Info for Consumers

What is a REALTOR?

You’re ready! You’ve decided to seize the unique opportunities presented by the current housing market. The single most important transaction in your lifetime should not be conducted without the expertise and assistance of trained and licensed professionals, and this is where REALTORS come in. And, chances are you may be buying or selling a home again. Developing a long-term relationship with a REALTOR is the best way to ensure you will be well-armed and informed when making your housing decisions.

What’s different about a REALTOR

Working with a real estate professional who is a REALTOR is in your best interest. Not everyone who sells real estate is a REALTOR. Possessing a real estate license does not afford instant REALTOR status–a distinction of which you need to be aware. A REALTOR is a member of local, state and national professional trade associations and, as such, has access to a vast array of educational programs, research and resources. By being a member, a REALTOR subscribes to a strict code of ethics, and pledges to provide fair treatment for all parties involved, protect the right of individuals to own property and keep abreast of changes in real estate practice through continuing education and interaction with other professionals. As a member of the Ohio REALTORS your REALTOR can tap into numerous resources, like immediate access to staff real estate attorneys, who can provide objective up-to-the-minute counsel. He or she receives up-to-date information on a wide variety of legal, financial and economic issues, and has access to an association with more than 100 years of experience in real estate. And, if things don’t work out, arbitration is a choice your REALTOR can offer instead of lengthy and expensive legal proceedings.

The right REALTOR for you

Like finding the right house, selecting a REALTOR you can trust and comfortably work with is paramount. The best way to find such a professional is through recommendations from family and friends. Of course, you should interview several REALTORS before you choose one. If you are selling your home, you should ask the candidates how they plan to market your home, what pricing advice they can offer, and what other suggestions they can provide to further enhance the desirability of your home. Ask questions about the transaction to evaluate the REALTOR’s knowledge. Ask for–and check–references. And, finally, ask yourself whether you will feel comfortable working closely with this individual in the months ahead. But if you’re still not convinced of the value of a REALTOR, here are a dozen more reasons to use one:

  1. Your REALTOR can help you determine your buying power. That is, your financial reserves plus your borrowing capacity. If you give a REALTOR some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders — banks and mortgage companies — offer limited choices.
  2. Your REALTOR has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.
  3. Your REALTOR can assist you in the selection process by providing objective information about each property. REALTORS have access to a variety of informational resources. REALTORS can provide local community information on utilities, zoning. schools, etc.
  4. Your REALTOR can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
  5. Your REALTOR provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports.
  6. Financing options. Your REALTOR can help you in understanding different financing options and in identifying qualified lenders.
  7. Closing process. Your REALTOR can guide you through the closing process and make sure everything flows together smoothly.
  8. Selling your home. When selling your home, your REALTOR can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
  9. Your REALTOR markets your property to other real estate agents and the public. Often, your REALTOR can recommend repairs or cosmetic work that will significantly enhance the sale ability of your property. Your REALTOR markets your property to other real estate agents and the public. Your REALTOR acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc.
  10. Your REALTOR will know when, where and how to advertise your property. There is a misconception that advertising sells real estate. NAR studies show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of your REALTOR, you do not have to allow strangers into your home. Your REALTOR will generally pre-screen and accompany qualified prospects through your property.
  11. Your REALTOR can help you objectively evaluate every buyer’s proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing…a lot of possible pitfalls. Your REALTOR can help you write a legally binding, win-win agreement that will be more likely to make it through the process.
  12. Your REALTOR can help close the sale of your home. Between the initial sales agreement and closing (or settlement), questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. Your REALTOR is the best person to objectively help you resolve these issues and move the transaction to closing.

