Consumer Resources
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Your Dream. Our Mission: The REALTOR® Advantage
More than 1.5 million licensed brokers and salespeople are REALTORS® – members of the National Association of REALTORS® (NAR) who adhere to a strong Code of Ethics, participate in extensive training opportunities, and possess a wealth of community information. On statewide and local levels, REALTORS® are your neighbors, PTA members, government committee members and charity activists and donors. Through their regular involvement in local organizations and events, you can be assured that REALTORS® in your area are engaged members of the community and truly understand the marketplace. Currently there are just over 47,000 REALTORS® in Georgia who are ready to assist you in your quest for the perfect home.
Why Use A REALTOR®?
Buying and selling real estate is a complex matter. At first it might seem that by checking local real estate books or online sites you could quickly find a home at the right price. But a basic rule in real estate is that all properties are unique. No two properties — even two seemingly identical models on the same street — are exactly alike. Homes differ and so do contract terms, financing options, inspection requirements, and closing costs.
In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local REALTORS® who serve your area.
How Do You Choose?
In every community you’re likely to find a number of realty brokerages. Because there is heated competition, local REALTORS® must fight hard to succeed in your community. One place to find a local REALTOR® is from GAR’s ‘Find a REALTOR® directory. Other sources include open houses, local advertising, web sites, referrals from other REALTORS®, recommendations from neighbors and suggestions from lenders, attorneys, financial planners and CPAs. The experiences and recommendations of past clients can be invaluable.
In many cases, buyers will interview several REALTORS® before selecting one professional with whom to work. These interviews represent a good opportunity to consider such issues as training, experience, representation and professional certifications.
What Should You Expect?
After you select a REALTOR®, you will want to establish a proper business relationship. You likely know that some REALTORS® represent sellers while others represent buyers. Each REALTOR® will explain the options available, describe how he or she typically works with individuals, and provide you with complete agency disclosures required in your state.
Once you enter into a listing agreement with the REALTOR®, he or she will provide you with information detailing current market conditions, financing options and negotiating issues that might apply to your specific situation. Remember: Because market conditions can change and the strategies that apply in one negotiation may be inappropriate in another, this information should not be set in stone. During your time in the marketplace, your REALTOR® will keep you updated and alert you to each step in the transaction process.
REALTOR® Designations and Certifications
Does your REALTOR® have letters after their name on their business cards that you don’t understand – for example, Jane Doe, CIPS, GRI? These are designations that the REALTOR® has earned through extra coursework and study in order to serve a niche audience. The National Association of REALTORS® and its affiliated Institutes, Societies, and Councils provide a wide-range of programs and services that assist REALTORS® in increasing skills, proficiency, and knowledge. Designations and certifications acknowledging experience and expertise in various real estate sectors are awarded by NAR and each affiliated group upon completion of required courses. Read below to learn how the designation(s) that your REALTOR® has earned can help you in the real estate sales process.
Designations
ABR – Accredited Buyer Representative
The Accredited Buyer’s Representative (ABR®) designation is designed for real estate buyer agents who focus on working directly with buyer-clients at every stage of the home-buying process.
ALC – Accredited Land Consultant
The esteemed Accredited Land Consultants (ALCs) are the most trusted, knowledgeable, experienced, and highest-producing experts in all segments of land. Conferred by the REALTORS® Land Institute, the designation requires successful completion of a rigorous education program, a specific, high-volume and experience level, and adherence to an honorable Code of Conduct.
CCIM – Certified Commercial Investment Member
The Certified Commercial Investment Member (CCIM) designation is commercial real estate’s global standard for professional achievement, earned through an extensive curriculum of 200 classroom hours and professional experiential requirements. CCIMs are active in 1,000 U.S. markets and 31 other countries and comprise a 13,000-member network that includes brokers, leasing professionals, asset managers, appraisers, corporate real estate executives, investors, lenders, and other allied professionals.
CIPS – Certified International Property Specialist
CIPS designees are up-to-date and active in many aspects of international real estate, whether it’s purchasing a home abroad or helping a foreign buyer find a home (or business location) in the United States. The CIPS designation is held by both commercial and residential practitioners.
CPM – Certified Property Manager
CPM designees are recognized as experts in real estate management. Holding this designation demonstrates expertise and integrity to employers, owners, and investors.
CRB – Certified Real Estate Brokerage Manager
The Certified Real Estate Brokerage Manager (CRB) is awarded to REALTORS® who have completed advanced educational and professional requirements in the field of real estate management. CRB Designees streamline operations, integrate new technology and apply new trends and business strategies.
CRS – Certified Residential Specialist
The CRS designation signifies that the REALTOR® has undergone rigorous training in the areas of technology, finance, negotiation, marketing, and more.
CRE – Counselor of Real Estate
The Counselors of Real Estate® is an international group of recognized professionals who provide seasoned, expert, objective advice on real property and land-related matters. Only 1,100 practitioners throughout the world carry the CRE® designation. Membership is by invitation only.
GAA – General Accredited Appraiser
This designation is awarded to appriasers whose education and experience exceed state appraisal certification requirements and is supported by the National Association of REALTORS®.
GREEN – NAR’s Green Designation
Through NAR’s Green Designation, the Green REsource Council provides ongoing education, resources and tools so that real estate practitioners can successfully seek out, understand, and market properties with green features.
GRI – Graduate, REALTOR® Institute
REALTORS® with the GRI designation have in-depth training in legal and regulatory issues, technology, professional standards, and the sales process. Earning the designation is a way to stand out to prospective buyers and sellers as a professional with expertise in these areas.
PMN – Performance Management Network
The PMN focuses on negotiating strategies and tactics, networking and referrals, business planning and systems, personal performance management and leadership development.
