Key Real Estate Roles When Buying or Selling a Farmington Hills MI Home

Key Real Estate Roles When Buying or Selling a Farmington Hills MI Home

Key Real Estate Roles When Buying or Selling a Farmington Hills MI Home

There are many types of professionals that work within the real estate industry. Knowing the key real estate roles and what they offer can be very helpful if you’re looking to buy a home in Farmington Hills MI or sell your existing property. In this article, we are going to discuss the similarities and differences of the different real estate roles, including real estate agents, brokers, REALTORS®, listing agents, and buyers’ agents, and how they each can bring value to a transaction: 

What Is a real estate agent?

A real estate agent is an industry professional who serves as the facilitator of real estate transactions. Agents are licensed salespersons and cannot work independently. Real estate agents work for brokers or agencies and are normally paid on a commission basis, which is a percentage of the sale price of a property. The employing broker is responsible for a real estate agents’ actions and requirements for a real estate salesperson license vary from state to state.

Real estate agents are ultimately responsible for bringing buyers and sellers together and for carrying offers and counteroffers between each party along with any queries they may have. An agent will work with another agent once an offer is accepted, guide clients through the process of filling out paperwork, and make sure their clients are aware of any requirements to complete the sale, such as home inspections, moving, and important dates like the closing.  

What is a real estate broker?

A real estate broker is a step above a real estate agent. A broker typically will have more training and subject-matter education than an agent (but not always) and will typically handle some of the more technical aspects of a real estate transaction. A broker can work independently or hire real estate agents to work under them.

Brokers who work with buyers normally look for properties that match the criteria set forth by their clients, conduct negotiations, prepare offers, and help the buyers with any other issues leading up to the closing date. Sellers’ brokers determine market values of their clients’ properties, list and show properties, communicate with sellers about offers, and assist in the offer process. A broker associate is a real estate broker who works for another real estate broker or a brokerage firm.

Although brokers can work for themselves, they may choose to join a larger real estate network. Some pay a flat fee to the employing broker and some earn a percentage of each transaction. Brokers receive a commission once a sale is completed.  The listing agreement or contract generally outlines how much of a percentage of the sale will go to the broker.

What is a REALTOR®?

Not all real estate agents or real estate brokers are REALTORS®. Although the word “realtor” is commonly confused with that of “real estate agent,” the designation is open to a variety of professions within the real estate industry. A REALTOR® can include residential and commercial real estate agents, brokers, property managers, appraisers, and other real estate professionals.

“REALTOR®” is a title that means the individual belongs to the National Association of REALTORS® (NAR), is bound by an extensive code of ethics, is an expert in their field, and pays annual dues.  REALTORS® are expected to be honest and transparent with their clients, avoid exaggeration and misrepresentation, and always conduct business with their clients’ best interest in mind.  

What Is a listing agent?

A listing agent can be a real estate broker or a real estate agent. Listing agents owe a fiduciary responsibility to the seller under a listing agreement and must protect that interest. In other words, the agent must put your interests first.  Listing agents have a comprehensive understanding of how the real estate market works and how to market and price a property effectively. 

Their responsibilities include listing the property on various listing services; negotiating prices, contingencies, and conditions on behalf of the seller; scheduling showings, pricing and advertising the property; property, and help with the closing paperwork.

Most listing agents require sellers to sign exclusive selling agreements. By doing so, the agent secures a commission for his or her brokerage upon closing. The brokerage then shares a portion of the commission with the agent. 

What is a buyer’s agent?

A buyer’s agent is a real estate professional who guides a buyer through the process of purchasing a home. A buyer’s agent has a legal obligation to protect the interests of the buyer and work to ensure they are getting the best deal possible. Although there are some real estate agents who specialize in working with buyers, most agents work as either a buyer’s agent or listing agent, depending on the specific transaction. 

A buyer’s agent is responsible for acting as a resource for their clients by guiding them through each step of the home buying process. They find listings for the buyer, schedule showings, negotiate with the listing agent, recommend other real estate professionals such as real estate attorneys, inspectors, etc.; and guide and advise the buyer through closing.