Required Disclosure Forms

Ohio law protects you in the transaction Whether you are listing, buying or leasing property, a real estate agent can provide you with expertise and assistance. In some cases, the real estate agent will represent you as his/her client; in other instances you may be working with the agent as a customer. In either event, the law protects buyers and sellers with required disclosures and forms prior to your purchase. The following disclosures are required in Ohio:

  • Consumer Guide to Agency Relationships…A real estate agent will provide a buyer or seller with a “Consumer Guide to Agency Relationships” at first contact. This guide explains agency law in easy to understand, consumer-friendly language and will outline the brokerage policy on agency relationships.
  • Agency Disclosure Statement…The Agency Disclosure Statement documents the agent’s and brokerage’s agency relationships with the parties involved in the real estate transaction. This will be provided to the consumer prior to signing an Offer to Purchase or lease and will go to the seller with the offer.
  • Residential Property Disclosure Form…This form is a statement of the condition of the property and of information concerning the property actually known by the owner as required by the Ohio Revised Code.
    • Transactions covered: The transfer of sale, land installment contract, lease with option to purchase, exchange, or lease for a term of 99 years and renewable forever of property that is improved by a building or other structure that has one to four dwellings.
    • Transactions not covered: Foreclosure sale Transfer pursuant to a court order Transfer to a mortgagee by a mortgagor by deed in lieu of foreclosure Transfer by a mortgagee who has acquired the property by a deed in lieu of foreclosure Transfer by a fiduciary in administrating an estate, guardianship or trust Transfer between co-owners Transfer to the transferor’s spouse Transfer between spouses or former spouses as a result of a divorce Transfer to or from the state or other governmental entity Transfer of newly constructed residential property not previously inhabited Transfer to a transferee who has resided in the property for one or more years immediately prior to transfer Transfer by a transferor who has inherited the property and has not resided in the property for one year prior to the transfer
  • Lead Based Paint Disclosure Form…The Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD) mandate that the public receive a Lead Paint Disclosure Form containing information necessary to prevent lead poisoning in homes that may contain lead-based paint hazards. According to the law, home buyers and renters will receive known information on lead-based paint and lead-based paint hazards during sales and rentals of housing built before 1978. Buyers and renters will receive specific information on lead-based paint in the housing as well as a Federal pamphlet with practical, low-cost tips on identifying and controlling lead-based paint hazards. Sellers, landlords and their agents will be responsible for providing this information to the buyer or renter before sale or lease.
    • Transactions covered: The sale or lease of housing constructed prior to 1978
    • Transactions not covered: Foreclosure sale Leasing of rental properties that have been found to be lead-based paint free by a certified inspector Short-term leases of 100 days or less, where no lease renewal or extension can occur Lease renewals where lead disclosure has already taken place and no subsequent testing or information has become available Housing for the elderly or disabled, unless a child under the age of 6 resides, or is expected to reside, in the housing 0-bedroom dwellings where the sleeping area is not separated from the living area

Selling Your Home

Selling your home is a big decision. You probably spent more than a couple years there, and your family will have created many memories and neighborhood friends. Maybe you expected to stay put but circumstances have changed, or maybe you always knew you’d move sooner or later. Either way, it’s always a little unsettling to pack-up, pull up roots, allow potential buyers to scrutinize your home, and manage all the details of the transaction while still providing for your family financially and emotionally.

Is this the right time to sell my house?

There are several factors to consider when deciding whether to sell your home. There are times when you may need to sell, such as when your job location or lifestyle change, or you have serious money problems. You may have outgrown your current home or are now able to afford a better place and are ready to move up. When the economic forecast is good, you may want to sell and take advantage of the strong market.

What is the most important factor in deciding to sell?

Be certain! If you are not sure you want to sell, you won’t put forth the required effort or negotiate in good faith. Beyond being a waste of time, in certain instances a buyer can force you to honor a signed contract even if you change your mind. Save yourself the trouble.

How do I determine the sales potential of my home?

The basic influencing factors include location, appearance of house and neighborhood, size, condition, view, percentage of owners to renters in your neighborhood (owners tend to have a pride in ownership) and crime rate.

What are the steps once I’ve decided to sell?

First, choose a REALTOR and ask for a comparative market analysis. This will help you determine a fair asking price–high enough so you get what your home is worth and realistic enough so you interest buyers. Secondly, look into the current mortgage interest rates. It will affect what potential buyers can afford, and what you can afford if you move up. Fix up the overall appearance of your home, with an eye for the little, easy things like cobwebs in the corner.

How can I best work with my REALTOR?

