Mark Swiss
Home Sales Consultant
Century 21 Horizon Realty, Inc.
3117 East Joppa Road
Parkville, Maryland 21234
Office: 410-882-0021
Home Office: 410-866-8508
e-mail: markswiss@century21.com

         Frequently Asked Questions

This site is brand new. Start asking some questions. What do you want to know? You can send your questions by e-mail. I will give you a personal reply or phone call to answer your question in a timely manner. I will then have a question to add to this page.

Some questions that will be addressed are:

• What is the first thing I should do when I'm ready to buy a home?
• As a Buyer, how much of a real estate commission can I expect to pay?
• As a Seller, how much of a real estate commission can I expect to pay?
• As a Buyer, how much can I expect to pay in closing cost?
• As a Seller, how much can I expect to pay in closing cost?
• What is PMI?
• What does "Pre-qualified" mean?
• What does it mean to be "Pre-Approved" for a mortgage loan?
• What is a 203/K Loan?
• What is the difference between a FHA loan and a VA loan?
• What is a HUD home?
• Is Home Owners' Insurance the same as Renters' Insurance?
• Do Discounted Commissions Really Increase My Net Proceeds?
• What is the first thing I should do when I'm ready to buy a home?

• What is the first thing I should do when I'm ready to buy a home?

Actually, the first step to buying your first home should take place at least a year or so before you are ready to shop for a home. That step is establishing, maintaining and verifying your credit rating. I have met many buyers who seem fearful of using credit or boast that they have never had to use a credit card. TO OBTAIN A MORTGAGE LOAN YOU NEED ESTABLISHED CREDIT !

(So, your very first step is to purchase something on credit (even if its a small purchase) and show at history of consistent monthly payments. I suggest buying something where you make payments for at least six to nine months. Make your payments about twice the minimum monthly payment stated on the statement and mail the payments consistently about a week or two before the payment due date stated on the statement. That is my personal recipe for developing a great credit score.)

After your credit is established, the first thing you should do when you are ready to buy a home is find a REALTOR® who will work with you. A REALTOR® who will evaluate your financial situation, and establish a plan that will lead you to a home that meets all your needs

• As a Buyer, how much of a real estate commission can I expect to pay?

  Generally, buyers do not directly pay real estate commissions and do not have to budget for them. Unlike many other buyer expenses which are paid up-front - directly out of the buyers pocket, realtor fees are figured into the sale price of the property and are resolved at settlement.

  Lets look at the situation logically. Buyers have too many other things to send money on. Out-of-pocket costs (before settlement) include, earnest money deposits, home inspections, homeowner's insurance, appraisals, termite and pest treatments. At settlement buyers then have the closing costs that include reimbursing seller for pre-paid expense/taxes, government charges and taxes, title charges, and various mortgage loan fees - not to mention furnishing the home once they own it). If buyers were held accountable for realtor fees, there would be far less financially able buyers. (Looking at the economical principle of supply and demand, fewer buyers would generate less demand which results in lower prices for the seller.) Having the realtor fees come from the sellers adjusted proceeds at settlement creates the most favorable situation for both buyers and sellers.

  That's the good news. Now that I explained the traditional handling of commissions, there is an advisory that I give to my buyers. In today's real estate market, many real estate agents are reducing services and undercutting the commission rate in an effort to win listings. They gives the seller the impression that they can still list the property at the full commission price and make an additional profit on the sale. Seems like a plausible idea - on the surface. Well, rather than absorbing the loss (reduced commission) that they negotiated, the listing agents are passing some or all of the reduction on the the buyers agent. I believe this winds up costing the seller money in the long run but that is another topic (see Do Discounted Commissions Really Increase My Net Proceeds?) -- now, back to my buyer's advisory.

  Buyer's agents in today's market have a tough job helping their buyers submit winning offers in what has become a very competitive buyer's market. First they need to find a property that meets all of their buyer's needs and their approval. Then the agent has to be able to put together a winning bid. They are paid only if their buyer wins and closes the deal, then they split the commission with their brokerage. Because buyer agents put in so much effort with no guarantee of compensation, they work only for buyers that assure their loyalty by entering into an Exclusive Buyer Agency Agreement with them. Such agreements state the conditions of the agreement between the buyer, agent and brokerage including a minimum rate of compensation (commission).

  When listing agents reduce the commission they offer to buyer's agent, it creates a possible situation where the buyer could be obligated to pay the difference between what the listing agent pays and the rates on the Exclusive Buyer Agency Agreement. I advise my buyers of the of the possibilities and ask if they want me to exclude or include properties with specific obligations from their search criteria. I gear my search based on how they want me to proceed.

• compete with Buyer's enter into an agreement keep the money . fee that the sellers what I There is good news in that the buyer's commission is traditionally reflected in the sales price which allows it to be included in the mortgage and not paid out-of-pocket. The seller has the commissions deducted from the proceeds of the sale at settlement s who receives the proceeds of the sale,

• Buyers are rarely financially able to afford real estate commissions. They have too many other things to send money on (down payments, earnest money deposits, inspections, surveys, mortgage applications - not to mention furnishing the home once they own it). If buyers were strapped with paying realtor fees directly out-of-pocket, there would be far less able buyers. (Looking at the economical principle of supply and demand, less buyers means less demand which results in lower prices for the seller.)

  Real estate Market Prices include allowance for real estate commissions (about 7% above the price if sold with no commission). The seller traditionally has the commissions deducted from the proceeds of the sale at settlements which who receives the proceeds of the sales Sellers Because sellers real estate transactions deal with such large sale prices and because of the demand it places ion the buyers require such

• As a Seller, how much of a real estate commission can I expect to pay?

• As a Buyer, how much can I expect to pay in closing cost?

• As a Seller, how much can I expect to pay in closing cost?

• What is PMI?

• What does "Pre-qualified" mean?

• What does it mean to be "Pre-Approved" for a mortgage loan?

• What is a 203/K Loan?

• What is the difference between a FHA loan and a VA loan?

• What is a HUD home?

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