The Selling Process

At some point in every homeowner's life, reality speaks. It's time to sell your house. Your needs have changed, you need bigger, smaller, or an entirely different location. And you can't accomplish this by making reasonable changes to your current home.

So, where do you start? What can you expect?

Preparing To List

While you can call in a Realtor for a consultation at any point, there are a few things that I recommend you do first. A good deep cleaning is one of those things. Clean those places that don't get a lot of love- baseboards, behind appliances and large furniture, ceiling corners, etc. spruce up your yard, and pack away clutter and personal items. Take care of any maintenance issues, and be sure to rid your home of any offensive smells. Most of this is very common advice, so I won't eat up your time with yet another checklist or detailed list of de cluttering advice. Head over to Pinterest or any of the numerous home improvement websites for details, if needed. But I will say this, go for fresh and clean scents, rather than a food scent or something very taste-specific like a musk. Neutralizing is the goal.

The other step is to have a clear, realistic sense of your wants and needs. Browse listings in your desired area to get a feeling for what is available and how much they're going for. Your Realtor will help with this when its time to start shopping for the next home, but it can definitely help you discover how realistic your ideal is and prepare you for what you're likely to encounter. This can also help you determine what is most important- location, home size, updates, etc. in other words, it will keep you grounded. You can't expect to get a move-in ready, updated home in a hot location for bottom dollar, so you should have an idea of what that is, both in the area you're scoping out and the area around the home you're selling. The best, hardest working Realtor still cannot make the impossible happen, so reasonable expectations are essential. 

Finally, the last thing I always recommend is to get preapproved for your next purchase before listing, unless you're planning to rent. You need to be sure that you're financially ready for the next step so that you don't find yourself in a difficult situation, without a place to live. Ouch! Getting preapproved (not just prequallified, there is a difference) will ensure that your income and credit meet current lending standards before there is no turning back.

Finding A Realtor

Once you know what you want, and have at least started preparing your home for the market, you're ready for a consultation. Get recommendations from family and friends for a good Realtor, and watch for successful sales in your area. These are some good ways to find a good agent. There are unfortunately some not so great ones out there, so make personal recommendations are extremely helpful. Interview the top couple of choices and ask questions. Strong communication and guidance skills can be just as important as how many homes they've sold or awards they've won. Your Realtor can recommend trusted lenders, if you haven't yet been prequallified, or you can get personal recommendations for this, too. 

There are a variety of different agents. Some are not Realtors (see the Preparing to Purchase post for more information on the difference), but the majority of real estate agents are. Think about what level of personalized service you would like to have. Do you want to see the same agent every time, or have a team that takes turns? Do you need someone there for you every step of the way (a full service Realtor), or just for the major events (a transactional or limited service agent)? Talk to agents about these things when you're interviewing to find out how they work and how their style works (or doesn't work) with your goals. 

Be wary of cash back incentives and gimmicky marketing tactics. While a few extra bucks at closing may sound appealing, you have to wonder why the agent is willing to give away part of their paycheck. Some may be new to the business and trying to build up their client base, others may not be selling a whole lot. Real estate agents are almost always paid commission only, there is no salary from the brokerage. In fact, we pay our brokerages, too! So think about it this way. If they're willing to give up their own pay to get business, are they going to give easily when it comes to your money? Incentives when you are buying and selling, or if you're a repeat client are common and less concerning than a stranger's postcard in the mailbox with a coupon for a cash rebate. 

Don't be afraid to ask about an agent's sales numbers! Have they sold 2 homes within the last year or 20? Might this matter to you? Especially in a challenging market, that experience could be the difference between you getting your price or sitting on the market, reducing and becoming desperate enough to accept whatever offer comes your way. 

In every state commissions are negotiable, and typically the seller pays both the listing agent and the buyer's agent, if there is a 2nd agent involved. One commission rate will be negotiated with the listing agent, and then that amount is split with the buyer's agent. After that, most agents will pay the broker's cut, errors & omissions insurance, and marketing fees out of their half. In other words, the amount you see on paper may look like a lot, but you're paying for a professional service for more than a month's worth of work, and only if the home sells. Many brokerages have company policies on what they charge, but some agents can and will negotiate their rates. That said, don't expect full service for limited service rates. Evaluate candidates on their sales skills, communication with you, and use your best judgement to decide who will be the best candidate to protect your money. Choose the agent or team that suits your needs best.