Ask about and understand what marketing steps your REALTOR will take and when they will occur. Define your expectations of the transaction and communicate them. Disclose problems, keep your house in good condition and let the REALTOR take the lead with buyers. Keep your house clean, the yard neat, and be ready at any time. Let your REALTOR show the house, but if you are at home during a showing, look neat and stay inconspicuous. Just remember, your presence may make buyers uncomfortable and not want to voice any negative comments. Finally, you must allow inspections, fix anything necessary, and show up at the closing.

What should I do to get my home ready for showing?

Start by taking a look from the street. This is the first impression potential buyers will get. Remember what you liked when you first saw the house. Have you improved on it or let anything go? Next, walk slowly through the interior. Eliminate odors, especially pet and smoke. Clean the windows and pull back the drapes to maximize light and make your rooms brighter.

We’ve found a great house at a good price. Should we buy?

You have three basic options. You can wait until you sell your current home. With this option you risk losing the new home to another buyer, but you may find one later you like even more. Secondly, you may add a contingency clause to your offer, stating that you must sell your current house before closing on the new one. Third, if you are having trouble selling your current house, you may consider renting it out or refinancing it for cash to help you buy. The problems associated with this third option include finding and managing tenants, trying to sell the house with tenants, closing costs and higher mortgage payments with a refinance.

What are the important factors when considering an offer?

Consider all of the following: price, terms, clauses, personal property requested and who holds the earnest money. What can I do to help get potential buyers financed? You may offer to pay points, which will reduce the rate and interest on the loan. If the buyers have adequate income but are a little short on cash, you may pay the non-recurring closing costs at the settlement. Are there any special considerations when selling a condo? The most obvious difference is the maintenance fees. You may want to remind buyers that maintenance fees can often work out to less money than single-family home maintenance costs because condo fees are shared by all owners.

Home Ownership Assistance

Home Ownership Alliance…We Can Take You Home

Ohio REALTORS are a part of the Ohio Home ownership Alliance (OHA), a public-private partnership of organizations committed to increasing home ownership throughout Ohio. Learn more about home ownership opportunities and resources in Ohio by coming to our home pages: Housing & Urban Development Ohio State Office, U.S. Department of Housing and Urban Development (HUD) has funding and affordable homes for Sale.

Ohio Mortgage Bankers Association OMBA is dedicated to maintaining a strong housing, residential and commercial real estate finance system. Connect with experts in mortgage services and mortgage industry-related firms at. Visit site.

Ohio Home Builders Association OHBA is a proactive voice representing the residential construction industry in Ohio, whose 9,000-plus members and associate vendors take pride in housing Ohioans. Visit site.

Ohio Housing Finance Agency This agency provides financing for the acquisition, construction and rehabilitation of single-family housing and multi-family rental projects for low- and moderate-income consumers. And check out our first-time homebuyer program. Visit site.

Ohio Insurance Institute OII is committed to strengthening consumer understanding and confidence in Ohio’s property and casualty insurance industry. For facts about your homeowner insurance needs and related safety issues. Visit site.

Real Estate Terms

Here are some commonly used terms you might hear in the real state transaction process:

