I want to become a first-time home buyer, but I am very young. I’m only 23. I don’t have the slightest clue on where to start, all I know is I would like to buy a foreclosed property. Should l look into my loan options, then find a house, or should I find a house, then try for a loan? 

-Kendra

The first thing you want to do is find a great REALTOR®. The best way to go about this is to ask around! Ask people you know who own homes what their experience was like and if they would recommend the Realtor that they used. Ask what they liked and just as important (if not more so) ask what they did NOT like about their experience (if you don’t ask specifically, many people will always give a positive review just out of courtesy/habit and that’s not what you want…you want the whole story).

Once you find a great Realtor, take advantage of them and their contacts. People who are great at what they do tend to run in the same circles - so chances are your great Realtor will also know a great lender, home inspector, title company, plumber, roofer, etc. Your Realtor will become your best referral source for all of these trades as the very nature of the job requires us to establish and maintain relationships (and often friendships) with all of them.

After that, you will want to start working with a lender as soon as possible. Before you find a home, find a lender and have them get started getting you pre-approved for your loan. They will be able to give you a definite guideline as far as how much you can spend and the costs involved in your transaction. Once you get your pre-approval letter in hand from the lender you can then start looking for a home.

The banks (as sellers of the foreclosures) won’t even receive your offer if you don’t include this pre-approval letter (or proof of funds if you’re paying cash). Even though it’s still a buyer’s market, the best deals often get snapped up in a day or two and the last thing you want to do is find a home and then say “what now?” and have it take a week (or sometimes more) to get pre-approved, and by the time you’re ready to actually submit your offer (with the pre-approval letter attached) the home is often already under contract with someone else. Do not let yourself put the cart before the horse! Get your ducks in a row and THEN start looking at houses.

Once you find a house that you like, have your agent pull up comparable properties and recent sales so that they can educate you as to the true market value of the property. This will help you to feel comfortable that the offer you present is great for you, and also fair to the seller (if it’s not fair to the seller, chances are you won’t get the house). If you need assistance finding a great Realtor in your area, feel free to contact one or more of the great Realtors found on this forum - many of us have excellent contacts throughout the country; for example, even if you’re not looking for a home in Florida (where I work) I know many of the best agents from around the country.

Joshua Hanoud is a REALTOR® for Tropic Shores Realty and specializes in providing a higher level of service to golf course, waterfront, and estate home buyers and sellers in Hernando County and the surrounding Nature Coast area of West Central Florida.

What is the commission structure when a house is being owner financed? What percentage will the REALTOR® receive?

-Karen

Karen, I will begin by saying that real estate commissions are always negotiable, meaning they vary from broker to broker. Depending on how a brokerage is structured the individual agents may even charge different fees on a negotiated basis.

With that in mind, I would simply say refer to your listing agreement to see if this particular situation is covered separately. Once the transaction is closed, whatever fee has been negotiated will be payable to your broker unless some type of payment schedule has also been negotiated. I recommend, when offering owner financing, the owner should negotiate a down payment that is substantial enough to cover the commission and other closing costs.

David Welch specializes in residential re-sales and new home construction at RE/MAX 2000 Realty in and around Orlando, FL.

We lost our house a year ago and are living in an apartment. We’re thinking of  renting because it is hard to have three kids in an apartment. Is there a chance to buy a house with the economy the way it is, having had a foreclosure only a year ago? -Lisa

It will be highly unlikely that a bank will finance a property purchase for you at this time, since you are only one year out of a foreclosure. You will need a bit more time to establish a history of on-time payments to satisfy a bank.

However, there may still be some alternatives for you. Do you have other credit? How is your payment history with other creditors? What was the cause of the foreclosure? Was it an adjustable loan? The answers to the above will be relevant to anyone who may consider lending you money now or in the future.

In some markets, we are seeing more lease/options presented, and we are seeing some seller financing. Have you considered either of these as possible solutions? A property owner/seller has the ability to evaluate the total circumstances and is not bound to institutional guidelines. A property owner/seller may consider seller financing for you if you can demonstrate on-time payments for the last year, show that the foreclosure was an isolated instance of credit challenge, or show the cause of the prior problems has been corrected or passed.