Typically, it’s the seller who pays the commission for both the buyer’s agent and listing agent. If buyers are unable to find a home to purchase, the buyer’s agent doesn’t get paid.

The takeaway

Whether you are buying a home in Farmington Hills MI or it’s time to list your property, knowing the types of real estate professionals can help you make informed decisions. For example, when you hire a real estate agent, you may also want to dig into the real estate broker’s reputation, since that’s who the agent works for.

You may also prefer to work with a REALTOR® since they are held to a high ethical standard. Regardless of the type of real estate professional you work with, make sure they are experienced, knowledgeable, skilled, appropriately licensed, and have a stellar reputation.

Partner with award-winning Farmington Hills MI REALTOR® – Tom Gilliam   

Tom Gilliam is proud to be a trusted REALTOR® in Farmington Hills MI for the past 20 years – offering his guidance and expertise to home buyers and sellers. Tom understands that buying or selling a home is a significant financial and life decision and that you are looking for someone you can trust. As your agent, he will protect your interests, advocate for you, negotiate on your behalf, and do whatever it takes to ensure the best results possible. 

Feel free to reach out to Tom directly at (248) 790-5594 or you can get in touch with him by email.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578 

Tips for Winning a Farmington Hills MI Real Estate Bidding War

Tips for Winning a Farmington Hills MI Real Estate Bidding War

Tips for Winning a Farmington Hills MI Real Estate Bidding War

After weeks, maybe even months, searching for a home in a low-inventory competitive market, you finally uncover the perfect home for your family. It’s in the right neighborhood, near top-rated schools, has the right number of bedrooms, and provides convenient access to everyday amenities. The house has everything you have been dreaming so you decide to make an offer. But, because of the current housing market, your Farmington Hills MI REALTOR® comes back with the news that several other buyers have also submitted offers on the home. Suddenly you find yourself in a situation with multiple buyers vying for the same property, otherwise known as a bidding war. 

With so few houses for sale today and historically low mortgage rates driving buyer activity, bidding wars are becoming the new norm. In a bidding war, each buyer will make a more attractive offer, often driving up the price beyond what it was listed for, in hopes of winning the home. Although bidding wars are more likely to occur during hot seller’s markets when there is less inventory for buyers to choose from, the quality of the property, the desirability of its location, and the strength of its school district can also increase the chances of a bidding war. If you do find yourself in a bidding war, there are some things you can do to make your offer more appealing to the seller than the other offers. 

Here are some things you can do to up your chances of winning in a multiple-offer situation:

Hire an experienced Farmington Hills MI real estate agent

If you are serious about winning a bidding war, it would be wise to enlist the services of a reputable, seasoned real estate agent. A qualified REALTOR® will have the experience and skills necessary to help you win in a multiple bid situation. They will also have extensive market knowledge, which is crucial in determining the fair market value of the home you’re interested in.

By enlisting the services of a Farmington Hills MI real estate agent, you can feel confident that you won’t offer more than the house is worth or more than you can realistically afford to pay for it. Your agent will give you much-needed advice and also ensure that all decisions made are in your best interest. Bidding wars can be challenging to navigate, especially if you’re a first-time homebuyer. It’s vital to do your research so you have a clear understanding of the process, the market, and the home you are interested in purchasing.

Waiving contingencies 

In a competitive market, buyers will often waive certain contingencies to make their offers more attractive to sellers. Contingencies in home buying contracts allow a way out for the buyer should there be unexpected issues with financing or defects with the property. By waiving certain contingencies—for example, your financial contingency (an agreement that the buyer will only buy the property if they get a large enough loan from the bank) or your inspection contingency (an agreement that the buyer will only buy the property if there aren’t any deal-breaker issues found during the home inspection) – you show just how serious you are about moving forward with the deal. 