RAA – Residential Accredited Appraiser
For residential appraisers, this designation is awarded to those whose education and experience exceed state appraisal certification requirements and is supported by the National Association of REALTORS®.
SRS – Seller Representative Specialist
The Seller Representative Specialist (SRS) is designed to elevate professional standards and enhance personal performance. The designation is awarded to real estate practitioners by the Council of Real Estate Brokerage Managers (CRB) who meet specific educational and practical experience criteria.
SIOR – Society of Office and Industrial REALTORS®
The SIOR designation is held by only the most knowledgeable, experienced, and successful commercial real estate brokerage specialists. To earn it, designees must meet standards of experience, production, education, ethics, and provide recommendations.
SRES – Seniors Real Estate Specialist
The SRES® Designation program educates REALTORS® on how to profitably and ethically serve the real estate needs of the fastest growing market in real estate, clients age 50+. By earning the SRES® designation, you gain access to valuable member benefits, useful resources, and networking opportunities across the U.S. and Canada to help you in your business.
Certifications
AHWD – At Home with Diversity
The At Home With Diversity certification teaches REALTORS® how to conduct their business with sensitivity to all client profiles and build a business plan to successfully serve them.
BPOR – Broker Price Option Resource
The BPOR certification provides REALTORS® with knowledge and skills to perform accurate and professional broker price opinions (BPOs) and comparative market analyses (CMAs), while reducing risk and increasing opportunities.
C-RETS – Certified Real Estate Team Specialist
The Certified Real Estate Team Specialist certification is designed to improve team development, individual leadership skills, and financial performance. The courses provide the tools, strategies, and knowledge that are required of today’s real estate professionals who are either considering or currently operating in a team environment. It is for team leaders, team members, those looking to start a team, and those who simply want to sharpen their management skills.
e-PRO®
NAR’s e-PRO® certification teaches REALTORS® to use cutting-edge technologies and digital initiatives to link up with today’s savvy real estate consumer.
MRP – Military Relocation Professional
NAR’s Military Relocation Professional certification focuses on educating real estate professionals about working with current and former military service members to find housing solutions that best suit their needs and take full advantage of military benefits and support.
PSA – Pricing Strategy Advisor
Enhance your skills in pricing properties, creating CMAs, working with appraisers, and guiding clients through the anxieties and misperceptions they often have about home values with NAR’s PSA (Pricing Strategy Advisor) certification.
RENE – Real Estate Negotiation Expert
This certification is for real estate professionals who want to sharpen their negotiation skills. The RENE certification program gives REALTORS® the tips and tools they need to be skillful advocates for their clients.
RSPS – Resort & Second Home Property Specialist
This certification is designed for REALTORS® who facilitate the buying, selling, or management of properties for investment, development, retirement, or second homes in a resort, recreational and/or vacation destination are involved in this market niche.
SFR – Short Sales & Foreclosure Resource
The SFR® certification teaches real estate professionals to work with distressed sellers and the finance, tax, and legal professionals who can help them, qualify sellers for short sales, develop a short sale package, negotiate with lenders, safeguard your commission, limit risk, and protect buyers.
A
Adjustable Rate Mortgage: (ARM): A home loan that can adjust the interest based upon market rates after the set fixed period on the note has expired. Generally an ARM will carry a lower interest rate than a fixed rate mortgage but is considered riskier because the interest rate is not fixed for the life of the loan.
Amortization: A term used to describe the process of paying off a loan over a predetermined period of time at a specific interest rate. The amortization of a loan includes payment of interest and a portion of the outstanding principal balance during each payment cycle.
Amortization Schedule: Provided by mortgage lenders, the schedule shows how over the term of your mortgage the principal portion of the mortgage payment increases and the interest portion of the mortgage payment decreases.
Annual Percentage Rate (APR): A term used in the Truth-In-Lending Act to represent the full cost of a loan. Stated as a yearly rate, APR includes base interest rate, loan origination fee (points), commitment fees, prepaid interest and other credit costs that may be paid by buyer.
Application Fee: The fee that a mortgage lender charges to apply for a mortgage to cover processing costs.
Appraisal: A professional analysis, including references to sales of comparable properties, used to estimate the value of the property.
Appraiser: A professional who conducts an analysis of the property, including references to sales of comparable properties in order to develop an estimate of the value of the property. The appraiser’s report is called an “appraisal”.
Appreciation: An increase in the property’s value due to changes in market conditions, the opposite of depreciation.
Assessed Value: The value that a public taxing authority places upon personal property for the purposes of taxation.
Assumable Mortgage: A mortgage that can be taken over and “assumed” by the buyer when a property is sold. This type of mortgage is quite popular if the seller has a low interest rate and the market rates are considerably higher.
B
Balloon Mortgage: A mortgage that typically offers low rates for an initial period of time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or is refinanced by the borrower.
Bankruptcy: Legally declared unable to pay your debts as they become due. Bankruptcy can severely impact your ability to borrow money. Talk to a credit counselor as soon as you realize you are having problems paying your bills on time to try to prevent bankruptcy.
C
Closing (Closing Date): When the real estate transaction between buyer and seller is completed. The buyer signs the mortgage documents and the closing costs are paid. The sale of the property is finalized by delivery of deed and the disbursement of funds necessary to the sale or loan transaction. Also known as the settlement date. In Washington, Sellers and Buyers sign documents one to two days prior to Close.
Closing Costs (Settlement Costs): The costs to complete the real estate transaction. These costs are in addition to the price of the home and are paid at closing. They include points, taxes, title insurance, financing costs and items that must be prepaid or escrowed and other costs. Ask a lender or real estate professional for a complete list of closing cost items.