You can also search for a lease/option. You can search rental properties which may be available for purchase, or search active for sale listings and inquire if the sellers will consider leasing with an option. For the latter, identify properties that have been on the market for awhile. Keep in mind that property owners who are in a short sale position will not be able to accommodate a lease/option.

Deborah Madey is a REALTOR®  for Peninsula Realty Group in Monmouth County, NJ.

What is the best way to get started acquiring a foreclosed home?

It’s very simple, you can call your local REALTOR® in your local market. A lot people, of course, like to do searches online and maybe pick a Realtor that has a lot of experience in the foreclosure industry and get educated that way.

Other than that, I would definitely suggest to use a local Realtor in the market, so that they’re very first on the market area and the neighborhoods. They possibly get foreclosure lists on a regular basis so they can help the consumer get started.

Claire LeForce is a REALTOR® for Realty World in the San Joaquin Valley, CA.

I live in California and I am buying a mobile home. The mobile is being sold “as is.” During the home inspection, certain problems that constitute safety hazards were discovered of which I had no prior knowledge. The seller states that she has no money for repairs and maintains that the “as is” contract means that she can refuse to make any safety-related repairs. Is that true?

-Dave

In an “as-is” purchase contract the seller is reserving the right to refuse any compensation to the buyer for or requirement to complete repairs to safety hazards or defects that are not specifically called out in the contract. An example of items specifically called out in the contract can be termite work or mandatory city retrofits for gas or water safety or any other customary cost incurred in a typical real estate transaction. You should note however, the seller’s obligation to disclose all material facts and defects affecting the property does not change.

If a buyer discovers a material issue that had not been disclosed or is discovered during the inspection period, the buyer reserves the right to adjust the offer price, request a credit for repairs, request the repairs be made by the seller, or cancel the transaction if the seller refuses to assume responsibility. Unfortunately in your case it seems as though the seller is either unwilling or unable to accept responsibility for repairing the safety hazards found during the inspection period.

Unless the safety hazard in question is specifically called out as a seller responsibility in your purchase contract your only three choices are to negotiate a credit to you at the close of escrow for the necessary repairs, negotiate an adjustment of the purchase price to account for the newly found safety hazards, or to cancel escrow. If you are able to find common ground with the seller using one of the first two options, don’t forget to disclose it to your lender. I can’t emphasis this enough. Your lender will consider this a material change in your loan application and require notice of all outstanding safety hazards at close of escrow. They will also require notice of any money that is being returned to the buyer from the seller at the close of escrow. Remember, not disclosing all pertinent facts to your lender is considered improper and very much illegal.

Allan Glass is a real estate broker at ASG Real Estate Inc and a consultant in the Los Angeles market specializing in REO, foreclosures, and short sales. Over the past 17 years he has sold over $1 billion in commercial and residential real estate.

What is the best advice for first-time buyers?

I think they have to be sure that they can get a loan - that’s really the key issue for first-time buyers. There ‘s areas that are just not going to be appropriate for first-time buyers, so they need to know if they can qualify for a loan and what loan products are out there. Lastly, they need to work with a reputable lender - that’s also really key.

Shari Chase is President and CEO of Chase International Distinctive Properties in Reno, NV

I am selling my house for $110,000. The buyer’s REALTOR® put in a bid for $112,000, with me giving her back $8,000 at closing. Meaning, in reality, I am only selling the house for $104,000. But, she is showing the sale price at $112,000, and getting commission on the $112K. To me this just does not sound very ethical. It is taking commission on money that was never even used or really even in the equation. Please give me your thoughts on this. If it matters I am in Round Rock, Texas, just outside of Austin, Texas.

-Emmett

It is not uncommon for the agent to get paid on the gross sales price, and it is not uncommon for them to get paid on the net sales price. On behalf of my seller clients, I always put in the sales contract that the commission will be based on net sales price in special provisions. That is something that needs to be in writing and agreed on by all parties.