The Initial Consultation

In preparation for the consultation, locate any important documents related to the home and have them ready. Do you have the survey map, previous appraisal reports, etc.? These documents may be helpful, and could save you some money as the sale progresses. Most homeowners keep these with their original closing documents. You'll also need any recent inspection reports and major repair receipts. The time period varies by state, but any inspection reports from the last 4-5 years are commonly required to be attached to the condition disclosure. You'll also need 1-2 spare keys. I recommend 2- 1 for the lockbox, and 1 for the agent to store in their office, just in case the lockbox fails or another agent leaves with the key in their pocket after a showing. Discuss your expectations, goals, and preferences. 

Typically, listing a home happens in 2 or more steps. The agent will schedule a consultation to come tour your home and get a good look at its condition, as well as the general area. This is an essential step in pricing the home correctly. They will also point out things that need to done to ensure success, and that can be done to increase the potential market value. Most can recommend professional stagers, cleaners, and contractors, if needed. If you know you'll need help preparing your home for the market, this could be a reason to do a consultation early on. 

Be prepared to discuss your goals, if you didn't already during the interview. The agent needs to know your ideal timeframe for the move- when you'd like to move or when you absolutely must be done. They'll discuss market conditions and price ranges, along with how each will likely perform in the current market. Make sure the agent is on the same page. If your goal is to move right away and top dollar is less of a concern, be wary of an agent that will only list when the house is perfect, and vise versa. But again, be realistic. If updates are needed, and you don't want or have time to do the work, don't expect top dollar. 

Your agent will most likely want to get paperwork out of the way during this consultation. Expect to sign agency disclosures, a listing contract, and any related addenda (additional documents related to the property, such as an HOA form). These are all legal documents, with responsibilities on each side. The gent has a duty to you as their client, and you have a duty to your agent. Most listing agreements are the Exclusive Right to Sell variety, meaning you agree to work with only one agent. After all, you've established a trust relationship with this person and want them to be loyal and motivated to successfully sell your home. 

You'll be given property condition disclosures to complete, and possibly some forms to have notorized. Be sure to complete disclosure forms fully and honestly to the best of your knowledge. Not disclosing an issue you are aware of or have repaired previously could come back to bite you after the sale. I cannot stress this enough. Honesty really is the best policy when it comes to disclosures. The small financial losses you might expect if there has been an issue are nothing compared to the liability expenses if you wrongfully fail to disclose them.

The Listing Process

Most of the time after the initial consultation, you'll need a few days to get things ready. However, for some, your home may be ready to go that day. Either way, once the home is ready to list, the agent will need 1-2 hours to collect all of the data. Each agent and client handles this differently. 

During this time, your agent will take measurements, collect information on systems and appliances, and either take photos or have a professional photographer come to do this. They may also have a videographer take video to create a virtual tour, or a drone photographer take aerial photos. Some may have floor plans created. This will vary by market expectations and the price range of the home. Aerial photos are seen more in high end home sales.

Showings

Your Realtor most likely discussed showing procedures with the listing contract paperwork. If not, then they'll discuss them with you when they are preparing the listing data and photos. Most use a showing service- a third party that handles scheduling. They can be quite convenient for you, too, since you can set time limits (like no showings after 9 PM), and approve showing requests by text, phone, or online. Others handle the scheduling on their own. 

Before any showings take place, put away any valuables, prescription medications, or weapons. Lock them in a safe or remove them from the home when you'll be away. While showings will occur with licensed agents, thefts can and have occurred in the past. Realtors don't typically background check their clients (most do require loan preapproved however), and criminals do buy homes. And while we do enter the home for showings with our buyer clients, we are not always able to watch each family member as they go from room to room. Couples and families often split up when touring homes, seeking their own individual must-have features in each one. You can reduce the risk and potential heartbreak of a theft by removing or putting away tempting items. 

When your home is being shown, it's best not to be there unless there is a special situation. Home buyers need time to imagine living in the home with their things. When the owner is present during a showing, buyers often feel like they're intruding, making it hard to focus on the thought of living there. If they can't imagine themselves living in the home, they probably won't imagine writing any offers either. 

Also have a plan for pets. Many homeowners will put pets in a crate, room, or garage when they're away for showings. Others request advance notice so that they can take their pets with them, or have a friend or neighbor come take them out. And others still have asked close family or friends to temporarily keep their pets while their home is on the market. Know your pets. Are they aggressive or cautious with new people? Dogs are often protective of their homes and owners, so even a friendly dog might be uncomfortable with a stranger in your home when you aren't there. If this is the case, it's best to ensure that they'll be out of the home or crated to avoid an uncomfortable situation for you and potential buyers. Be sure that pet waste is regularly cleaned up from the yard, and that litterboxes and small animal cages are cleaned frequently. Use fresh or clean scented air fresheners to ensure that buyers are greeted with a pleasant aroma instead of pet smells that you may be used to.

