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Traditionally in the U.S. housing market, the seller has offered the buyer’s broker and agent a share in the commission specified in the listing agreement between the seller and the listing broker and agent. In a settlement between the National Association of REALTORS�, beginning on August 17, 2024, buyers will have to sign an agreement with their buyer’s agent specifying what services will be available and the fee the buyer’s agent is charging.

Many sellers may continue to offer compensation to the buyer’s broker and agent, maintaining the traditional practice of the seller paying both sides of the commission. However, when no offer of compensation is made, there are several distinct alternative ways to facilitate the buyer agent’s fee, as well as a myriad of variations to suit different scenarios.

In an instance where the seller doesn’t offer compensation to buyer agents regarding a property you’re interested in, there are several options to consider:

1. Negotiation with the Seller
   As your agent I can negotiate with the seller or their agent, on your behalf, to include the buyer agent’s commission in the terms of the sale. This becomes part of the overall negotiation strategy when making an offer.
2. Adjusting the Purchase Offer
   As your agent, I can modify the offer to indirectly cover the commission by raising the purchase price to include the commission and have it included in the financing. For example, if a home is listed at $400,000, and the commission is $12,000, the offer would be for $412,000 with a condition that the seller pays a $12,000 commission to the buyer’s agent.

   This approach ensures the seller receives their expected amount while covering the commission.

3. Seller Concessions
   As your agent, I can negotiate for seller concessions, where the seller agrees to pay a portion of the closing costs. This can include loan origination fees, appraisal fees, points, and other items that are disclosed in the offer to purchase.
   Seller concessions can help offset your out-of-pocket expenses, potentially making the purchase more affordable even with commission obligations.
4. Buyer Pays Commission Directly
   If the seller refuses to pay the buyer’s agent commission and it can’t be incorporated into the purchase price, it may be necessary to pay the commission directly. This would be discussed and agreed on before proceeding with any offer, and it would be clearly stated in the buyer’s agency agreement.

It’s important to note that any combination of these strategies may be used to find the best solution for your specific situation. The overall goal is to ensure you can pursue properties you’re interested in while fairly addressing the commission aspect.

Download our Buyer’s Agent Guide for more information.

Last year, U.S. homeowners faced an average property tax bill exceeding $4,000, marking the highest increase in five years, according to data from Attom Data Solutions, a real estate data firm. Property taxes nationwide amounted to over $363 billion in 2023, reflecting a 6.9% rise, largely attributed to inflationary pressures on local government costs and public employee wages.

States with the highest effective property tax rates included Illinois, New Jersey, Connecticut, New York, and Nebraska, with notable disparities in tax increases observed across different regions, such as a 31.5% increase in Charlotte, North Carolina, and a 15.2% rise in Atlanta.

Property taxes are determined by the assessed value of the property and applying the tax rates for the different taxing authorities for that year. Generally, homeowners are notified of the assessed value of the property for that year, many times, even before the tax rate is set.

There is often a procedure for disputing the assessment, which may involve various processes. In some states, independent appraisal boards convene to review arguments from the taxpayer and a representative of the taxing authority.

To help further understand the process, here are some helpful definitions:

Assessment Process – The local government assesses the value of your property periodically to determine its taxable value.

Taxable Value – This is the value of your property that is subject to taxation, which may not necessarily be the same as its market value.

Tax Challenge – Homeowners have the right to appeal their property tax assessment if they believe it is too high.

Tax Rates – Typically determined by the taxing authority based on funding needs to generate the necessary revenue.

Tax Exemptions – Some homeowners may qualify for tax exemptions or reductions based on factors like age, disability, or veteran status.

Escrow Accounts – Many homeowners pay their property taxes through an escrow account set up by their mortgage lender, which is included in their monthly mortgage payment.

Tax Due Dates – Property taxes are typically due annually or semi-annually, depending on local regulations.

Penalties for Non-payment – Failure to pay property taxes on time can result in penalties, interest charges, and even the loss of your property through tax foreclosure.

For information about federal income taxes relating to homeownership, download the Homeowners Tax Guide.

Congratulations on your offer being accepted! In many cases, you may have a provision in your sales contract for a satisfactory home inspection. You’re one step closer to owning your dream home. Now is the time to choose a home inspector to take a closer look at the property.

