Buying or Selling a home in the Brooklyn Real Estate market can be a complicated process. Truly it takes a village of people for the purpose of completing just one home sale.
Wikipedia explains the phrase “It takes a village to raise a child” as an African proverb. It means an entire community of people must interact with children to experience and grow in a safe and healthy environment.
The phrase “It Takes a Village” has been adapted over the years for other references. In fact, it is a great explanation of what the home buying and selling experience is like in the Brooklyn Real Estate Market.
How many different parties do you think are involved in one real estate transaction? You may find it surprising. Let’s take a look.
First, you need to find someone ready to sell their home. We often hear the term “Motivated Seller.” What would make a homeowner a “motivated seller?” Motivation to sell a home can come for many reasons.
When a buyer hears the seller is motivated, it may trigger many thoughts.
- There is room to negotiate the price.
- The owner may be open to making concessions to consummate the sale.
- There are material defects to the home or property that the seller doesn’t want to address.
- The home is near foreclosure.
- The seller is ready to take the home off the market and wants to see any offer.
- The seller is in a financial bind.
- The owner MUST sell now.
Determination, not desperation, may be what motivates a seller.
There are many reasons a seller would want to sell a property that is not related to the desperation thinking above.
- Job relocation
- Retiring to a new location
- Settle an estate
Knowing the seller’s motivation would be an advantage in negotiations. However, you may or may not understand the seller’s reason for selling when you place your offer.
Next, you need someone qualified and ready to purchase a new home. Obtaining a pre-approval from a reputable lending institution makes you a qualified buyer. They also have proven they have the necessary funds and qualifications to buy a home in the Brooklyn Real Estate Market. The reasons someone may be interested in purchasing a home vary as much as the reasons a seller would want to sell.
Some reasons to purchase may be:
- Achievement of “The American Dream”
- Sound investment
- Build equity
- Potential tax benefits
The buyer’s motivation is as important as the seller’s motivation. An apathetic buyer can take a home off the market for some time and then decide to terminate the sale. Your real estate agent can help you vet the buyer’s motivation. Unfortunately, you would need to have a crystal ball to definitely know what will happen.
In hopes of financing the home, the buyer will choose a financial institution for their mortgage. Surprisingly, the lowest interest rate is not always the best option. You may want to compare several lenders.
Obtaining an estimate of the lender’s fees can be eye-opening. Some things you will want to compare are:
- Interest rates
- Lender fees
- Cash required to bring to closing
By all means, it is essential to find a reputable lender who is knowledgeable in lending in your area. Out of state or internet mortgage companies may not know the intricacies of a home purchase in the Brooklyn Real Estate market.
The lender should do a thorough analysis of the buyer’s financial situation to determine if they qualify for a mortgage. The buyer should offer evidence of their qualifications when they make an offer on the property.
There is a difference between a pre-qualification and a pre-approval. A pre-qualification provides the buyer with a general estimate of what they can afford. A pre-approval is more valuable because the buyer’s credit has been checked, and documentation has been verified to approve the buyer for a specific loan amount. A pre-approval can be valid for 60-90 days and should be re-verified to confirm no buyer’s status changes.
REAL ESTATE AGENTS
Typically you will find two real estate agents involved in any Brooklyn Real Estate sale. The first agent works on behalf of the seller, helping them prepare their home and price it competitively. The second agent represents the buyer and helps evaluate an offering price and terms once the right home has been found.
The real estate agents work together, bringing the buyer and seller to an agreement on the best terms possible.
You will want to find a trustworthy agent to represent you in either a sale or purchase.
What are the qualities of a trustworthy agent?
- Local Market Expert
- Good Communicator
Your real estate agent should hold the designation of Realtor®, which means they belong to the National Association of Realtors® and their local Board of Realtors®. Notably, a member of these associations must follow guidelines to ensure they are fair and ethical in their business practices.