Occasionally, if the agent knows of a buyer, either one they're working with or one that a coworker has been working with, they may ask you to allow them to see it before showings have officially begun. This is up to you, so speak up if you're uncomfortable. This could lead to an extremely quick sale, if one of those buyers likes the house and makes an offer. However, the more market exposure your house gets, the better your chances of getting the best price. If the buyer offers you a good price and terms, feel free to take it. But if top dollar is your main goal, more so than quick and convenient, don't feel like you have to respond until the house is up for everyone in the market to see.

Feedback and Communication

A good real estate agent will communicate with sellers on a regular basis to discuss showing activity and feedback. Buyers' agents often share feedback to let the seller and their agent know what features they liked about the home, or what issues kept them from considering it. This can be helpful in determining if price adjustments or condition improvements are necessary. Keep in mind that some feedback will be negative, no matter how great the house is. It simply will not work for every buyer, and that's ok. It just has to be a good fit for the right one. 

Your agent can use the tools they have available to monitor showing activity and compare it to the averages for your area. If your home is getting significantly less showings than comparably sized and priced homes in the area, you need to take a close look to figure out why. Is the price too high? Is there a problem with the condition! Is there something nearby deterring buyers? Or has competition suddenly increased? Market conditions can change, so adjustments and new strategies are sometimes needed. Buyers usually buy homes after considering 3 main factors- location, condition, and price. Location cannot be changed, so condition and price are the factors that a home seller and their agent can control. If the condition is poor, the price needs to reflect that. In contrast, a home in "turn-key" condition, meaning it is ready to move into on day 1' will warrant a higher price.

Offers

If everything has been done right, one or more offers will come in after a reasonable amount of time on the market. This length of time varies by area, price range, and current market conditions. Most listing agreements will require the agent to present every offer, even if they know it is lower than your bottom line, but you can instruct your agent to do otherwise. Offers most often arrive by email on a contract form filled in with the property information and offer details- like the closing date, type of financing to be used, and who will be paying for what at closing. As the seller, you have 3 main options to use on any offer received- accept, reject, or counter-offer. Counter-offers are probably the most common. After receiving and reviewing an offer with your agent, there may be just a few things in it that you disagree with, so you'll revise these items and send that back the buyer, or it may be done more casually- via phone or email discussion. This might go on a couple of times before everyone is in agreement. Note that a seller can only "work" or counter one offer, and then can only accept one offer. After all, there is only one house to sell. Multiple offers are nice to drive the price up, but present some special challenges. If multiple offers are more common in your area and current market, be sure to hire an agent that understands how best to handle this situation. 

Offers can be to purchase the home as-is, or a buyer may request a repair that is obvious during showings. This does not preclude a buyer from negotiating repairs after the inspection, however. More on inspections and repairs shortly.

After agreeing on all terms, each party (the buyers and sellers) will sign the contract, and then the agent will execute it. The executed date is day number zero when counting all contract deadlines. 

Inspections, Appraisal, and Repair Negotiations

Congratulations! You've accepted an offer. One of the first things that most buyers will do will be to schedule inspections. Inspectors perform visual inspections and test the functioning of all major systems in the home. This helps the buyer understand what they're buying and to discover any potential issues or concerns to address. Buyers may have additional inspectors come in for pest inspections, often required for government insured loans, or to take a closer look at any one system. 

When the buyer schedules inspections, be sure the inspector has access to all major appliances, breaker boxes, attic and basement entrances, etc. Pay special attention to those appliances in the garage that may be blocked with your boxes or personal belongings. Also be sure that all utilities are connected and left on for inspections. Many inspectors are state licensed and will have access to your home via the same lock or system as the buyer's agent. Buyers may attend inspections, or more commonly will meet the inspector once they're finished to review the report. 

Inspectors almost always find something. Even on newer homes, there will be some amount of wear and tear, maintenance, or code changes. Building codes change frequently. Any time a home's systems or wiring do not meet current building codes, it must be disclosed on the inspection report. A good inspector will explain this and discuss whether it is still safe or poses a concern. 

A buyer's response to inspections and requests for repairs will vary with each person,may well as the price and market conditions. Some won't ask for a single repair, some will send you an itemized list, and then other will simply request a credit and do the repairs on their own after closing. As with an offer, you can respond to a repair amendment by accepting, rejecting, or countering. Consider that some repairs could affect the buyer's financing, if not completed. Consult your agent for repair negotiations and advice on responses. 