  • Adjustable-Rate Mortgage (ARM): A loan on which the monthly payments will increase or decrease over time, based on changes in the ARM’s interest rate index. ARM payments typically are adjusted every six months or once a year. Common indices to which ARMs are tied include the 11th District Cost of Funds, one-year T-note and six-month T-bill.
  • Amortization: The gradual repayment of a mortgage through monthly (e.g., installment) payments. In the early years of a mortgage, most of the monthly payment goes toward interest. Later in the mortgage, more of the payment goes toward reducing the loan’s principal balance.
  • Annual Percentage Rate (APR): The annual cost of a mortgage, including interest, loan fees and other costs, stated as a percentage of the loan amount.
  • Appraisal/Appraised Value: An opinion of the market value of a home expressed by a real estate appraiser.
  • Arbitration: The term used to describe a form of dispute resolution that occurs outside of the court system. Basically, arbitration is a dispute resolution system where the parties submit arguments and evidence to a neutral person, know as the arbitrator, who then renders a decision, called an award, based upon the evidence and arguments presented.
  • Caps: Provisions of an ARM limiting how much the interest rate can change at each adjustment period (e.g., every six months, once a year) or over the life of the loan (rate cap). A payment cap limits how much the payment due on the loan can increase or decrease.
  • Closing: The meeting at which a home sale is finalized. The buyer signs the mortgage, pays closing costs and receives title to the home. The seller pays closing costs and receives the net proceeds from the home sale.
  • Closing Costs: Expenses in addition to the price of the home incurred by buyers and sellers when a home is sold. Common closing costs include escrow fees, title insurance fees, document recording fees and real estate commissions.
  • Conventional Mortgage: A loan not guaranteed, insured or made by the federal or state government.
  • Debt-to-Income (DTI) Ratio: The ratio of monthly debt payments to monthly gross income. Lenders use a housing DTI ratio (house payment divided by monthly income) and a total DTI ratio (total debt payments including the house payment divided by monthly income) to determine whether a borrower’s income qualifies him or her for a mortgage.
  • Deed: A legal document conveying ownership of property.
  • Downpayment: The portion of the home’s purchase price the buyer pays in cash.
  • Earnest Money: The deposit given by a buyer to a seller to show that the buyer is serious about purchasing the home. Earnest money usually is refundable to homebuyers in the event a contingency of the sales contract cannot be met.
  • Equity: The difference between a home’s value and the mortgage amount owed on the home.
  • Escrow: The holding of documents and money by a neutral third party prior to closing. Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation): Government-sponsored, privately owned entities which purchase mortgages from lenders and turn the mortgages into securities which are bought by investors. Fannie Mae and Freddie Mac are the key secondary mortgage market agencies.
  • Fixed-Rate Mortgage (FRM): A loan on which the interest rate and monthly payment do not change.
  • Hazard Insurance: A policy which protects against the damage to a property caused by fire, wind or other hazards.
  • Homeowner’s Warranty: A policy that covers certain repairs (e.g., plumbing or heating) of a newly purchased home for a certain period of time.
  • Impound Account: An account established by a lender to collect a borrower’s property tax and insurance payments. Impound accounts are normally required on mortgages with down payments of 10 percent or less.
  • Loan-To-Value (LTV) Ratio: The ratio of the amount of money owed on a home to the home’s value. The LTV ratio for a $100,000 home financed with a $90,000 mortgage would be 90 percent, for example.
  • Mediation: A process used to resolve disputes. In mediation, the parties to the dispute are assisted by a neutral third person called a mediator. The mediator is not empowered to impose a settlement or decision on the parties, rather the mediator facilitates discussions and negotiation between the parties with the goal of assisting the parties in reaching a mutually acceptable settlement of their dispute.
  • Mortgage Banker: A company which originates mortgages for sale into the secondary mortgage market (e.g., to Fannie Mae and Freddie Mac).
  • Mortgage Broker: An individual or company that arranges mortgage financing between a borrower and a lender.
  • Mortgage Interest Deduction: The ability of mortgage borrowers to deduct the interest paid on a home loan for purposes of federal and state income taxes.
  • Origination Fee: A fee charged by a lender for making a mortgage.
  • PITI: Principal, interest, taxes and insurance — the primary components of a monthly mortgage payment. Points: One point equals 1 percent of the mortgage amount.
  • Points are charged by lenders to increase the lender’s return on the mortgage. Typically, lenders may charge anywhere from zero to two points.
  • Principal: The loan amount borrowed or still owed.
  • Private Mortgage Insurance (PMI): Insurance issued by private insurers which protects lenders against a loss if a borrower defaults on a mortgage with a low downpayment (e.g., less than 20 percent).
  • REALTOR: A real estate broker or agent who, as a member of a local Board/Association of REALTORS, a state association of REALTORS and the National Association of REALTORS, adheres to high standards of professionalism and a strict code of ethics.
  • Seller Financing: A financing agreement in which a seller provides part (or all) of the financing needed by a buyer to purchase the seller’s home.
  • Title: A legal document establishing the right of ownership of a property.
  • Title Insurance: Insurance to protect the buyer and lender against losses arising from disputes over the ownership of a property.
  • Underwriting: The process of evaluating a loan application to determine if it meets the lender’s standards.