Inspectors are thorough and in some states are required to be licensed. They have extensive training and follow strict rules to inspect the home’s structure, electrical systems, AC and heating, plumbing, appliances, and many other aspects.

Inspectors find things you might not be familiar with or have overlooked. Even in brand-new construction, inspectors will find issues. This way, you know about the problems and can determine how to deal with them.

Inspections help you make decisions. If the inspection uncovers big surprises, you may want to ask the seller to make repairs or lower the sales price. You may also decide to walk away from the transaction.

It’s better to know about problems before you close the sale on a home. No one likes it when an inspector finds deficiencies, but it’s better to know about them upfront than to find out later. An inspection can help you avoid surprises down the road and make an informed decision about your purchase.

Your agent can recommend a qualified inspector and answer questions you may have about the process and what to expect. Another alternative is to ask friends who have purchased a home recently about the inspector they used and any suggestions they might have.

Some additional tips for hiring a home inspector:

• Make sure the inspector is licensed, if required, and insured. Ask if they belong to any professional organizations.
• Ask the inspector about their experience and what they will be inspecting, as well as the type of report you will be receiving from them and whether it includes pictures of items in question.
• Ask if you can be present for the inspection so you can ask questions and watch the process to better understand.

By following these tips, you can hire a qualified home inspector who will help you make a wise decision about your purchase and protect you from unforeseen surprises.

There is a technique that has been attributed to Benjamin Franklin and used when faced with a decision. As the lore goes, whenever Ben was faced with a decision, like you are now, he’d take a piece of paper, draw a line down the middle of it. On the left side, he’d list all the reasons he should do something and on the right side, he’d list the reasons to avoid doing that thing.

Would-be home buyers are faced with the decision of whether to buy in today’s market with uncertainty about inflation, the presidential election, the economy, higher than recent mortgage rates, and increased home prices, just to mention a few.

Some people have been put on the sidelines because they cannot qualify for a mortgage and others have sidelined themselves, even though they have the funds and resources, because of all the "noise" in the market. Looking at the advantages of renting versus buying may bring clarity.

Advantages of Renting:

• Financial Flexibility: Renting typically requires a lower upfront cost, making it more accessible for individuals with limited savings or those looking to manage their finances conservatively.
• Maintenance Responsibility: Renters are often not responsible for major maintenance and repair costs, as these are typically the landlord’s responsibility, allowing for a more worry-free living experience.
• Mobility: Renting provides greater flexibility to relocate quickly if job opportunities or personal circumstances change without the commitment of selling a property.
• Amenities and Services: Many rental apartments offer on-site amenities such as gyms, pools, and concierge services, providing added convenience and luxury without ownership responsibilities.
• Predictable Costs: Renters usually have fixed monthly costs for rent, making budgeting more straightforward as they don’t need to account for unexpected homeownership expenses.

Advantages of Buying:

• Equity Building: Homeownership allows you to build equity over time as you pay down your mortgage, which can serve as a valuable asset and investment for the future.
• Stability and Control: Owning a home provides stability and control over your living environment, allowing you to personalize and renovate the property to your liking.
• Tax Benefits: Homeowners may benefit from tax deductions on mortgage interest and property taxes, potentially reducing their overall tax liability.
• Long-Term Investment: Real estate has historically appreciated in value over the long term, potentially leading to significant wealth accumulation.
• Sense of Ownership: Owning a home often brings a sense of pride and accomplishment, as well as the freedom to make decisions about the property without seeking landlord approval.

The Ben Franklin balance sheet might suggest that whichever side had the greatest number of reasons, that would be the appropriate action. If each item had the same weight of importance that might be logical. However, some reasons might tip the scale dramatically in favor of taking a particular action.

The equity building aspect of homeownership is exactly that type of reason. With each payment made on the mortgage, a portion of it reduces the principal balance due which builds equity in the home. Each month, a larger amount goes to the principal.

Homes on a national basis have experienced a 5.56% annual appreciation over the last 60 years according to the Federal Reserve Economic Data and Bureau of Labor Statistics. During that period, inflation has averaged 3.7%, making homeownership a hedge against inflation. Even if a person continues to rent, they will be paying more because rents have increased during the same 60-year period at 3.88% annually.