Agreed upon repairs are required to be completed before closing, or the buyer may delay closing. In Texas, repairs must be performed by licensed contractors (where licenses are typically required), unless agreed otherwise in writing. Keep the receipts to pass along to the buyer and show proof of completion. This will also allow the buyer to go back to the repairman or company for warranty issues, instead of looking for you!

An appraisal will most likely be scheduled as well. If the buyer is paying cash, the appraisal is optional, but is required for any type of financing. The appraiser will visit your property, take notes, and measure each room. They will compare the house to similar houses that have sold in the area and then provide the bank and buyer with their opinion of the value. If the value comes in lower than the agreed upon purchase price, the buyer may have an option to terminate the contract. You can renegotiate the price, or the buyer may pay the difference in cash at closing. Again, these strategies vary widely with each buyer and with market conditions.

Under Contract

As a seller, there isn't a lot for you to do once you're in contract, which is nice since you'll be busy packing, moving out, and often searching for another home at the same time. So what are some key things to do? 

First, if you didn't provide key documents to your agent when the house was listed for sale, you'll be required to do so now. These documents will include property condition disclosures, survey plat map (if available for re-use), and any documents showing changes in ownership like a deed, divorce decree, will, etc. the first two are more common. Deeds are recorded with the county, so most of the time a title company will access this information through county records. the latter are required if changes in ownership have been more recent and are not yet recorded. You'll also need to provide information to the title company, such as each owner's social security number and your current mortgage account number for payoff and tax purposes. 

Note that the title company will perform several searches and will locate any liens associated with the property or current owners. These will be verified by the title company, and if valid, must be cleared prior to closing. Clearing a lien is usually done by deducting the costs from your proceeds on the closing statement and paying the creditor. The most common lien is the mortgage note or deed of trust. Others could include unpaid income or property tax liens, and mechanic liens for unpaid work performed on the house. Also, if you are not a U.S. citizen, you may have to have additional taxes withheld. Consult your title company for more information on these tax requirements. 

After that, the seller won't have much to do on the contract side until closing. Expect the buyer to schedule a final walk-through the day of or day before closing, and occasionally additional showings in between for measurements or estimates. When packing, be sure that you do not pack up any keys, garage door openers, fixtures or accessories (as defined by the contract), unless they were specifically excluded in the contract. These will include things like blinds, curtains, light fixtures, and fireplace equipment.

Closing typically takes place either at the title company office or at a remote location with a mobile notary. All sellers must sign, or if one seller will be unavailable, a Power of Attorney form may be used, but should be prepared in advance. Your time slot will be scheduled, and for a seller, signing takes approximately 20-30 minutes. Once all parties have signed, documents will be sent to the necessary parties for funding. Funding is usually quick if the buyer purchased with cash. If a loan is used, funding typically happens in about 2 hours or less. If closing happens at the end of the day, however, funding most likely will not occur until the following business day. 

If you agreed to transfer possession of the house at closing and funding, you should be completely moved out and have the clean, empty house ready to go at the time of closing. If a temporary lease is being used, a specific date will be agreed upon for you to turn over the house. Either way, when possession is delivered, you'll give your keys, garage door openers, and accessory keys (like to mailboxes or shed locks, etc.) to your agent or the title company, who will then pass them along to the buyer. Often, agents will advise home sellers to leave all of these in a drawer in the home, and bring just one key to closing. 

After the Sale

Congratulations on a successful sale! Once the sale has closed, schedule utilities to be disconnected (or taken out of your name at least), cancel your homeowner's insurance policy, and forward your mail. If you had an escrow account with your mortgage company, the unused funds will be mailed to you, usually within about 30 days. (Make sure your former mortgage company has your new address!)

If you made a profit of more than $250,000 in the sale, consult your CPA or tax professional to determine any special tax forms you may need, and how much you may owe Uncle Sam. Capital Gains taxes are complicated. 

If you had a Homestead or any other tax exemptions on your former property, contact the county tax department (or appraisal district) to find out if you need to fill out any forms to transfer these exemptions to your new property or to notify them that you no longer own this one.

After all that, pour yourself a celebratory drink! Selling a home can be a daunting process, but one with huge rewards. 

Written by Maggie Hernandez with Group Watson- Keller Williams Realty

(214) 682-7002 www.GroupWatson.com

Preparing for Your Home Purchase

This time of year, many people are just beginning to think of their upcoming home purchase. If you're reading this blog, chances are you that you are one of those people. Maybe you've had the desire to buy a home for some time, but haven't acted on that desire. Most often this happens when you aren't sure where to begin. Rest easy, I'm here to help.