Condominium: A unit in a multiunit building. The owner of a condominium unit owns the unit itself and has the right, along with other owners, to use the common areas but does not own the common elements such as the exterior walls, floors and ceilings or the structural systems outside of the unit; these are owned by the condominium association. There are usually condominium association fees for maintenance for building and property upkeep, taxes and insurance on the common areas and reserves for improvements.
Counter-offer: An offer made in return by the person who rejects the previous offer.
Credit Bureau: A company that gathers information on consumers who use credit and sells that information in the form of a credit report to lenders.
Credit History: A credit history is the record of your usage of credit. It is a list of individual consumer debts and an indication as to whether or not these debts were paid back in a timely fashion or “as agreed”. Credit institutions have developed a complex recording system of documenting your credit history.
Credit Report: A document used by the credit industry to examine an individual’s use of credit. It provides information on money that individuals have borrowed from credit institutions and a history of payments.
Credit Score (FICO): A computer-generated number that summarizes an individual’s credit profile and predicts the likelihood that a borrower will repay future obligations.
D
Debt-To-Income Ratio: A comparison of gross income to housing and total monthly expenses.
Deed: The document that transfers ownership of a property.
Default: The inability to pay monthly mortgage payments in a timely manner or to otherwise meet the mortgage terms.
Deposit: See Earnest money.
Delinquency: Failure of a borrower to make timely mortgage payments under a loan agreement.
Discount Point: Paid at closing and calculated as a percentage the total loan amount, discount points are prepaid interest used to reduce the interest rate on a loan.
Down Payment: The portion of a home’s purchase price that is paid in cash and is not part of the home loan.
E
Earnest Money Deposit: The deposit you make to show in good faith that you are committed to buying the home. The deposit will not be refunded to you after the seller accepts your offer unless one of the sales contract contingencies is not satisfied. Your earnest money deposit is credited back at closing towards down payment or closing costs if the offer is accepted.
Escrow Account: A separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes and homeowners insurance.
F
Fair Housing Act: A law that prohibits discrimination in all facets of the homebuying process on the basis of race, color, national origin, religion, sex, familial status, or disability.
Fair Market Value: The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.
Fannie Mae: Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.
FHA: Federal Housing Administration; established in 1934 to advance homeownership opportunities for all Americans; assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages.
Fixed-Rate Mortgage: A home loan with an unchanging interest rate for the life of the loan and constant principal and interest payments.
Flood Insurance: Insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.
Foreclosure: A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
Freddie Mac: Federal Home Loan Mortgage Corporation (FHLM); a federally-chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders with funds for new homebuyers.
G
Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as with Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.
Good Faith Estimate: An estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.
H
Homeowner’s Insurance: A policy that protects you and the lender from fire or flood which damages the structure of the house; a liability, such as an injury to a visitor to your home; or damage to your personal property, such as your furniture, clothes or appliances. Homeowner’s insurance: an insurance policy that combines protection against damage to a dwelling and its contents with protection against claims of negligence or inappropriate action that result in someone’s injury.
Housing Expense Ratio: The percentage of your gross monthly income that goes toward paying for your housing expenses.
Home Inspection: A professional inspection of a home to review the condition of the property. The inspection should include an evaluation of the plumbing, heating and cooling systems, roof, wiring, foundation and pest infestation.
Home Warranty: Offers protection for mechanical systems and attached appliances against unexpected repairs not covered by homeowner’s insurance.
Housing Counseling Agency: Provides counseling and assistance to individuals on a variety of issues, including loan default, fair housing, and homebuying.
HUD: The U.S. Department of Housing and Urban Development; established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.
HUD-1 Settlement Statement: A final listing of the costs of the mortgage transaction. It provides the sales price, and down payment, as well as the total settlement costs required from the buyer and seller.
I
Index: A measurement used by lenders to determine changes to the interest rate charged on an adjustable rate mortgage after the fixed period of the loan has expired.
Inflation: The number of dollars in circulation exceeds the amount of goods and services available for purchase; inflation results in a decrease in the dollar’s value.
Interest: The cost you pay to borrow money. It is the payment you make to a lender for the money it has lent to you. Interest is usually expressed as a percentage of the amount borrowed.
Interest Rate: The cost to borrow money expressed as a percentage.
Insurance: Protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.
J
Judgement: A legal decision; when requiring debt repayment, a judgement may include a property lien that secures the creditor’s claim by providing a collateral source.
K
L
Lien: A claim or charge on property for payment of some debt. With respect to a mortgage, it is the right of the lender to take the title to your property if you default and do not make the payments due on the mortgage.
Loan: Money borrowed with intent to repay.
Loan Fraud: Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.
Loan-To-Value (LTV) Ratio: A percentage calculated by dividing the amount borrowed by the price of the home to be purchased; the higher the LTV, the less cash a borrower is required to pay as down payment.
Lock-In: Since interest rates can change frequently, many lenders offer an interest rate lock-in that guarantees a specific interest rate if the loan is closed within a specific time.
Loss Mitigation: A process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.
Loan Origination Fees: The fee paid to your mortgage lender for their services of processing the mortgage application. This fee is usually in the form of a percentage of the loan amount.
Low Down Payment Feature: A loan program that requires little or no money down to purchase.
M
Margin: An amount the lender adds to an index to determine the interest rate on an adjustable rate mortgage.
Market Value: The current value of your home based on what a willing purchaser would pay. The value determined by an appraisal is often used to determine market value.
Mortgage: A loan secured by a lien on your home and property that secures the promise to repay a loan. In some states the term mortgage is also used to describe the document you sign to show that you have granted the lender a lien on your home; other states use a deed of trust document instead of a mortgage. It may also be used to indicate the amount of money you borrow, with interest, to purchase your house. The amount of your mortgage is usually the purchase price of the home minus your down payment.