The average price of a home in America in 1963 was $19,300 and in 2023, 60 years later, the average price of a home was $495,100. Long term, a home is a powerful investment in an individual’s wealth.

For more information, download our information guide Homeownership Today and run a Rent vs. Own for your particular situation.

Beginning August 17, 2024, many agents will be required to enter into a written agreement with a buyer before touring a home either in-person or through a live virtual tour and buyers should be familiar with what it entails.

There have been buyer agreements for decades in the real estate industry and it was always suggested that the agent have a buyer acknowledge it in their first substantive meeting. The practice of when it was signed was not scrutinized which is why some buyers may not be familiar with the practice.

The agreements benefit both parties specifying obligations and duties. The advantages for the buyer include:

• Dedicated Representation: A buyer’s agreement ensures that the agent is committed to representing the buyer’s best interests throughout the entire home buying process.
• Clear Expectations: The agreement outlines the scope of services provided by the agent, including their duties and responsibilities, helping to establish clear expectations between both parties.
• Priority Access: By signing a buyer’s agreement, the buyer gains priority access to the agent’s time, resources, and expertise, ensuring they receive personalized attention and support.
• Exclusive Representation: The agreement typically stipulates that the buyer will work exclusively with the agent, preventing conflicts of interest and ensuring undivided loyalty from the agent.
• Streamlined Communication: With a buyer’s agreement in place, communication between the buyer and agent is streamlined, making it easier to stay informed and make informed decisions throughout the home buying process.
• Negotiation Strength: Having a committed agent by their side gives homebuyers greater negotiating power, as the agent can leverage their expertise to secure the best possible terms and price for the buyer.
• Peace of Mind: Knowing that they have a dedicated and experienced professional advocating for their interests gives homebuyers peace of mind, reducing stress and uncertainty during the home buying journey.

Since the agreements may not be standardized, this article will familiarize you with the components of a typical agreement.

The agreement should specify and conspicuously disclose the amount or rate of any compensation the agent/broker will receive from any source. The amount must be objectively ascertainable and not ambiguous like "whatever amount the seller is offering to the buyer."

It should be stated that the agent/broker may not receive compensation from any source that exceeds the amount or rate agreed to with the buyer. Additionally, the agreement should note that broker commissions are not set by law and are fully negotiable and any other provisions required by state law.

If mandatory agreements have not been promulgated by state licensing authorities, the broker or agent can develop their own. However, there are some elements that should be included:

• Agreements should be written in understandable terms for all parties in readable font size.
• Types of representation can include those provided by state law.
• Agreements should clearly enumerate the services provided to the buyer.
• Agents and buyers can negotiate and agree to the term of the agreement, and automatic extensions until closing the sale following completing a contract of sale. Other provisions may include termination for cause and without cause by both the buyer and the agent, and whether compensation is owed if the buyer terminates the written agreement.
• Contracts should transparently outline the buyer’s obligations, confidentiality duties, and the Equal Housing Opportunity statement, along with warnings about wire fraud and seller video/audio recording during home tours. MLS Participants may also inform consumers that they’re offering real estate brokerage services and recommend seeking assistance from inspectors, lenders, attorneys, tax advisors, and title agents.
• Agents and buyers may agree to a retainer fee and if that fee is included in the total compensation, credited against other compensation, and whether it is refundable under specific conditions.
• The agreement may address how conflict of interest will be resolved during the term of the agreement including disclosure and consent for representing other buyers submitting offers on the same property, dual agency, designated agency, or transaction brokerage.
• A provision can be included on how to handle disputes such as mediation or arbitration.

Buyer representation offers numerous advantages when purchasing a home. With a dedicated agent, buyers gain access to expert guidance and advocacy throughout the entire process, ensuring their best interests are prioritized.

From navigating the complexities of the market to negotiating the best terms and price, a buyer’s agent provides invaluable support and peace of mind. Additionally, buyer representation streamlines communication, provides access to exclusive listings, and enhances negotiating power, ultimately leading to a smoother and more successful home buying experience.

Buying a home is a sizable investment relative to each buyer. Even if a person has purchased a home in the past, it benefits the buyer tremendously to work with a professional to advise them through the process and the buyer’s agreement spells out the specifics.