Whether you've never bought a home before, or you're a homeowner that doesn't remember the process, here's a step-by-step guide to help you prepare for the home buying process.

Preparing for a Home Purchase
The first step is to take a look at your credit report. There are several free credit websites out there. In most states, you're allowed to review your credit reports for free once per year on www.annualcreditreport.com. You can also purchase credit scores and credit monitoring from this site or one of the 3 credit reporting bureaus: Experian, Trans Union, and Equifax. Be sure that you use a reputable source to avoid phising and identity theft.

Your median credit score (the middle value score of all 3) should be at least 620. You also shouldn't have any late payments on credit accounts within the last year, and ideally, for the last 2 years. You also shouldn't have any open collection accounts. If this is what you're seeing, you are in good shape! If not, you may have some work to do. Set reminders on your calendars or cell phone for payment due dates to help you pay on time, or just make a payment with each pay check. Pay extra attention to credit card due dates, since they are not always on the same date every month.

Do not go disputing every negative item on your credit report! Depending which loan type you use to finance your home, this could cause some problems. Some loan types cannot be closed with an open dispute showing on the credit. If you have true inaccuracies, by all means, dispute these and provide the necessary evidence so that they can be removed. However, it may be more effective to contact the creditor directly with your evidence. They may be more cooperative this way. If there are a lot of items on your report that are truly your accounts, you do have options. You can work with a credit repair company, non-profit, or negotiate settlements with the creditors.

Savings and Cash-on-Hand
Next, look at your savings account balance. You'll need at least 3% of the price of the home you're looking to purchase for closing costs, in addition to your down payment. This would be $3,000 for every $100,000 of home price. This figure should be calculated using the entire purchase price, not the amount financed after your down payment. Some loans do allow you to finance most of the closing costs, however, this will increase your monthly payment. Not all closing costs can be financed, either. Earnest money, option fees, and inspector costs cannot be rolled in to a loan. Appraisals often must be paid for up front as well. This varies, but if you aren't sure, plan for it. It's better to have an extra few hundred in your pocket than not.

For a break-down of the typical costs that come with the purchase of an existing home in North Texas, click here. Closing costs on a foreclosure or new construction home will vary, so consult a Realtor for more information if you're looking at this type of purchase.

When my husband and I were planning to move, we created a spreadsheet and entered every purchase on our bank and credit card statements from the past 3 months. We categorized them to differentiate between essential expenses- food, housing, utilities, cars, etc. and discretionary spending- clothing, dining out, entertainment, etc. We were able to reduce our spending by about $300 per month and put that money all in savings. Every time we were tempted to head to a restaurant or make an unnecessary purchase, we'd call each other and talk about the neighborhood we wanted to live in. We had been dreaming of living there for years. It really helped, and in a year's time, we had our closing costs in full. Our down payment came from the equity gained from the sale of the home we lived in at the time. Friends have come up with this money in their own ways, so find what works for you. Some borrow from a 401k (many allow you to borrow for a down payment and home buying expenses), some sold valuables like boats and furniture. Others took on 2nd jobs or did things like babysitting for extra funds to put into savings. Get creative! It often takes a little more than your typical savings habits to quickly save enough to buy a home.

Contrary to popular belief, 20% down payments are not the minimum. While 20% does reduce the amount you'll be financing, show financial security, and eliminate mortgage insurance (more on this later), you can finance a home with far less in most cases. Mandatory down payment requirements will vary with the loan type being used to finance the purchase, from $0 on up to 20% of the purchase price.  If you have 10% in the bank and everything else is ready to go now, you're still in good shape. If home values are appreciating, taking the time to save that additional 10% not have as much of an impact on your purchasing power.

For example, if you're looking at a $250,000 home in an area where prices are going up an average of 5% per year, and you have 10% in the bank ($25,000), it may make more sense to go ahead and buy the home. If you did, you would be financing $225,000. If it took you 2 years to save up the additional $25,000, that same home's price would be $275,000, so you still wouldn't have 20%. If you did, you would still be financing $220,000. That's only $5,000 less than you would have financed if you had purchased 2 years prior. If you had purchased earlier, you also would now have an additional $25,000 in equity just from the home's appreciation, on top of the equity earned from paying down your mortgage during that timeframe. Not to mention the money spent on rent that did not go toward building your equity at all. Waiting doesn't always make sense. However, mortgage insurance rates are a factor to consider. Most lenders will require mortgage insurance for any purchase or refinance loan that exceeds 80% of the value of the home. This insurance protects the lender in the event that you default on the loan. Sadly, you as a buyer won't benefit from it, but it is required. Consult a mortgage professional for actual payment calculations with and without mortgage insurance on scenarios like this to make a well informed decision.