Mortgage Broker: An independent finance professional that specializes in bringing together borrowers and lender to facilitate real estate mortgages.
Mortgage Insurance (MI or PMI): A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance may be required for borrowers with a down payment of less than 20% of the home’s purchase price.
Mortgage Lender: The lender providing funds for a mortgage. Lenders also manage the credit and financial information review, the property and the loan application process through closing.
Mortgage Rate: The cost or the interest rate you pay to borrow the money to buy your house.
Mortgage Banker: A company that originates loans and resells them to secondary mortgage lenders like Fannie Mae or Freddie Mac.
N
O
Offer: A formal bid from the homebuyer to the home seller to purchase a home, generally put forth in writing.
Origination: The process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.
Origination Fee: Paid at closing and calculated as a percentage the total loan amount, origination points are paid to the mortgage company originating the loan for their services.
Open House: When the seller’s real estate agent opens the seller’s house to the public. You do not need a real estate agent to attend an open house.
P
PITI: Principal, Interest, Taxes, and Insurance: The four elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes and insurance goes into an escrow account to cover the fees when they are due.
PMI: See mortgage insurance.
Pre-Approval: Lender commits to lend to a potential borrower for generally 30 to 45 days; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.
Pre-Approval Letter: A letter from a mortgage lender indicating that you qualify for a mortgage of a specific amount. It also shows a home seller that you are a serious buyer.
Pre-Qualify: A lender informally determines the maximum amount an individual is eligible to borrow.
Pre-Qualification Letter: A letter from a mortgage lender that states that you are pre-qualified to buy a home but does not commit the lender to a particular mortgage amount.
Pre-Foreclosure Sale: Allows a defaulting borrower to sell the mortgaged property to satisfy the loan and avoid foreclosure. Also known as a Short Sale.
Premium: An amount paid on a regular schedule by a policyholder that maintains insurance coverage.
Prepayment: Payment of the mortgage loan before the scheduled due date; may be subject to a prepayment penalty.
Principal: The amount of money borrowed to buy your house or the amount of the loan that has not yet been paid back to the lender. This does not include the interest you will pay to borrow that money. The principal balance (sometimes called the outstanding or unpaid principal balance) is the amount owed on the loan at any given time. It is the original loan amount minus the total repayments of principal you have made to date.
Points: Paid at closing and calculated as a percentage the total loan amount. For example, if a loan is made for $50,000, one point equals $500.
Predatory Lending: Abusive lending practices that include making a mortgage loan to an individual who does not have the income to repay it or repeatedly refinancing a loan, charging high points and fees each time and “packing” credit insurance on to a loan.
Q
R
Radon: A toxic gas found in the soil beneath a house that can contribute to cancer and other illnesses.
Replacement Cost: The cost to replace damaged personal property without a deduction for depreciation.
Rate Cap: The limit on the amount that the interest rate on an ARM can increase or decrease during any one adjustment period.
Ratified Sales Contract: A contract that shows both you and the seller of the house have agreed to your offer. This offer may include sales contingencies, such as obtaining a mortgage of a certain type and rate, obtaining acceptable inspections on the home, making repairs, closing by a certain date, etc.
Real Estate Professional: An individual who provides services in buying and selling homes. The real estate professional is paid a percentage of the home sale price by the seller. Unless you have specifically contracted with a buyer’s agent, the real estate professional represents the interest of the property seller. Real estate professionals may be able to refer you to local lenders or mortgage brokers, but are generally not involved in the lending process.
Refinancing: Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).
REALTOR®: A real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS, and its local and state associations.
RESPA: Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships.
S
Securities: A financial form that shows the holder owns a share or shares of a company (stock) or has loaned money to a company or government organization (bond).
Settlement: Another name for closing.
Subordinate: To place in a rank of lesser importance or to make one claim secondary to another.
Survey: A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.
Sweat Equity: Using labor to build or improve a property as part of the down payment.
T
Title: The right to, and the ownership of, land by the owner. Title is sometimes used to mean the evidence or proof of ownership of land; although another term used for that is “deed”.
Title Insurance: Insurance that protects lenders and homeowners against loss of their interest in the property because of legal problems with the title.
Truth In Lending Act (TILA): Federal law which requires disclosure of a truth in lending statement for consumer loans. The statement includes a summary of the total cost of credit such as the APR and other specifics of the loan.
U
Underwriting: The process a lender uses to determine loan approval. It involves evaluating the property, the borrower’s credit, and ability to pay the mortgage.
Uniform Residential Loan Application: A standard mortgage application that your lender will ask you to complete. The form requests your income, assets, liabilities and a description of the property you plan to buy, among other things.
V
W
Warranties: Written guarantees of the quality of a product and the promise to repair or replace defective parts free of charge.
X
Y
Z
For Buyers
Purchasing a home usually depends on obtaining adequate financing, typically in the form of a 15- or 30-year mortgage. Financing is the difference between the purchase price and the down payment. While there are cash sales, the majority of Americans take on a mortgage to finance the purchase of their home.
Demonstrating Financial Stability
Unfortunately, not every buyer qualifies for loans allowing a small or no down payment. Good credit is necessary to receive loans with the best rates and conditions. The best way to increase your credit rating and loan eligibility is to make all debt payments including rent, credit cards, and vehicle loans in full and on time for at least one year prior to purchasing your home.
Credit reports are maintained by three credit reporting agencies: Experian, TransUnion and Equifax. It’s a good idea to obtain your credit report from all three agencies, since each may contain different information and you don’t know which agency will be supplying your report to your lender.
If there is incorrect or missing information that would improve your credit score, report it to the credit bureau. Under the Fair Credit Reporting Act, consumers have the right to review and contest information in their credit reports. Even if your credit report reads exactly like you expected and your credit is in fine shape, going into the mortgage application procedure with peace of mind is worth the extra work.