Download our Buyers Agent Guide and schedule an appointment to get answers for your questions.

Home insurance rates have increased by almost 20% nationally between 2021 and 2023 and even more in some states like Arizona where rates have jumped 62% in some cases.

The appreciation that homeowners have enjoyed, especially in the past four years, has caused premiums to increase because the values are higher. In addition, insurance is affected by inflation due to the increased cost of labor and building materials used to calculate the replacement cost of the dwelling.

Natural disasters, especially in coastal areas, tornados, fires, and hail are just a few of the things that insurers have paid considerable claims and are driving the prices of premiums higher. Some insurers are pulling out of high-risk areas which make it difficult for homeowners to not only find coverage but at reasonable prices.

There are several things that homeowners can do to lower the cost of their policies.

Increase Deductibles – Opt for a higher deductible to reduce premium costs, but ensure you have sufficient savings to cover the deductible in case of a claim.

Bundle Policies – Combine homeowner’s insurance with other policies such as auto insurance with the same provider to qualify for multi-policy discounts.

Improve Home Security – Install security features like smoke detectors, burglar alarms, deadbolts, and security cameras to reduce the risk of theft and damage, thus lowering premiums.

Upgrade Home Systems – Updating electrical, plumbing, and heating systems to meet current building codes can lower insurance premiums by reducing the risk of accidents or damage.

Maintain a Good Credit Score – Maintaining a good credit score demonstrates financial responsibility and can lead to lower insurance rates.

Shop Around – Compare quotes from multiple insurance providers to find the best coverage at the most competitive price.

Choose a Less Risky Location – Living in an area with lower crime rates, proximity to fire stations, and minimal environmental risks can result in lower insurance premiums.

Stay Claims-Free – Avoid filing small claims, as a history of claims can lead to higher premiums. Instead, consider paying for minor repairs out of pocket.

Reduce Coverage – Review your policy to determine if you have more coverage than necessary and adjust coverage limits accordingly to reduce premiums.

Ask About Discounts – Inquire with your insurance provider about available discounts for factors such as age of the home, non-smoking household, or membership in certain organizations.

Insurance is required on properties with mortgages on them but even when a home is paid for, most homeowners cannot afford the physical loss but also from potential exposure to liability to people who might be injured on their property. It is estimated that the number of American homeowners without insurance in 2024 has increased to 12% from 5% in 2019.

Having an annual review with a property casualty insurance agent ensures homeowners maintain adequate coverage as property values and personal circumstances change, protecting against potential underinsurance. This proactive approach provides an opportunity to discuss lowering premiums, helps identify potential gaps in coverage, offering peace of mind and protection against unforeseen events.

In the 1980s, home buyers faced significantly higher mortgage rates compared to today’s market. Despite this challenge, many people successfully purchased homes and made them worthwhile investments. They employed a range of strategies to manage costs and ensure affordability. Here are the key tactics they used, explained in detail:

To reduce the amount borrowed and thereby lower monthly payments, many buyers saved for larger down payments. By putting more money down upfront, they could decrease their loan-to-value ratio, often securing better interest rates and reducing private mortgage insurance (PMI) costs.

Strict budgeting was essential. Buyers meticulously planned their finances, cutting unnecessary expenses and prioritizing savings. This disciplined approach enabled them to accumulate sufficient funds for down payments and to manage ongoing homeownership costs without financial strain.

Purchasing smaller or starter homes was a common strategy. These properties were more affordable and easier to maintain. While these homes might not have been the buyers’ dream homes, they served as a steppingstone, allowing them to build equity and eventually move to larger properties as their financial situations improved.

First-time homebuyers often took advantage of government programs that offered lower interest rates, reduced down payment requirements, and other incentives. Programs like FHA loans provided more accessible pathways to homeownership for those who might otherwise struggle to qualify for conventional loans.

Buying homes in less expensive neighborhoods or regions with lower property taxes helped many buyers manage costs. These areas often offered more affordable housing options without sacrificing too much on quality of life. Some buyers were willing to commute longer distances to work in exchange for lower home prices.

Savvy buyers negotiated better terms with sellers and lenders. This could include negotiating for lower interest rates, asking sellers to cover closing costs, or securing other concessions that made the purchase more affordable. Effective negotiation skills often resulted in significant savings.