Amy Downs is a REALTOR®  with Keller Williams Realty in Dallas, TX.

What happens if my house doesn’t appraise for the selling price?

We’re seeing this more and more these days. Many homes are no longer appraising at the value that they’re supposed to be at. You have a few options. The first option, obviously, is that you can lower the price to what the appraise value is. Hopefully you have a cash buyer and they want the house so badly they’re willing to pay above appraised value.

The other thing you can do is go back to the other party and say, how about we meet in the middle? Again, it’s still negotiation. You do have a few choices, but obviously, the big one is trying to come together so the person that’s buying the house may put in more money to satisfy the lender and that you may have to take a little bit more off the selling price.

Tracy Saunders is a REALTOR® at Chase International Real Estate in Tahoe City, CA

My house is listed for $339,000. We bought it three years ago for $368,000. There is a house directly across the street from me similar in amenities but 1,000 square feet smaller, listed at $249,000. (They bought it for $280,000 around the same time.)

My question is, I see a lot of traffic at that house compared to ours. We listed on Sept. 24, and only have 5 brochures removed from our free info box so far. That house has already received an offer, but it was turned down by the sellers. We would like to increase the traffic to our property. Aside from our REALTOR® posting it on a multiple listing site, what else can we do? Would an open house help?

-Heide Scott

Pricing is an essential part of a marketing strategy. Making sure your home is priced properly is the first and most important way to get traffic to your home. When you listed your property did you and your Realtor use valid comparables and set a realistic expectation for price? This is not a market to set “dream” standards or prices based on what you think your home is worth. Any property is only worth what a buyer is willing to pay. That determines the fair market value. Setting a price, and even an appraisal, is not a science and not guaranteed to get you what you expect.

Aside from that, the buyer mentality in today’s market is that they do not want to do anything to a property that they feel they are paying fair market value for, yet for a bank owned property or distressed property they are more willing to make an adjustment and take a risk. This being said, it is hard to determine if the neighbor is fairly priced, or if you are overpriced. Square footage alone is not the only factor you would need to consider. I advise my seller clients that if we don’t have an offer in the first 10-14 days, we need to be quick to make a price adjustment to try to catch the market. I also try to recommend clients price at 1-2% below the current market so that they attract the buyers’ attention.

Another pricing strategy I have been employing is to price at a $25,000 increment so as to catch both ends of a search segment on REALTOR.com®. When you have a home priced at $274,500, you are missing the $275,000-300,000 search range, therefore $500 may well be costing you a buyer. Being smart and aggressive is key. It truly is ALL about pricing. You do need to have exposure too!

Not being in the MLS is not advisable in this day and age. The MLS services across the country have what are called IDX or AVM feeds that provide data to partnering brokerages, services and Realtor sites. This allows your home the maximum exposure and a better chance to sell for a higher value. By electing not to participate, you are truly limiting your market and the chance of getting a good solid offer. Another problem in today’s market is the underpriced, or “fire sale” property. People who don’t care, or banks that just want to unload, are driving prices to below market value and are creating a problem when it comes to appraisal and overall community value and pricing.

You really can’t compete with such properties. Sometimes the only option is to allow them to sell and get off the buyer radar. Or use the opportunity and hope that it will help drive traffic to your home. But if you are priced where you are, you are not even within the same buyer pool.

An open house does not typically sell a house. It helps a Realtor get new clients and offers your neighbors an opportunity to see your home, so it is worth doing, but not the holy grail you may be seeking. There may be no holy grail at all for you. Based on the information you are providing to us, I would deduce the following things. First, condition is also a factor, not just square footage, if your neighbor is priced properly, and traffic would say they may well be, as well as the fact that they received an offer, you may want to review your pricing strategy.

Bringing your price down to $300,000 may be a good first step, but if that is too low, you may want to review your motivation for selling. Do you need to sell or do you want to sell? Are you looking to grab an opportunity in moving to a higher end property? Your dollar is more valuable in an upward move and therefore any loss you take on your home will probably be made up for two-fold on the purchase. Review your goals and choices, reconsider your pricing, and definitely get on the MLS unless you want your home to be the best kept secret in the area. Hope that helps!

