Real Estate Agent Red Flags

The Homebuying for Dummies book that I’ve relied heavily on says to interview different agents. It really stresses the importance of this, and even gives sample questions you may want to ask. Absolutely do this! I am embarrassed to say I did not heed this advice, but I am happy to share my story to save you some headaches and anger.

I went with a realtor who I kind of knew through our shared social circles. She also had graduated from the same college as me, which was an academically rigorous school. So I thought, well she’s obviously a smart and good person, and maybe she’ll feel even more motivated to do a good job for me since we have friends in common. None of this logic worked out for me!! Well, in all fairness, she is smart, and no matter what else I have to say she indisputably knows more about the business than I do, but I have not felt good about her as an agent for the following reasons that I have discovered along the way, which I would also advise you to consider red flags if you spot them in an agent: Continue reading

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Exclusivity Contracts

When you tell a realtor you want to work with them, they may ask you to sign an exclusivity contract, stating you’ll only work with them, and if you decide you want to end that relationship and work with someone else, you will be required to wait a certain amount of time (e.g., 3 months) before legally being able to do so.

Now I actually signed one of these, no questions asked, but a friend of mine refused to and the agent still agreed to work with her, which got me thinking: why sign one?

To me, this is a question deserving of some thought. Currently this is a buyer’s market and a sloooow market, agents are not raking in money like at other times, they are hurting for business, and they only make money when you decide to buy a house, so why should they be the ones to set the terms of working together? Now that I’ve really thought about it, I’m thinking they should be happy to cater to you and me, the buyers. I think knowing that you have not agreed to work exclusively with them  may well make them work harder for you, because they want to be the realtor who finds you your new home.

I’m not saying there aren’t advantages to signing an exclusivity contract, maybe there are, and I’m going to leave that up to you to research. I just want to provide something to think about, something your prospective realtors certainly aren’t going to present as an option, but something that I most definitely would have looked further into if I had the decision to make again.

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Mortgages: Where To Find Helpful Information

The resource that I have relied on the most to help me understand what’s currently going on with mortgages and predicted trends for the near future is this particular page of Bankrate.com: Mortgage Rate Trend Index. Every week they update their predictions for mortgage rates for the next week. While many weeks it’s a total draw, I have still found it to be helpful. Especially if you take the time to read the contributors’ rationales for their opinions. These people are experts (their titles and affiliations are listed under their comments), so even though they disagree with each other sometimes, most provide understandable rationales for their opinions. At the time I’ve been looking, Dick Lepore is someone who seems to get it right a lot.

Also, look around the bankrate.com site in general. There is other interesting information there relating to mortgages.

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It’s A Structure To Live In, Stop Idealizing It

Got some words of wisdom for ya, and not my wisdom either ;). Obviously it is exciting to buy a new home! But I received some good advice that I wanted to share about trying not to get attached to a house you’re considering, even if it’s one you’ve already put an offer in on. The idea of your house as this perfect possession you must have  is a trick perpetuated by realtors, much like greeting card companies and stores who have something to sell would have you believe that your love for others is best expressed through material possessions. Don’t buy into the hype! Because that could potentially be some verrry expensive hype!

Luckily for me, I have an acquaintance who owns several rental properties, and another acquaintance who is a general contractor, who both gave me this same piece of advice: If you fall in love with a home, you will overpay for it. NEVER lose sight of the fact that a home is a dwelling place, a huge financial commitment, and an investment. As deflating as it may sound, the sooner you can accept this truth, the better off you’ll be. Keep in mind that you won’t only “love” one home; many will pop up that you really like. So wait it out: you will find a home out there that makes you happy and that is a good buy for you.  No regrets over the one you “loved” that passed you by— that one passed you by for a reason, and there will be another that is even better for your situation!

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There’s a ME in HoME Buying!

Well it’s been about a week since I’ve posted anything, and for good reason. Things have gotten really busy in my life, between hitting a busy point with my regular commitments in daily life, and having home buying-related work on top of that. So, at the suggestion of my oh-so-wise boyfriend, I went on a mini-vacation. Nothing fancy, just visiting his family for a few days, but it was days off from all the stressors and it made such a difference in my anxiety level. I’m back today, feeling noticeably more relaxed and ready to gear up again for what the home buying process (and the rest of life!) has in store for me next.