Waiving contingencies can make an offer more appealing to the seller, but it can also be a risk for the buyer. If for example, you waive your inspection contingency and then find out during the inspection that the home has serious plumbing issues, you may have to sacrifice your earnest money to back out of the deal or pay for repairs once the title has been transferred. Although waiving one or more contingencies in a multiple offer situation could be the extra push needed to get the house you want, it ultimately comes down to how much risk you feel comfortable with.

There a number of different contingencies, but the three most common include the financing contingency, inspection contingency, and appraisal contingency: 

1). Financial contingency

One common strategy used to make an offer stand out from the competition is to waive your financing contingency. In a home sale and purchase agreement, financing contingency refers to a clause that states the offer is contingent upon the buyer securing financing for the property – a standard feature in most Offers and Purchase and Sales Agreements. If your mortgage is not approved for the amount of financing you need, the seller agrees to refund your deposit in full.  During a bidding war, waiving your financing contingency sends the message that you are confident you will get the loan no matter what.

With a clear picture of your finances and enough money in reserve, you can safely waive the financial contingency with minimal risk on your end. Of course, if you are paying for the home in cash, then financing is not an issue and you can exclude the financing contingency in your offer. Not only are you eliminating the need for a third party to get involved in the deal, but you’re also showing the seller that you mean business. There is a risk any time a lender has to get involved, so when you eliminate their presence, you eliminate the risk. 

2). Inspection contingency

In a standard real estate agreement, the buyer retains the right to back out of the contract if they find unacceptable issues with the property. This contingency allows the buyer to hire a home inspector to survey the home for damages before the deal closes. If major issues are discovered during the inspection, the buyer has the right to negotiate with the seller for repairs or back out of the deal. One safe way to waive your inspection contingency is to have a pre-inspection done on the property before ever making an offer.

If the report doesn’t reveal any serious issues, you can confidently waive the contingency with minimal risk. When a seller accepts an offer, their home is off the market. In a competitive market, the last thing the seller wants is to be waiting for an extended period of time for the inspection to happen. Make the contingency period no more than a week. If the home looks well maintained visually, it may be worth the risk to waive the inspection if you are confident you want the house no matter what. To minimize risk, the decision to waive inspection contingency should be made carefully and with the guidance of your real estate agent. 

3). Appraisal contingency

When an offer is accepted on a home, the lender will come out and appraise the property to determine its value. Mortgage lenders use appraisals to calculate the loan amount they will give buyers. If the appraisal falls short, the appraisal contingency lets the buyer cancel the contract rather than make up the difference in cost themselves.  If you waive this contingency, you are still responsible for purchasing the home if the loan does not work out – or you may be able to back out of the contract but lose your deposit. It is also possible the seller will decide to sue you if you break the contract.

That being said, more buyers these days are willing to waive appraisal contingencies to enhance their offer in a bidding war. Compared to a fully mortgage-contingent buyer, waiving the appraisal contingency is more attractive from the seller’s point of view because they have more certainty the deal is going to get done no matter where it appraises at. 

Waiving contingencies risk: Yes, there can be risk associated with waiving contingencies, but depending on the circumstances, a buyer might be in a position to do so.  When considering whether to waive contingencies, speak with your estate agent. They will be able to help you decide what’s best for you and help you determine if you are in a position to take on that risk. Your Farmington Hills MI REALTOR’s knowledge of normal practices and probable outcomes in the local market will make your offer more likely to succeed.

Up your offer

If you are set on winning a bidding war on a Farmington Hills MI property, your best bet is offering more money than the other buyers. Upping your offer doesn’t have to mean paying another ten thousand dollars or more. Sometimes, going up just a few thousand dollars can make all the difference between winning the bid on a property or losing out on it. One important thing to keep in mind when upping your offer is that just because you are ready to pay more for a house doesn’t mean the bank is. When it comes to your mortgage, you are still only going to be able to get a loan for up to what the house appraises for. So, if your higher offer gets accepted, that extra money might be coming out of your own pocket.