Many individuals took on additional jobs or side businesses to supplement their income. This extra income provided a financial cushion, making it easier to handle mortgage payments and other home-related expenses. Side hustles ranged from freelance work to part-time jobs in retail or hospitality.

Co-buying with friends or family members allowed buyers to pool resources and share the financial burden. This approach made it possible to afford larger or better-located homes that might have been out of reach otherwise. Clear agreements and legal arrangements helped ensure smooth co-ownership experiences.

Engaging in seller financing or rent-to-own agreements provided alternative pathways to homeownership. In seller financing, the seller acted as the lender, offering more flexible terms than traditional banks. Rent-to-own agreements allowed buyers to rent the property with an option to purchase it later, applying a portion of rent towards the eventual purchase.

As interest rates fluctuated, many homeowners took advantage of lower rates by refinancing their mortgages. Refinancing allowed them to reduce their monthly payments or switch to more favorable loan terms, making their mortgages more affordable in the long run.

The 1980s presented significant financial challenges for homebuyers, but through a combination of strategic planning, creative financing, and disciplined saving, many people successfully navigated the high-interest environment. These strategies not only made homeownership achievable but also laid the groundwork for long-term financial stability and growth. By learning from these historical approaches, today’s buyers can find inspiration and practical ideas to overcome their own market challenges.

Download our Homeownership Today information guide & Buyers Agent Guide.

Online estimates like Zillow, realtor.com, Redfin, & Homes.com are convenient, but typically lack accuracy and may have a significant margin of error. They are constructed using a computer-generated algorithm that utilizes historical public sales data and trends called an Automated Value Model, AVM.

National AVMs derive values from automated computer modeling of public records and may not reflect the true value of a home due to the nuances of local markets. An experienced agent, familiar with home sales in the area, takes several steps to arrive at a more accurate fair market value.

Real estate agents provide invaluable expertise by leveraging their deep understanding of local market conditions. This includes insights into neighborhood trends, recent sales data, and current inventory levels. By tapping into this knowledge, agents can accurately assess the fair market value of a home.

They conduct thorough property inspections, meticulously noting its condition, unique features, and any upgrades or renovations that could impact its value. This hands-on approach ensures a comprehensive evaluation that goes beyond surface-level data, allowing agents to provide more accurate and nuanced valuations.

Furthermore, agents excel at analyzing comparable properties to determine a home’s value. They meticulously review recent sales of similar properties, considering factors such as size, location, amenities, upgrades, and condition. Agents then adjust these comparable properties to account for any differences with the subject property, ensuring a more precise comparison. This meticulous process allows agents to offer a valuation that reflects the specific characteristics and nuances of the home being evaluated, providing clients with a more accurate understanding of its worth in the current market.

Additionally, real estate agents are adept at considering broader market trends and buyer preferences. They assess factors like supply and demand, interest rates, and economic conditions to understand their potential impact on property value.

By staying attuned to market dynamics, agents can offer informed insights into how these trends may affect a home’s value over time. Furthermore, agents gather feedback from showings and potential buyers, allowing them to gauge how the property is perceived in the market and adjust their valuation accordingly.

This holistic approach, combined with ongoing education and transparent communication with clients, sets agents apart in delivering accurate and reliable valuations that help clients make informed decisions about their real estate investments.

Contact an experienced real estate professional, familiar with your market area, to supply you with complete information necessary to maximize your home sale proceeds. Download our Sellers Guide.

You are encouraged by the Federal Trade Commission to be sure the information on your credit reports is accurate, complete, and up to date at least once a year. It is an important part of your financial life that can determine whether you get credit, the terms of the credit and how much it will cost.

In addition to borrowing money, good credit could affect premiums on insurance, employers’ hiring decisions, ability to rent a home.

Checking your credit history and credit scores:

• Helps you better understand your current credit position.
• Makes you aware of what lenders may see.
• Protects you from inaccurate or incomplete information.
• Recognize identity theft.

Free annual credit reports can be ordered from Equifax, Experian, and Transunion through their centralized website – AnnualCreditReport.com, toll-free phone number … 877-322-8228, and mailing address … Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. These are the only ways to order your free annual credit reports.