Maya Paveza is a REALTOR® for Coldwell Banker Preferred in Wilmington, Delaware and Southeastern Pennsylvania.  She is also a founding member of Twitterqueens, Inc. Social Media Educators. 

My house is listed for $339,000. We bought it three years ago for $368,000. There is a house directly across the street from me similar in amenities but 1,000 square feet smaller, listed at $249,000. (They bought it for $280,000 around the same time.)

My question is, I see a lot of traffic at that house compared to ours. We listed on Sept. 24, and only have 5 brochures removed from our free info box so far. That house has already received an offer, but it was turned down by the sellers. We would like to increase the traffic to our property. Aside from our REALTOR® posting it on a multiple listing site, what else can we do? Would an open house help?

-Heide Scott

Pricing is an essential part of a marketing strategy. Making sure your home is priced properly is the first and most important way to get traffic to your home. When you listed your property did you and your Realtor use valid comparables and set a realistic expectation for price? This is not a market to set “dream” standards or prices based on what you think your home is worth. Any property is only worth what a buyer is willing to pay. That determines the fair market value. Setting a price, and even an appraisal, is not a science and not guaranteed to get you what you expect.

Aside from that, the buyer mentality in today’s market is that they do not want to do anything to a property that they feel they are paying fair market value for, yet for a bank owned property or distressed property they are more willing to make an adjustment and take a risk. This being said, it is hard to determine if the neighbor is fairly priced, or if you are overpriced. Square footage alone is not the only factor you would need to consider. I advise my seller clients that if we don’t have an offer in the first 10-14 days, we need to be quick to make a price adjustment to try to catch the market. I also try to recommend clients price at 1-2% below the current market so that they attract the buyers’ attention.

Another pricing strategy I have been employing is to price at a $25,000 increment so as to catch both ends of a search segment on REALTOR.com®. When you have a home priced at $274,500, you are missing the $275,000-300,000 search range, therefore $500 may well be costing you a buyer. Being smart and aggressive is key. It truly is ALL about pricing. You do need to have exposure too!

Not being in the MLS is not advisable in this day and age. The MLS services across the country have what are called IDX or AVM feeds that provide data to partnering brokerages, services and Realtor sites. This allows your home the maximum exposure and a better chance to sell for a higher value. By electing not to participate, you are truly limiting your market and the chance of getting a good solid offer. Another problem in today’s market is the underpriced, or “fire sale” property. People who don’t care, or banks that just want to unload, are driving prices to below market value and are creating a problem when it comes to appraisal and overall community value and pricing.

You really can’t compete with such properties. Sometimes the only option is to allow them to sell and get off the buyer radar. Or use the opportunity and hope that it will help drive traffic to your home. But if you are priced where you are, you are not even within the same buyer pool.

An open house does not typically sell a house. It helps a Realtor get new clients and offers your neighbors an opportunity to see your home, so it is worth doing, but not the holy grail you may be seeking. There may be no holy grail at all for you. Based on the information you are providing to us, I would deduce the following things. First, condition is also a factor, not just square footage, if your neighbor is priced properly, and traffic would say they may well be, as well as the fact that they received an offer, you may want to review your pricing strategy.

Bringing your price down to $300,000 may be a good first step, but if that is too low, you may want to review your motivation for selling. Do you need to sell or do you want to sell? Are you looking to grab an opportunity in moving to a higher end property? Your dollar is more valuable in an upward move and therefore any loss you take on your home will probably be made up for two-fold on the purchase. Review your goals and choices, reconsider your pricing, and definitely get on the MLS unless you want your home to be the best kept secret in the area. Hope that helps!

Maya Paveza is a REALTOR® for Coldwell Banker Preferred in Wilmington, Delaware and Southeastern Pennsylvania.  She is also a founding member of Twitterqueens, Inc. Social Media Educators.