A critical component of the buying process is the home inspection. The purpose of the home inspection is to determine if there are any major ticket items or safety issues affecting the home. In reality, these are items that the seller may not have been aware of. Nitpicking the seller for trivial issues or updates that were visible upon your visit to the home is not the purpose of a home inspection.
The home inspector will usually look at the following areas of the home:
- Exterior structure
- HVAC System
- Hot Water Heater
- Electric Panel
- Plumbing in kitchen and baths
Be sure to check the credentials of the home inspector you choose. There are certifications required for home inspectors in the Brooklyn Real Estate market.
The home inspector will highlight areas of concern. You will also learn from the inspector the home components that may need to be replaced in the future. With this information in hand, you can make an informed decision about whether this is the right investment for you.
You will most likely need to hire an attorney to represent you either as a buyer or a seller when purchasing in the Brooklyn Real Estate market.
What is the lawyer’s role in a real estate transaction?
- Write and negotiate the sales agreement.
- Represent their client’s best interest.
- Review closing documents.
- Attend the closing to ensure a smooth transition.
For more information on the importance of real estate lawyers, see this previous blog post that explains it all in detail.
The title company researches the history of homeownership to determine the buyer receives a clean title to the property when they take possession of the home. In the event that they find any issues on the chain of title, they will resolve them before closing.
They will also research any judgments, liens, outstanding mortgages, or unpaid taxes on the property.
The title company will then prepare a report (abstract of title), revealing all the research findings. This document will validate the title of the property.
Title insurance is issued to protect the lender and new owner against any lawsuits or claims undetected on the original title search. The lender will require a title insurance policy.
If you are a cash buyer, it would be your decision to purchase title insurance. Although, if you are purchasing a home with cash it is highly recommended that you purchase the title insurance policy.
An appraiser will visit the home to prepare an opinion of value for the lender. Do not confuse the appraisal with a home inspection but, the appraiser may note any safety issues that are apparent to them. Requirements for an appraiser and a home inspector are different. An appraisal is not a substitute for a home inspection.
An appraiser will prepare a report called an appraisal that will provide their opinion of value based on several factors.
- Structural Construction
- Square Footage
- Recent Neighborhood Home Sales
Providing a fair and unbiased assessment of the property can be accomplished by randomly assigning appraiser through a third party.
The cost of the appraisal is an expense the buyer will pay. This is a requirement of the buyer’s lender.
In the event that the home does not appraise for the amount of the sales price, it can trigger a negotiation between the buyer and the seller. If both parties come to an agreement acceptable to the lender, the sale will be completed.
The underwriter works for the lender. Their role is to review the buyer’s information and the appraiser’s opinion of value to determine if the mortgage can be issued for the purchase price agreed upon. The underwriter will evaluate that granting the mortgage to the buyer is a sound investment for the lender.
An underwriter will look at several different areas to determine any risk of the buyer defaulting.
- Credit and payment history
- Income and assets of the buyer
- Appraised home value
The underwriter may need to request additional information to clarify any uncertainties that arise to be sure lending the money to the buyer is a solid investment for the bank/lender.
The last hurdle in the process of buying or selling a home is clearing underwriting. The type of loan, buyer’s financial situation, title issues, survey issues, and missing paperwork will all affect the time the underwriter will need to complete the process.
Once they have completed their review, the Underwriter will issue the loan a “Clear to Close” status!
Buying or selling a home in the Brooklyn Real Estate market involves many parties and this doesn’t include assistants and others within these companies who help. It really does take a village to pull all the pieces of buying or selling a home together.
That is why it is so important to hire the right Realtor® to work for you, whether you are buying or selling a home. Coordinating all these parties takes a thorough understanding of the sale process and experience in the local market.
Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. As a Brooklyn real estate agent with over 30 years of experience, I can help both buyers and sellers coordinate all the details.
In the event our office is shut down we are always committed to your safety during the COVID-19 health crisis in compliance with the State of New York public health policies. I can be reached by phone at (718) 253-9500 ext. 1901 or by email at email@example.com.
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SOURCE: Brooklyn Real Estate Blog – Read entire story here.