email address. We then use this information to periodically follow-up. However, we will not SPAM anyone and we provide an "opt out" to everyone on our email list.

11. Are ads in the newspaper still worth while? Do you advertise in print media?
The success of print ads (newspaper classifieds) is diminishing. But it may still play a role in the marketing plan for your home. We run ads in the newspapers that reach potential buyers for your property. Is your property one that might be a second, seasonal home? If so, we may run ads in out of area print media. Are you selling a high-end property? We have great success with the "Wall Street Journal." Print ads may be appropriate to your property. Your Real Estate professional should discuss this with you.

12. Do you hold an open house?
Not very often. With 20 years experience, we never sold a home to a person walking through during an open house. We have, however, developed relationships with buyers who visit an open house who eventually purchase another property. An open house benefits the agent, not the seller.

One responsibility an agent has when working with a buyer is to determine the buyer’s ability to purchase property the agent plans on showing. Buyers can be pre-approved or pre-qualified. A pre-qualified buyer is one who has a lender ready to provide the buyer with funds to purchase a property. During an open house you have people coming through who may not qualify to purchase your home. You and your Real Estate professional are spending time with people who most likely are not legitimate buyers.

There is also the inconvenience to you of having an open house. An open house is a time you ought to be away from your home and this is not always convenient to you, especially since open houses are on weekends, a time you probably want to be home.

13. What other marketing tools do you employ?
Our greatest success has come from the use of email. When we list your property, we send email flyers to a lot of people. We sent flyers to current clients and to past clients. Most of our business comes from referrals so past clients are important. They often know of a friend, co-worker or relative who is thinking of moving to our area. And by sending the flyer by email, they can forward it on to people they know that may be interested.

We also send the flyer electronically to other agents. They may be working with a client and your property is just what they are looking for. And again, being electronic, agents can forward the email on to their clients.

And we will ask you to do the same. We will send you the flyer by email and we’ll ask you to send it on to your friends, co-workers, neighbors, etc.

14. How important is "curb appeal?"
We cannot stress enough how important this is. Prospective buyers will first drive by your home. If they do not like what they see, they will not stop, they will not call. They will never see the modern kitchen you have or the great views from your back yard. How does your home compare to the ones on either side of yours or across the street? Your home has to appear neat, clean and orderly from the outside. If you have grass, keep it green (water and fertilizer) and mowed, weeds pulled, shrubs pruned, walkways swept. Pots of colorful flowers by the front entrance will attract and welcome visitors.

We had one buyer who looked at prospective properties at night. They liked to entertain and wanted to see how welcoming the home was to evening visitors. If you have exterior lighting, replace burned out bulbs.

15. What can I do to make the interior more appealing?
Please get rid of clutter. This may be hard for you have lived with your things for a long time. Ask your Real Estate professional for guidance. They are unbiased and will tell you the truth, as they want to sell your home. Just don’t take their comments personally. They are viewing your home from the eye of a prospective buyer who is looking for a bright, airy, spacious home. Since you will be selling your home and moving, start packing some of your possessions now and store them in a locker or neatly in the garage.

Pay attention to your closets. Are they jammed with clothes? A potential buyer will see that and come to the conclusion that their clothing will also be jammed. Remember that you will be moving. So get a couple of wardrobe boxes and store items currently out of season.

16. Should I paint and re-carpet?
If your home has not been painted in a few years or if the walls and trim are badly soiled or chipped, paint. This is the most cost-effective improvement you can make, especially if can do it yourself.

Carpet is another matter. Carpeting is not cheap. Ask your Real Estate professional for guidance. If carpeting is called for, choose a neutral color and try to stay one step above the cheapest carpet. Cheap carpet is just that, cheap!; And buyers will know it. You will be better off spending a little more on the pad so there is a cushy feel to the carpeted areas. On the other hand, do not go for the top of the line, as you will not get your money back.

17. What is "deferred maintenance?"
Deferred maintenance is a term applied to those things you should have done but have not yet gotten around to doing... peeling paint on exterior trim, a torn window screen, broken lock, dripping faucet. A home that has a lot of deferred maintenance is not good. First the buyer sees things that have to be repaired. The buyer will either ask you to make the repairs before the close of escrow or will expect you to pay for the repairs with either a lowered price or funds held in escrow to pay for the repairs.

Another aspect of deferred maintenance is that a buyer is made aware of the work required to keep the property in good condition. We know that a house constantly requires work to keep it up. If you have a lot of deferred maintenance, the buyer assumes that since you did not have the time, he won’t either. Also, if a number of items needing repair are visible, a buyer will wonder how many items less obvious also require repair?

18. What do I need to do to keep the house ready for showing?
Keep your home clean. Put dirty dishes in the dishwasher, keep beds made, bath linen neatly folded and dirty clothes out of sight in a hamper. To the degree that you can, keep blinds and curtains open for light and turn on lamps in dark corners and rooms. Remember - neat, bright and airy are the guiding words.

19. What can I do to make the house "easy to show?"
Agents have a limited amount of time when showing property to prospective buyers. Anything done to hinder showing will limit the number of showings you get. For example, not using a lockbox or requiring an appointment. Some people even require an offer be made before showing. Your personal situation may require some requirements for showing. For example, one of our clients worked nights and asked for no showings prior to 11:00 AM. Be sure to tell your Real Estate professional what your needs may be but try to keep them to a minimum.

20. How important is a lockbox?
By all means let your agent put a lockbox on your home. Again, keep the ease of showing your home as simple as possible. A lockbox enables an agent to show your property on short notice, beneficial to both you and the potential buyer.

21. What do I do about my alarm system while my home is listed?
If you have an alarm system it is best to not have it engaged. But if this makes you uncomfortable, give your Real Estate professional an access code. Agents have the ability to enter your alarm code into an area of MLS that is viewed only by other agents, not the public. With this information, an agent can show your home without fear of activating the alarm.

If your alarm is tied into a central alarm system, some alarm companies can give you a "realtor code" so your personal code is not compromised. And if there is a mistake made by a realtor, the central alarm can detect it.

22. I have pets. Does that hamper showing of the property?
Not necessarily. Let your Real Estate professional knows what will work best for you, your home and your pets. Cats can usually be confined to one room. Let your Real Estate professional know what room so they can post the info in MLS and ensure that the animal is secured in that room before leaving the home after a showing. Dogs need to be restrained, preferably in your back yard. The best thing with dogs is to take them for a walk when the home is being shown, assuming you are home at the time of showing. Dogs intimate some people and if you have one that barks, the barking can create a stressful environment not conducive to selling your home.

If you have exotic pets, work with your Real Estate professional on the proper way to handle or confine the animal.

23. Where can I get more information?
First, check our "Reports for Sellers" on our web site and the other FAQ. The reports give you additional guidance on some of these questions. If these do not answer your question, send us an email with your specific question. We’ll be glad to reply.