Choosing a Loan Officer
It really doesn't matter whether you choose the Realtor or the loan officer first, and typically, you'll begin working with each around the same time. I put the lender first, because the Realtor will want you to be pre-approved before showing you homes. No, this isn't due to laziness or not wanting to waste time. Pre-approval defines your budget, verifies that you can realistically purchase the homes you're looking at, and ensures that you're ready to act as soon as you find the right one. Nothing is worse than finding the right house before you're ready, spending a couple of days waiting on the pre-approval, and then finding out another buyer swooped in and put a contract on *your* future house. Ouch. I never want that to happen to my buyers!

So, once you have the minimum credit score and funds, you're ready to begin working with a mortgage lender. There are millions out there, so ask for recommendations from friends, family, and your Realtor (if you've chosen one). Realtors are great resources because we're seeing who is getting deals closed and on time, and who isn't. True, we'll often recommend those that send us clients, but we'll never recommend someone that does a bad job. Lenders and Realtors work hand-in-hand on each sale, so we always want a good team of professionals to get the job done right and on time. The same goes for Realtor referrals from lenders, too, I'm sure. If you get the lender first and ask for Realtors, they're not going to suggest someone that doesn't know what they're doing.

Some questions to ask your potential lenders would include their fees, what types of loans they offer, and do they have a good line of communication with their underwriting department and buyer's agents? Ask if they have a track record of closing on time. Don't be afraid! Listen for how well they explain things to you and how responsive they are to your questions. If they're not willing to answer questions now to earn your business, what might they be like when you're in contract and have a deadline and a problem pops up? Choose carefully. You can shop around. Even if multiple lenders check your credit, if it's for the same purpose in a short period of time, it will be seen as 1 inquiry. Don't be afraid to let them know you're shopping around, either. If you find one that seems to be very informative and great, but has higher fees, maybe they would match or at least reduce their fees in order to earn your business.

As you begin working with a lender, keep focusing on your credit. Don't open any new lines of credit or make any large purchases until after closing. Your credit will be checked in the beginning of the process and again just before closing. A new account could change your debt to income ratios enough to hurt the sale. So, when you're shopping for appliances and furniture, hold back on the finance offers. Continue making all of your payments on time. If you're searching for jobs, it may not be the best time to buy a home. Promotions are ok, but if you're thinking of changing jobs, consult your lender before you write up any resignation letters.

Another important rule- do not deposit large amounts of cash without consulting your mortgage lender. Ask your lender what amount they consider large, if you receive cash on a regular basis or expect some to come in. If the lender knows about it, they can help you determine the best way to document the funds in a way that won't raise a flag in underwriting. Loan underwriters will want to know where your money is coming from to ensure that you're a low risk borrower. Also, if you are receiving a down payment or closing cost gift of funds from a relative or other source, such as a non-profit, be sure to discuss documentation with your lender in advance.

The next step is to get pre-approved for a loan. This will take a few days, as apposed to a few minutes for a pre-qualification, but it is a crucial step. Nowadays it is pretty much a requirement to submit a pre-approval letter with a purchase offer. Pre-qualification doesn't carry as much weight as a pre-approval. The difference is a big deal to a well informed seller, especially if they have multiple offers on the property. For a pre-approval, the lender has gone a few steps further than just looking at your credit and asking you questions. They've actually received income documentation and asset information from you and most likely have verified this information already. They have ensured that you are able to purchase and are willing to put that in writing. Once you are pre-approved, you're just about ready to begin home shopping.

Choosing Your Realtor
Similar to the loan officer, begin by asking friends and family for their recommendations. Your loan officer can recommend someone great as well. Even if you've bought and sold homes before, it makes sense to work with a Realtor that is knowledgeable about current forms, laws, and etiquette in your local market. Take some time to interview your top candidates, and choose one that feels right to you. Have a conversation. You'll be spending some time with that agent and trusting them with sensitive information, so make sure you're comfortable with them and their personality. Find out how they work, what they do for clients, and just get to know them.