What is credit?
Credit is a record of a person’s debts and payment history. Credit bureaus compile individual reports of consumer debt through an array of sources, including credit card companies, banks, the IRS, department stores and gasoline companies, and any other entities granting loans. A credit report is a résumé of your financial performance, with information on your payment history for all the accounts you’ve held for the past seven to 10 years (seven years for accounts not paid as agreed and 10 years for accounts paid as agreed).
What is a credit score?
Credit scores are composites that indicate how likely you are to pay on a loan or credit card as agreed based upon your payment history, amount of debts, length of credit history, and types of credit in use. The credit grantor reviewing your loan application compiles your score based on information from your credit report and other data, including your income level. Fair Isaac and Co. (FICO) developed the mathematical formula for establishing scores. Scores range from 300 (poor) to 850 (excellent), and the rule of thumb is the higher the score, the lower the risk to lenders.
How is my credit score determined?
The FICO Score is calculated from several different pieces of credit data in your credit report. This data is grouped into five categories, and reflect how important each of the categories are in determining how your FICO Score is calculated.
Your FICO Score considers both positive and negative information in your credit report. Late payments will lower your FICO Score, but establishing or re-establishing a good track record of making payments on time will raise your score.
Your FICO score is determined using the following percentages:
- 35% Payment history
- 30% Amounts owed
- 15% Length of credit history
- 10% New credit
- 10% Types of credit used
What role does credit play?
Lenders review credit reports to determine debts owed and if they are repaid according to the terms of the initial contract. If you have any outstanding debt, lenders will analyze your debt-to-income ratio and how that debt will factor into your ability to make your mortgage payments.
Where can I obtain a copy of my credit report?
You can obtain a free copy of your credit report from each credit reporting company.
You can request your free credit report from https://www.AnnualCreditReport.com, which is the official site authorized by the federal government for you to obtain your free report.
What do I do when I get my report?
Read through it carefully, paying extra attention to the section on your account payment history.
How do I establish credit?
If you have never taken out a credit card or borrowed money from a financial institution, or if your accounts are young, you can establish credit history by having your rent payments to landlords and monthly payments to utility companies added to your credit report.
How do I re-establish good credit?
If your credit report contains negative information, such as frequent late payments, repossessions, collection activity, or bankruptcy, you may want to wait to apply until after you’ve improved your credit record. Rebuild your credit by showing strong payment history in the years following any problems. Most lenders prefer for three years to have passed since a foreclosure on a mortgage and at least two years since bankruptcy. Lenders are willing to forgive past black marks on a credit report if you establish a pattern of responsible debt repayment.
How do I correct a mistake?
Follow the directions of the credit bureau issuing your report. The bureau will contact the source of the information in question and attempt to resolve the dispute. Also, if late payment information is accurate but you have a good explanation (e.g., you were laid off from work or became very ill), you are allowed to add that information to your report.
Millions of new and existing homes are sold each year. There are many choices with the types of homes that are available at any given time on the housing market. The challenge becomes finding the property which best meets your needs.
The housing market is complicated because the stock of homes for sale is constantly changing. If it were possible to have a complete list of every home for sale at this very moment in a given community, such a list would become obsolete within hours, as new homes become available and properties now for sale are put under contract.
In effect, buyers are looking at a moving target in a marketplace that is never consistent. Because of this, it is important to know as much as possible about the choices in preferred markets by working closely with a local REALTOR® who has a good grasp of the market.
What Are You Looking For?
A home is more than just a collection of bedrooms and bathrooms. Several properties with the exact same amenities may well represent radically different designs, commuting distance, lot sizes, tax costs, interior dimensions, and exterior finishes.
Each of us is different, so it’s important to list the features and benefits you want in a home. Consider what is important to you.
Next, it’s important to consider your priorities. If you can’t get a home at your price with all the features you want, then what features are most important? For instance, would you trade fewer bedrooms for a larger kitchen? A longer commute for a bigger lot and lower cost? A REALTOR® will help you weigh your options and establish your priorities.
Where Should You Look?
All neighborhoods and communities have a special nature that gives them identity and value. One community may be well known for historic homes while another offers both suburban living as well as easy access to downtown office areas.
REALTOR.com features millions of homes online, including tens of thousands throughout Georgia. By any standard, it’s the largest source for property information online or off. You can look at homes to contact listing brokers, and you can also search REALTOR.com to find brokers who offer buyer representation services.
How Do You Find A House?
Some buyers like to search REALTOR.com by looking at listings on the basis of location or price, while others prefer to consult their REALTOR® with their criteria and have him or her suggest properties.
Regardless of your choice, it’s important to target your search. By using basic measures such as general location and affordability, you can refine your search and focus on homes that offer the most desirable features.
As a guide, you should maintain a file with information on each of the homes you like. You can print out listing pages from REALTOR.com® and then make notes for each one — what you like, questions, REALTOR® contact data, etc. Your REALTOR® will be your best guide when it comes to narrowing your search criteria.
There’s no doubt that choosing a home is a big decision and you want to do it right. As a buyer, here’s what actually happens. A home has been placed on the market for which the seller and listing agent have established a listing price. At this point, you and your REALTOR® make an offer on the home. The seller will either reject, accept, our counter your offer. Following the advice of your REALTOR® will help you make the wise and right choice for your offer.
No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where the value of an experienced REALTOR® is clearly evident because he or she knows the community, has seen numerous homes for sale, knows local values and has spent years negotiating realty transactions.
Is This “the” House?