Whether it’s a vacation (you should sooo make it a vacation if you can) or just committing to taking a bit of downtime away from it all, I’m discovering that self-care during this process is very important. Taking time for myself during which I wasn’t stressing about home buying, and all I don’t know, and how much money I’m spending, and hoping I’m making good decisions, really did wonders for restoring my peace of mind and actually has made me feel more capable of returning to addressing the very real and important decisions of the home buying process.

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I Should Save More Money Before I Buy: Retroactive Budget (or Regular Budget)

The idea of a traditional budget, while it may be considered a basic skill of personal financial planning, has never appealed to me. I don’t want to knock it– if it has worked for you or someone you know, by all means I would say learn about how to make a budget work for you. But if you’re like me and don’t see yourself doing that, I wanted to share with you a different idea that I came up with.

When I decided to take a closer look at my spending habits in order to help me better save, I decided to go with what I have dubbed a “retroactive” budget. Let me explain.

Virtually every dollar I spend is either on my credit card or through electronic debit, so I have easily accessible records of where my money goes. The only exception is cash I put in the collection plate at church (you may have that or other relatively small cash expenses) so those are the only ones that require the slightest bit of effort to track.

When I get my credit card statement online every month, I pull it up, along with email receipts for all the bills I pay online. There, everything I spent money on over the past month is laid out in front of me (minus those aforementioned small cash expenses). Next, I pull up an Excel spreadsheet I have made  that looks like this: expenses worksheet.

So the first column is all the categories of expenses that I have. Then for each charge on my credit card (or e-receipt for bill), I go to the appropriate category and enter the amount. I added a formula on the far right column to calculate total expenses per row and then the grand total. I did one of these worksheets for each month.

Then each month I review prior months to see how my spending compares, and to notice trends, e.g., have I consistently been spending a high amount on eating out, clothes, etc.? If so, I mentally make that adjustment to watch and curb that sort of spending the following month.

The great thing is, simply being more observant as a result of doing this sort of retroactive review of my spending has made me generally more aware everyday, without having to intentionally put effort into thinking about it. Since I started doing this type of retroactive budgeting 15 months ago, I have saved an average of $700 per month. I don’t know about you, but that got my attention! I hope my idea and layout help you achieve similar results– wishing you good luck saving!

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Mortgages: Broker vs. Lender

While I feel like a lot of sources out there make it seem like there are limitless options for who to get a mortgage from, and thus all the more pressure to make the right choice, at least in my situation I was pleasantly surprised to find it to be a lot less complicated than I had anticipated to settle on a lender.

Who to work with is pretty much going to be based on who has the best rate. That’s it. Allowing, of course, for wanting to make sure you’re working with someone who has the time for you and who can explain things in ways you understand, but I think all lenders would be motivated to do those things.

So how do you get the best rate? You either have to put in the time yourself, by getting referrals from people or looking up contact info for lenders, and then calling them all, or you can hire a mortgage broker to do all that for you. Mortgage brokers and mortgage lenders are not the same thing—no matter what, mortgage lenders are the people with whom you will apply for a loan. You can call them directly and ask them what their rate is (rates change every day, but they are used to people calling back daily to check), or you can contact them indirectly through a broker.

Mortgage brokers are people who have relationships with lenders and may be able to negotiate a slightly better rate for you and save you the time of researching what’s out there—but they charge a fee for their services. So in the end, you may not save more by using them; you may actually pay more than if you had done the work yourself.

In my mind, doing the work of making the calls myself was an easy decision, one, because I wanted to save money, and two, because I like to learn about and understand a new process I’m engaging in. If you go this route, you need to clarify with the representatives that you’re talking to that they are lenders, not brokers, and that there will be no fee for their services outside of the usual fees associated with the loan itself.

In a nutshell, this decision boils down to time, motivation to learn about the process, and money: you have to decide which of these matter most to you, and that will guide your choice.

Bonus: since I did the legwork myself, I can share a tip with you from personal experience that confirms something I read in Home Buying for Dummies. Despite what you might intuitively think, big name banks actually tend to have worse rates than smaller local lenders. Even if you’re a long-time customer. Credit unions, though, tend to have competitive rates, but local lenders can sometimes still do better. So definitely expand your search beyond your bank!

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