A Realtor is not just a real estate agent, and not every real estate agent is a Realtor. Realtor is a trademarked title earned only by a licensed real estate agent that is a member of the National Association of Realtors, and has taken an oath to conduct their business according to the Realtor code of ethics. View the code here. Many large brokerage firms require their agents to be Realtors. Smaller, independent firms may not be as strict. Each firm offers their own training, in addition to the minimum education required to take the state licensing exam. If you're interviewing an agent that is not a Realtor, it might be a great question to ask why. Perhaps they haven't joined yet, perhaps they're saving money (Realtors pay annual dues to the national, state, and even local associations that can be close to $1,000 per year or more.), or they were asked to leave the association for ethics violations. That last one should be cause for concern.

Be wary of cash back incentives and gimmicky marketing tactics. While a few extra bucks at closing may sound appealing, you have to wonder why the agent is willing to give away part of their paycheck. Some may be new to the business and trying to build up their client base, others may not be selling a whole lot. Real estate agents are almost always paid 100% in commissions, there is no salary from the brokerage. In fact, we pay our brokerages, too! So think about it this way. If they're willing to give up their own pay to get business, are they going to protect your financial interests? Incentives when you are buying and selling, or if you're a repeat client are common and less concerning than a stranger's postcard in the mailbox with a coupon for a cash rebate. Don't be afraid to ask about an agent's sales numbers! Have they sold 2 homes within the last year or 12? Might this matter to you? Especially in a challenging market, that experience could be the difference between you getting your dream home or settling for something that just isn't right. An agent that doesn't sell very many homes may have a little more motivation to get you to buy fast, instead of the patience to work with you until you've found the right fit. While on the flip side, that top producer you see on billboards everywhere may not have the time to give you the full service and guidance that you deserve.

Financial guru Dave Ramsey recommends to choose a Realtor with a "teacher's heart," and I agree. I've had clients tell me that past Realtors sent them stacks of documents and said "sign here" without ever explaining much. Yikes! Real estate contracts are legal, binding documents. Failing to uphold your duties, as defined by the contract, could cause you to find yourself in court- facing some real and expensive consequences. Therefore, your agent should be able to explain the contract to you, prior to signing, so that you fully understand what you're agreeing to do. And for goodness sake, please don't try it on your own! For these same reasons, real estate agents must go through several hundred hours of training and maintain state licenses. If you do not fully understand the contract forms you're signing, you could be putting yourself at risk. Besides, as a buyer, you don't pay for the agent, so why not have an expert on your side?

Ask prospective Realtors about their schedules as well. When will you most likely be available to tour homes? For many home shoppers, the answer is in the evenings and on weekends. Will they be available to show during these times or do they stick to a strict 9-5 schedule? Do they have another job? You'd be surprised how many agents sell homes part time around a full time job. New agents often do this while they're starting out and building up a client base, others will take a temporary job during slow seasons to supplement their income. Also ask about their client load. An agent working with 25 clients at any given time might be impressive, but will that agent have time for you? It would be unreasonable to assume that your agent is available every day, all day, but if they can't show you a home without a week's notice, you might want to move on. If you're looking into a team of agents, you may be working with a buyer's specialist or one of the team's members. Ask if you'll always be working with the same person or if it will be whoever is on call.

Ask about their back-ups. If they will be on vacation, or have significant family demands coming up, they should have a co-worker that will be able to show you a home or answer questions in their absence. Many Realtors work non-traditional schedules around their family obligations. They recognize their clients' needs, but also must be available during business hours when title companies and banks are open. Don't be afraid to ask for your agent's time. We're used to it, and we chose this profession. For me, the flexibility to be at a school function during the day is one of the major perks of the job, so I'm happy to trade off some evening or weekend time.

One more thing- ask for the broker's contact information. If they hesitate, you need to ask why. In Texas, when you enter into a representation agreement with a real estate agent, you are also technically entering into it with their broker. You are truly represented by both, even though your agent likely will do everything. Clients don't typically have to contact the broker, but have their number just in case. Unforeseen things happen. If your Realtor falls ill or is injured and unable to work while you have a contract pending and deadlines to meet, the broker will step in and either help you themselves or appoint another agent to take over until your agent returns. Your contractual obligations do not go away if the agent is unavailable.

Make it Official
Once you've chosen your Realtor, enter in to a contractual representation agreement. Some people are really afraid to do this, either because they know someone who has had a bad experience, or they're just afraid to be bound to one person. If you've asked the above questions, you should have a pretty darn good idea of who your agent is. By having the agent represent you, they are agreeing to work for you, and you are agreeing to work exclusively with that agent. Representing you is different from just showing you a few houses. Sure, an agent can show you homes without representing you. They can even prepare and submit an offer for you. But they're not working for you in that scenario. Seeing one or two houses can be a great way to interview an agent and get a feel for how they work. However, in Texas, without representing you as a buyer, an agent showing a house (listed by someone else) is considered a sub-agent of the seller. The listing agent is representing the seller's best interests. In either of these cases, they can give you factual information about the property, but cannot disclose any private financial information about the seller. Their job is to get the seller top dollar for the property. They are not obligated to keep your financial information confidential, either. If the agent knows that you're able to pay more for a house, not only are they likely to tell the seller that information, but they are actually obligated to do so.