How do you know if a house is THE one? Probably the best approach is to talk with your REALTOR® and discuss all of the important criteria you have made in choosing a home (check prices, view photos, view tours, check neighborhood statistics, check the school information, etc.) . Once your choices have been narrowed, you analyze your final choices and how each fits into your plans for your future home.
How Much Down?
If you place less than 20 percent down, lenders will want the mortgage guaranteed by an outside third party such as the Veterans Administration (VA), the Federal Housing Administration (FHA) or a private mortgage insurer.
Can You Really Afford It?
Remember the preapproval process? Getting preapproved means you have a very good idea of how much you can borrow, what loan programs will most likely work best in your situation and how much home you can afford. How reliable is a preapproval? While preapproval is not a loan commitment, it’s still necessary for lenders to check such items as credit reports, debt to income ratios, liabilities, assets, and more. . Despite fluctuating interest rates, preapproval nonetheless provides a reasoned, careful analysis of what you can afford. After all, loan officers are routinely paid only when loans are originated. It doesn’t make much sense for loan officers to suggest high loan limits that later can’t be delivered. Seek the advice and recommendation from your REALTOR® and/or mortgage loan officer.
Typically, you will make an offer that the REALTOR® will present to the listing agent or may have the opportunity to present to the seller. The seller, in turn, with his/her REALTOR® may accept the offer, reject the offer, or counter the offer. The initial offer will include a number of important items to be discussed by your REALTOR® – date of offer, full address, sales price, closing date, possession date, earnest money, due diligence date, closing attorney, material relationships, and many more.
While much attention is spent on offering prices, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value or costs for buyers. Terms are extremely important and should be carefully reviewed.
Georgia REALTORS®, working with legal counsel, have developed forms that are appropriate for a variety of real estate transactions. These forms are tried and tested to protect the interest of you, the consumer. These documents include numerous sale conditions and their wording should be carefully reviewed to assure that they reflect the terms you want to offer. REALTORS® can explain the general contracting process as well as his or her role.
How Much?
You sometimes hear that the amount of your offer should be “x” percent below the seller’s asking price or “y” percent less than you’re really willing to pay. In practice, the offer depends on the basic laws of supply and demand. If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order. It’s important to seek to understand the numbers – have your REALTOR® run an analysis of the community in which you are interested.
How Do You Make An Offer?
Typically you will complete an offer that the REALTOR® will present to the owner and the owner’s representative. The owner, in turn, may accept the offer, reject it or make a counter-offer. The initial offer will include offer price, earnest money, desired closing date, and other stipulations that you feel are necessary.
Because counter-offers are common, it’s important for buyers to remain in close contact with your REALTOR® during the negotiation process so that any proposed changes can be quickly reviewed.
How Many Inspections?
A number of inspections can occur with the property you are considering. Speaking with your REALTOR® about all of the options of inspections available is important. From general home inspections, termite inspections, radon inspections, and feasibility studies of land are just a few of the inspections that could take effect when buying a home.
Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property’s mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.
No one would drive a car without insurance, so it figures that no homeowner should be without insurance. The essential idea behind various forms of real estate insurance is to protect owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime.
What Kind And How Much?
There are various forms of insurance associated with home ownership, including the following major types:
Title Insurance is purchased with a one-time fee at closing and protects owners in the event that title to the property is found to be invalid. Coverage includes “lenders” coverage, which protect buyers up to the mortgage value of the property, and “owners” coverage, which protects owners up to the purchase price.
Homeowners’ Insurance provides fire, theft and liability coverage. These policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment.
Flood Insurance is generally required in high-risk flood-prone areas. This insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents. Your REALTOR® can explain which locations require such coverage.
Home Warranties offer the assurance that if something goes wrong after the purchase, it can be fixed. Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years. Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost.
Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with a REALTOR®, insurance broker or home builder.
Where To Look?
REALTORS® often provide home insurance and such policies are also available from insurance brokers. The time to obtain insurance and warranty coverage is at closing, so speak with your REALTOR® or insurance broker prior to closing. Be sure to ask about limitations, costs, deductibles, and additional forms of coverage that may be available.
Go to any local courthouse and you can find property records detailing real estate ownership in your community — sometimes records that date back hundreds of years. These records are important because they provide today’s owners with proof that they have good, marketable and insurable title to the property they are selling. Such records enable buyers to provide proof of ownership when they sell.
The closing process, which in different parts of the country is also known as “settlement” or “escrow,” is increasingly streamlined and automated. In some cases, buyers and sellers don’t need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery.
In practice, closings bring together a variety of parties who are part of the “transaction” process. For example, while the history of property ownership has been checked, it’s possible that the records contain errors, unrecorded claims or flaws in the review itself, thus title insurance is necessary. At closing, transfer taxes must be paid and other claims must also be settled (including closing costs, legal fees and adjustments). In most transactions, the closing agent also completes the paperwork needed to record the loan.
What To Expect?
Closing is a brief process where all of the necessary paperwork needed to complete the transaction is signed. Closing is typically held in an office setting, sometimes with both buyer and seller at the same table, sometimes with each party completing their papers separately.
Whatever the case, the result is that title to the property is transferred from seller to buyer. The buyer receives the keys and the seller receives payment for the home. From the amount credited to the seller, the closing agent subtracts money to pay off the existing mortgage and other transaction costs. Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices.
What Do You Need to Do?
One of the best parts of settlement is that buyers and sellers need to do very little. Before closing, buyers typically have a final opportunity to walk through the property to assure that its condition has not materially changed since the sale agreement was signed. At closing itself, all papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.
You’ve done it! You’ve looked at properties, made an offer, obtained financing and gone to closing. The home is yours. But is the home buying process complete? Whether you’re a first-time buyer or a repeat buyer, there are several more steps you’ll want to take.