Only one website � AnnualCreditReport.com � is authorized to fill orders for the free annual credit reports you are entitled to by law. For more information, go to the Federal Trade Commission website regarding Free Credit Reports.

Homeowners should verify their home’s equity at least once a year because the two factors that affect it change regularly. Market value changes and the unpaid balance of the home decreases with each monthly payment made on an amortizing loan.

Amortization and appreciation cause the equity to increase in value. Knowing your equity gives you options with regards to refinancing the home and releasing part of that equity.

The equity in your home can offer a financial safety net providing funds for emergencies or major life events, leveraged for investments or home improvements. An annual update on your home’s equity will ensure you stay informed about your financial position and opportunities for growth.

Refinancing a residence is a strategic financial move that allows homeowners to optimize their mortgage and tap into various benefits. Whether it’s about securing a lower interest rate, consolidating debt, or accessing cash for significant life events, refinancing offers a range of options to suit individual needs. In this article, we’ll explore the most common reasons people choose to refinance their homes.

• Lowering the Interest Rate – One of the primary reasons homeowners refinance is to take advantage of lower interest rates. By securing a more favorable rate, they can reduce their monthly mortgage payments and save substantial amounts over the life of the loan.
• Shortening the Loan Term – Some homeowners opt to refinance to shorten their loan term, typically from a 30-year to a 15-year mortgage. This strategy allows them to build home equity faster and pay off their mortgage sooner.
• Lowering Monthly Payments – On the flip side, homeowners may refinance to extend the loan term and reduce their monthly payments. This can free up cash for other financial goals or provide budgetary relief during challenging times.
• Converting an ARM to FRM – Adjustable-Rate Mortgages (ARMs) can bring uncertainty with fluctuating interest rates. Refinancing into a Fixed-Rate Mortgage (FRM) offers stability and predictability, shielding homeowners from unexpected rate hikes.
• Combining Mortgages – Homeowners with multiple mortgages may choose to consolidate them into a single, more manageable loan. This simplifies their financial situation and can lead to lower overall interest costs.
• Paying Off Higher-Cost Debt – Refinancing can be a valuable tool to pay off high-interest debts like credit cards or personal loans. By rolling these debts into a mortgage, homeowners can benefit from lower interest rates and potentially reduce their monthly obligations.
• Removing a Person from the Mortgage – Life circumstances change, and homeowners may need to remove a co-borrower from the mortgage due to divorce, separation, or other reasons. Refinancing allows them to do so while ensuring the remaining borrower’s financial stability.
• Accessing Cash for Various Reasons – Cash-out refinancing enables homeowners to tap into their home equity and receive a lump sum. This cash can be used for home improvements, educational expenses, medical bills, or any other significant financial goal.
• Debt Restructuring – Homeowners can restructure their debt by refinancing. This involves consolidating various debts into a single mortgage, simplifying payments and potentially reducing the overall interest rate.
• Funding Investments – Some homeowners choose to refinance their residences to access cash for investments, such as starting a business, investing in real estate, or pursuing other income-generating opportunities.
• Home Renovations – Refinancing can provide the necessary funds for home renovations or remodeling projects, increasing the property’s value and enhancing the living experience.
• Responding to Life Events – Life events like weddings, education expenses, or medical emergencies may require substantial financial resources. Refinancing allows homeowners to access their home’s equity to address these events without resorting to higher-interest loans.

Refinancing a residence offers homeowners a versatile financial tool to achieve a variety of goals. Whether it’s securing a lower interest rate, adjusting the loan term, consolidating debts, or accessing cash for life events, refinancing can help homeowners optimize their financial situation and achieve their objectives. Before proceeding, it’s essential to evaluate the specific goals, costs, and benefits of refinancing and consult with a mortgage professional to make an informed decision.

There is a cost associated with refinancing a home whether it is paid in cash or rolled back into the mortgage. Assuming you’re refinancing for a lower rate, the newly achieved savings are divided into the cost of refinancing to determine how long you need to stay in the home to recapture the cost of refinancing. Determine the break-even point in your situation by using the Refinance Analysis calculator.

Contact us to schedule an annual Annual Advisory and receive an estimate of your home’s equity based on a current market evaluation at no expense or obligation.