Pay in cash

This obviously isn’t going to apply to everyone, but if you have the cash to cover the purchase price, offer to pay it all upfront instead of getting financing. Not only are you eliminating the need for a third party to get involved in the deal, but you are also showing the seller that you mean business. Sellers typically prefer dealing with a buyer who can pay cash because they don’t have to worry about a potential buyer actually receiving the financing they need. There’s a risk any time a lender has to get involved and when you eliminate their presence, you eliminate the risk. According to a Redfin analysis of home sales over the past two years, buying a home without financing boosted a buyer’s chance of winning a bidding war by 97%.

Include an escalation clause

An escalation clause can be an excellent asset when trying to win a bidding war. An escalation clause is an addendum to your offer that states you’re willing to go up by X amount if another buyer matches your offer. More specifically, it dictates that you will raise your offer by a specific increment whenever another bid is made, with a cap. if winning a bidding war on a home is the end result you are looking for, there’s nothing wrong with putting it all on the table and letting a seller know how serious you are. Work with your agent to come up with an escalation clause that fits with both your strategy and your finances.

Be flexibility

The date of possession is often an important part of the offer in a multiple bid situation. Typically, the closing period lasts 30, 45, 60, or 90 days. Customizing the length of the closing to suit the needs of the seller can often help clench the deal over a higher offer. Sellers almost always want fast closings, usually 30 days. If the seller needs to coordinate selling with buying another home, or moving in a short amount of time, giving them the close date they want can often be the difference in getting the house or not.

If the seller needs a rent-back, you can offer to allow them to stay in the property after the close of escrow. Depending on the circumstances, you might charge them what your PITI (principal, interest, taxes, and, insurance) payment is or the local market rent rate. You can even consider giving it to them to enhance the terms of your offer, depending on the situation.

The takeaway

Bidding wars can be challenging to navigate, especially if you’re a first-time homebuyer. It’s vital to do your research so you have a clear understanding of the process, the market, and the home you are interested in purchasing. Finding experienced representation is the best way to ensure a smooth and successful transaction in a multiple offer situation.  If you are a first-time buyer or even a seasoned buyer, you should seriously consider working with a qualified Farmington Hills MI real estate agent you can trust, and carefully listen to their advice.

 

Partner with Top-rated Farmington Hills MI REALTOR® – Tom Gilliam

Whether you are interested in buying a home in Farmington Hills, MI, or its time to list your current property, experience matters most in a changing market. Top-rated Farmington Hills REALTOR® – Tom Gilliam offers over 20 years of local experience, in-depth market knowledge, and access to the most up-to-date listings for Farmington Hill MI homes for sale. Known for his professionalism and care for every detail, Tom is an expert at uncovering the perfect home for his clients’ lifestyle needs in the right neighborhood or community.

2020 Best of Farmington Hills REALTOR - Tom Gilliam

If you are ready to sell your home, Tom will create a comprehensive marketing plan that exposes your home to the public as well as to other real estate agents through the Multiple Listing Service (MLS), other cooperative marketing networks, open houses for agents, etc.

Your listing will appear on all the most popular real estate sites where buyers spend hours a day looking at homes such as Realtor.com, Zillow, Trulia, REMAX, Redfin, and dozens of others. Your property will also be featured on Tom’s own highly-trafficked website Homes2moveyou.com. You can be assured that your home will get sold quickly and for the highest market price.

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Tom works very hard for his clients. He will be there to protect your interests, advocate for you, negotiate on your behalf, and do whatever it takes to ensure a smooth and successful transaction. If you or someone you know is interested in buying or selling Farmington Hills MI real estate, please give top-rated Farmington Hills MI REALTOR® – Tom Gilliam a call today at (248) 790-5594 or you can reach him here.

Tom Gilliam, REALTOR®
RE/MAX Classic
29630 Orchard Lake Rd.
Farmington Hills 48334
Direct: 248-790-5594
Office: 248-737-6800
Email: Tom @ Homes2MoveYou.com
License #314578

 

 

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