Choosing Your Agent
You might think that the most important decision you make is the home you decide to buy. You just find a home and make an offer. What else is there? Right? Actually your first and most important decision should be your choice of representation, and therefore, your choice of a real estate agent. Your real estate agent will be the person you depend on for so many things during the entire home buying process.
Your real estate agent should be someone you trust and respect, is professionally knowledgeable, and most importantly, will be representing you, the homebuyer, exclusively. What this means to you is that this agent will always have your best interests in mind, and will be your loyal advocate throughout the entire transaction. They should never just show you the homes that they are listing, or their company’s listings. They should show you everything that meets your wants and needs. They should also never tell you that they will represent you as a Transaction-Broker. This is not even possible, because legally a Transaction-Broker cannot represent you at all. A Transaction-Broker is nothing but a facilitator, or a non-agent. Colorado requires a written agreement for you to be represented, and without this agreement, the default relationship is that of a Transaction-Broker. Please refer to the page on Agency for a complete explanation.
With an Exclusive Buyer’s Agent, there is never any question as to whether your agent is on your side or not. You receive the benefits of a fiduciary relationship throughout your entire real estate transaction. These fiduciary duties include Trust, Loyalty, Confidentiality, Disclosure, and Obedience. We don’t list homes or work for sellers, so there is never a chance for a conflict of interest, since we won’t try and sell you one of our listings.
With the passage of the new Designated Brokerage law in Colorado, a traditional brokerage firm might tell you (or they might not, since the law doesn’t require them to) that they can assign (designate) an agent to represent you as a Buyer Broker. What the traditional brokerage firm won’t tell you is that this “designated” broker is by law, isolated from most of the rest of the firm. This means that this agent can’t rely on the advice or help of more experienced brokers, or their employing broker. Will you be able to rely on this part-time “designated” buyer broker during difficult negotiations? What’s more, this person may even be sharing an office with (and thus, fax machines, copy machines, assistants, etc.), or be married to, the person who is representing the seller in your transaction. Have you ever been in an office and overheard another person’s conversation?
Something else to be aware of is that if you are interested in a home that is listed by your agent, your agent will give you a Change of Status Transaction-Broker Disclosure form. This means that after obtaining all of your private and confidential information, your agent is now changing from your “designated” buyer broker to a Transaction-Broker, and you just gave up your right to be represented. The problem is, you won’t even have a choice, because your approval is not required for the Change of Status Transaction-Broker Disclosure form. You, the consumer, should be able to choose how you are represented. Only with an Exclusive Buyer’s Agent do you not have to worry about this situation ever happening.
Choosing Your Financing
Another very important decision most of you will have to make is where you will get your loan to buy the home, and what type of loan is best for you. Will you use a bank, a credit union, a mortgage banker, or a mortgage broker? Will you choose a 30 year fixed rate loan, a 5/1 ARM (adjustable rate mortgage), a 2/1 Buy Down? How much will you qualify for, and will the monthly payments fall within your comfort zone? How much will the closing costs be and how much will you need for a down payment?
There is so much to know, and it can all be overwhelming at times. This is where you can depend on your Exclusive Buyer’s Agent. We help you sort through all of the options. We recommend that you get Good Faith Estimates from different lenders and compare not only the interest rates, but also the closing costs. We will help you differentiate between normal loan costs and junk fees or garbage fees that some lenders try to charge you. Sometimes lenders will lower their fees if they know they are being shopped against other lenders.
It’s best to be pre-approved, or at least pre-qualified, for a loan. This way when you do find your home and make an offer, your offer will be more attractive to the seller compared to similar offers from other buyers who do not already have a loan.
Finding a Home
You may wonder how an Exclusive Buyer’s Agent can help you find a home since we don’t have any homes that we are trying to sell. The fact is, we have access to all of the properties listed in the Multiple Listing Service, as well as for sale by owner properties and new homes. We will do whatever we can to find your perfect home.
The Purchase Offer and Negotiations
Once you find your perfect home, how do you know how much to offer? This is when you will really be glad you have an Exclusive Buyer’s Agent on your side. Not only do we try and find out everything we can about the seller’s situation, we also do a comparative market analysis, called a CMA, that shows you the selling price of other similar properties. Without this information, it is really difficult to know whether the seller is asking a fair price.
You will most likely be asked to pay an earnest money deposit when you submit your purchase offer. The amount of the earnest money deposit is usually around 1% to 3% of the list price of the home. The purpose is to show the seller that your offer is in good faith. The earnest money deposit is held in a trust account, and is usually applied towards your down payment when the real estate transaction closes.
The Purchase Contract
The Purchase Contract is a standard Colorado Division of Real Estate contract form. It contains the offer price and terms, any inclusions or exclusions such as refrigerators, washers, and dryers, any additional provisions such as a sale-of-home contingency, and numerous dates and deadlines concerning the loan, appraisal, title, seller’s property disclosure, inspection, closing, possession, offer acceptance, and other items of importance. The seller can either accept your offer, submit a counter offer, or reject your offer.
The big day has finally arrived. All of the contingencies and negotiating items have been resolved. The final step is for a closing company to close your real estate and loan transactions. You will need to bring your check for the down payment and closing costs, and be ready to sign your name to a lot of documents. The closing usually takes 1 1/2 to 2 hours. You will receive the keys to your new home, but in Colorado, the possession of the home is typically 2 days after the closing.
Whereas you may never hear from some agents again, we believe that this special experience of home buying is only the beginning of our relationship. We will always be there for you after the sale, whether you have questions regarding the closing, the payment of your property taxes, or if you need some help protesting your increased property valuation assessments. We consider you to be a client for life, and a valued member of our team.