By representing you as a buyer, the agent is looking out for you and your needs. Their job is now to proactively search for homes that meet your needs and wants, share information with you, and get you the house you want, at the best price the market will allow. Lately in DFW, it's been a seller's market, so the best price scenario has taken a back seat to getting you the house that meets your needs. Regardless of the market conditions, a buyer's agent is required to keep your financial information confidential. There are times when it does make sense to discuss things with the other party prior to making an offer, like if there is a unique situation, but this should be done only with your knowledge and consent, and it should never be done in a way that harms your bargaining power. To properly serve you, the agent really needs to represent you. In turn, you need to remain loyal to your agent. If you go to open houses on the weekend without your agent, and tell the listing agents all about your budget, you're only hurting yourself. The same thing applies if you're calling the numbers on the signs in front of houses for sale. If you have an agent, use them! Chances are, if they didn't tell you about this house you're driving by, it either didn't meet the needs you discussed, is in contract, etc. or that you're looking beyond the parameters that you discussed with your agent. Talk to them! The agent can get the information for you and discuss whether your search criteria needs to be adjusted. Communication is important, and you're not inconveniencing your agent if you ask. It's their job!

Thinking About Your Future Home
While you're waiting for a pre-approval letter and interviewing agents, start making 2 lists. I always tell my buyers to make one list of their must haves- those essential elements that a home has to have for you to consider living there- minimum number of bedrooms, etc.; and then a list of their wants- cosmetic features, luxuries, etc. I suggest that they carry this list along when touring homes and treat it as a checklist. A home that is pretty and has all of your wants can seem so attractive, making it easy to overlook the fact that it doesn't have enough bedrooms or misses another key item on the must-have list. I've been there. When we were shopping for a 4 bedroom house for our family of 4, plus mother-in-law that was moving in with us. One day we wandered in to an open house and absolutely fell in love with a pretty 3 bedroom home. The décor was just our style, and the kitchen was beyond perfect! We almost bought it. Almost. But would have been in big trouble when we moved in and did not have the space we needed at the time. Instead, we found a 4 bedroom that wasn't as pretty, but had the space and layout we wanted, and then we styled it our way.

Also think about your timeframe and narrow down your ideal location. Browse some real estate websites (I recommend realtor.com for the most accurate listing information) and really get an idea of what you're hoping to find. Realtors are pretty good at helping you narrow down your options, but if you begin with a 20 square mile area with broad criteria, you may begin your search overwhelmed with too many options. Spend time in the areas you're considering to get a feel for the activity during the day, evenings, and weekends. Look at schools, and consider your commute. No matter how good a Realtor is, they can't tell you what you want. Only you can determine your acceptable commute time and ideal home.

Finding the Right Home
Enlist technology while you're searching. Take pictures or video of each home, make notes, or record your thoughts, starting and ending with a photo of the front of the home or the address. After touring several homes, they will begin to blend together in your mind. There are some good apps, but I've found just photos and video to be effective. Note what you like and what you don't like, as well as observations about the street and neighborhood. Your Realtor can always take you back for a 2nd look, so don't stress over it too much. Narrow down your options by eliminating those that don't work for you.

Keep your lists handy and refer to them often during showings. Did the home have all of your must-haves? How many items on your wish list did it have? It can be tempting to see nothing but the "pretty" when shopping, and too easy to ignore the practical.

If you really like one, move quickly, especially if it is a seller's market. Your Realtor will help you structure an offer that is competitive in the current market and meets your financial needs. This is where advice from family and friends can be detrimental. For example, I've heard people say "my father-in-law says to never offer full price" in markets where multiple offers are common. If the market has a surplus of inventory, this advice is fine. If inventory is low and the number of buyers shopping exceeds the number of listings for sale, you may need to put everything on the table to get the house you want. Trust the experts here. While those giving you advice probably mean well, they're most likely not buying and selling homes every month, so they won't have the most up-to-date information on the market.

Written by Maggie Hernandez with Group Watson- Keller Williams Realty

(214) 682-7002 www.GroupWatson.com