Those papers you received at settlement are extremely valuable, so hold on to them! In the short-term they can help establish tax deductions for the year in which the property was purchased. In the future, such papers will be important for tax purposes when the property is sold, and in some cases, for calculating estate taxes.
Also at closing, determine the status of the utilities required by the home, items such as water, sewage, gas, electric and oil service. You want utility bills to be paid in full by owners as of closing and you also want services transferred to your name for billing. Usually such transfers can be done without turning off utilities. Your REALTOR® can provide contact numbers and related information.
About two weeks after closing, contact your local property records office and confirm that your deed has been officially recorded. Such records are public notices that show your interest in the property.
Condition of Home at Move In
It is generally understood that sellers will leave homes “broom clean” when moving out. This expression does not mean “vacuumed” or “spotless.” Broom clean makes sense because it means the house is ready to be painted and cleaned.
Your Home, Your Money
For most owners a home is the largest single asset they hold, so it makes sense to protect that asset. Many owners make a photo or video record of the home and their possessions for insurance purposes and then keep the records in a safety deposit box. Your insurance provider can recommend what to photograph and how to secure it.
You want to maintain fire, theft and liability insurance. As the value of your property increases such coverage should also rise. Again, speak with your insurance professional for details.
Finally, enjoy your home. Owning real estate involves contracts, loans, and taxes, but ultimately what’s most important is that homeownership should be a wonderful and rewarding experience.
For Sellers
Why Use A REALTOR®?
There are more than two million people nationwide who have licenses to sell real estate, of which approximately 1.5 million members belong to the National Association of REALTORS®. Only these certified members are entitled to use the term “REALTOR®”.
REALTORS® must adhere to a strict Code of Ethics. By joining the National Association of REALTORS®, individuals have access to a wide range of classes, seminars and certification opportunities. Local REALTOR® groups are active in community matters and individual members are routinely involved in PTAs and other neighborhood organizations. Georgia REALTORS® actively advocate for private property rights and the interests of consumers in regards to real estate transactions.
In essence, local REALTORS® are community experts. They track real estate trends, share neighborhood concerns, and participate in local matters. They’re good neighbors who are in the business of helping others buy and sell homes.
How Do I Select a REALTOR®?
Whether you’re a first-time seller or someone who has sold many homes, there are several ways to find a local REALTOR® in Georgia.
- Use the Find a Georgia REALTOR® search engine to find individuals who actively sell in your community.
- Get recommendations from friends and colleagues who have recently sold their homes.
- Look for REALTOR® signs in your community.
- Look at the listings in local real estate magazines. You may be able to quickly find one REALTOR® with whom you would like to work.
You may also like to meet with more than one REALTOR® before choosing the person who you believe is best fit to help you sell your home. When you meet with a REALTOR® for the first time, it is important that you ask about their fees, services, local experience, and marketing ideas and capabilities among other things.
What Should I Expect When Working with a REALTOR®?
Once your home is listed with a REALTOR®, he or she will immediately begin to market your home according to the most appropriate conventions for your community, which usually includes entering details and photos of your home into the multiple listing service (MLS), a database of current properties for sale, and properties that have sold, or been offered for sale but for various reasons, did not sell. The complete MLS Database is only accessible by licensed real estate agents.
He or she should keep you informed as the marketing process unfolds and as expressions of interest are received. In time, the marketing plan may be modified to reflect buyer reactions and changes in the marketplace. Your REALTOR® should keep you updated periodically as to the progress – or lack thereof – in the sale of your home.
What Is Your Home Worth?
All homes have a price, and sometimes more than one. There’s the price owners would like to get, the value buyers would like to find, and a point of agreement which results in a sale.
In considering home values, factors like local sale prices, community supply and demand, owner needs, and sale incentives are important to consider.
How Much Is Too Much?
Because all transactions are unique there is some flexibility in the marketplace. The amount of flexibility depends on local conditions.
Suppose you’re selling a townhouse. There have been five recent sales of the model you own and those sale values have ranged between $200,000 and $210,000. These recent sales give you an idea of how your home might be priced. In a strong market perhaps you can ask for $210,000 or a little more. If the market has slowed, $210,000 may be a reasonable asking price, but perhaps more than the final sale price.
Here’s another example. Imagine that you live in a community of Victorian-style homes, most of which were built in the 1920s. All the homes are different in terms of size, condition, modernization, style and features. In such a neighborhood, an average sale price is just a statistic without much practical meaning. On a single block one home may sell for $400,000 while another is priced at more than $1 million. For this reason, the average price may be outrageously high for one home and staggeringly low for another, making this figure unsuitable as a price-setting standard.
Who Can Help?
Experienced REALTORS® are active in the local marketplace and can provide assistance with pricing, marketing, negotiation and closing. Because REALTORS® have likely handled many transactions, they’re familiar with the terms and conditions that went into individual sales, not just published sale prices which may not reflect various premiums, discounts and adjustments.
Every home sale is different. The marketplace is always in flux, interest rates constantly change and new buyers search for homes each day. With such fluidity, it requires REALTORS® to craft marketing plans specifically for individual homes and market conditions.
Selling can entail a variety of marketing strategies. Once listed, it’s likely that the home will be quickly entered into the local MLS (Multiple Listing Service) and placed on REALTOR.com. This aggregated data can be specific to your housing needs. REALTORS® routinely market by mail and via email and their personal websites with new-listing announcements and newsletters. Open houses, broker access to the home via the use of a lock box, and networking with both local and out-of-town brokers are also common.
Much of a broker’s work will be quiet and unseen. Telephone calls, work with contacts, follow-ups with open-house visitors, conversations with ad respondents, web postings and other outreach efforts are all part of the process required to sell a home.
An open house is another method of marketing. In planning an open house, a REALTOR® typically advertises that the home will be open for a given period of time on a set date. During the open period, the REALTOR® hosts the home while the owners leave for a few hours.
At the open house, the REALTOR® will provide literature, maintain a visitor log, and answer questions. By interacting with visitors, the REALTOR® will seek feedback regarding the home and opportunities to follow up with prospective purchasers.
Showing Your Home Online
REALTOR.com lists about 1.4 million homes, while individual REALTOR® sites and local MLS services also have an online presence. Online real estate information includes not only home listings, but numerous additional features and benefits such as neighborhood information, school data, recent home sale prices, and video tours.
The internet is not only a way to view properties. E-mail and instant messaging give REALTORS® and consumers more opportunities to keep in touch.
There is no question that selling a home is an important event. A home sale represents transition, movement and change. Households move from the known and comfortable to the unknown and a period of adjustment. There may be job changes, new schools, distance from old friends and the possibility of new ones.
No less important, a home sale by itself can be complex. There will be people looking at your house, documents to sign and issues to be negotiated.
Because a home sale involves an array of both personal and business concerns, it’s important to get it done right. You need to carefully prepare your home, understand the market and see what alternatives are realistically available.
What’s An Acceptable Offer?
The goal of every seller is to have a line of buyers outside the front door, each clutching higher and higher offers. While this has been known to happen, in most markets there is generally a balance between the number of buyers and sellers. A number of factors determine whether a buyer’s offer is acceptable, including if the offer is near the asking price or has clauses hidden in the contract and if the seller can wait for more offers.
In each case, owners, with assistance from their REALTOR®, will need to carefully review offers, consider marketplace options and then determine whether an offer is acceptable.
What Is A Counter-Offer?
When a home is made available for sale, the owner is essentially making the offer to buyers that for a given number of dollars and other terms you can acquire this home. Buyers, in turn, can respond disinterest, agreement to the seller’s terms, or a counter-offer.A counter-offer is nothing more than a new offer. And just as the buyer had three options in response to the owner’s original price and terms, the seller can now choose one of three reactions: accept the offer, decline the offer or make a fresh counter-offer.
Offers and counter-offers reflect the back-and-forth activity of the marketplace. It’s an efficient and practical process but also one that may contain tricky clauses and hidden costs. The REALTOR® who lists your home can explain the local bargaining process in detail and assist in the actual negotiations.
How Do You Negotiate?
It’s sometimes argued that negotiation must produce one “winner” and one “loser.” Others suggest that a “win/win” situation is possible where each side gets something of value. In actuality, real estate bargaining typically involves compromises by both sides. It’s not war; it’s not winner-take-all; and it’s not the time to take personally any comments made by purchasers.Instead, negotiating should be seen as a natural business process; buyers should be treated with respect; and owners should never lose sight of either their best interests or their baseline transaction requirements.
Even the smallest home contains a lot of furniture, clothes, kitchen equipment, pictures and other items. For a short move, it may be worthwhile to transport small goods by yourself, but larger items will likely require a professional mover.
Moving.com provides information on moving options, storage, truck rentals and related topics. This information, plus assistance and advice from your REALTOR®, can ease the moving process.
It’s ideally best to get rid of excess furniture and other goods by having a sale before you move. This will reduce the volume of goods to be moved and thus lower moving costs. Unwanted furniture which cannot be sold can often be donated to charitable groups, many of which will come to your home to pick up donations. All other unwanted items should be taken to a landfill. You should provide the U.S. Postal Service with a forwarding address, and utility companies should be advised when to end service. Check with utility companies to see if there is deposit money which should be returned.
Planning Your Move
The time to plan your move begins once you’ve decided to sell your home. Some of the activities required to sell the home can actually help with the moving process. For example, cleaning out closets, basements and attics means there will be less to do once the home is under contract.
Your planning will be guided by a number of things:
- If you are moving a long distance, you’ll likely require an interstate mover and the use of a large van.
- If you are moving internationally, you will need to contact the embassy in Washington, D.C., for information. Be aware that items which may be entirely common in the United States can be prohibited in foreign countries. Ask about customs protocols, duties and taxes.
- If you are moving locally and plan to move without professional assistance, you’ll need to consider packing boxes, peanuts, blankets or padding and a van rental.
Regardless of the distance of your move, planning is key. Stock up on boxes, packing materials, tape and markers. Always mark boxes so that movers will know where goods should be place.
Movers must have the right equipment, training and experience to do a good job. A mover, no matter how large or small, should be able to provide recent references for home sellers with a similar volume of goods to transport. Movers should also be licensed and bonded as required in your state, and employees should have workman’s comp insurance, so be sure to confirm your mover’s credentials.
Get mover estimates in writing. Be aware that it’s possible to get discounts through membership organizations and, sometimes, on the basis of your profession.
Get A Checklist
Moving is a big job and checklists can make it more organized and easier. Here are some of the major items to consider:
- If you’re moving more than a few miles then you should have enough cash or credit to cover travel, food, transportation and lodging.
- Keep medicines and related prescriptions in a place where they will be available during the move.
- Number boxes so that all items can be counted on arrival. Make a list of boxes by number and indicate their contents.
- If moving with children, make sure that each has a favorite toy or toys, blankets, games, music and other goods.
- When moving historic, breakable or valued items, be sure to use special handling and packing to protect from expensive damage.
- Have address books and important contacts readily available in case you need help.
- If you have a smartphone or laptop computer, make it accessible during your trip to pick up business and personal e-mail.
Moving Checklist – from RealSimple.com Moving Checklist – from Moving.com - Are there pieces of furniture that aren’t going to make the trip with you? Click here to see a list of organizations that will pick up furniture for free. (Source: thisoldhouse.com)