Did you know that home sellers that use a real estate professional on average get 16% more in the sale of their home? In rare instances, some people are able to sell their own homes without the services of a real estate agent but for most it is tricky business.

Here are a few reasons why you can’t sell your own home.

1. A home for sale needs to be in the MLS (multiple listing service). You need to be a licensed real estate broker or  agent to be able to put a home in the MLS. Not having your home in the MLS is problematic, it will be difficult to advertise your home on many home search engines and websites.

2. Many real estate agents won’t show homes that are for sale by owner. For a real estate agent it can be difficult to deal directly with a home seller. Agents are used to receiving a commission on the sale and without a written agreement there is no guarantee that the buyer’s agent will be compensated for his or her services. Not having the cooperation of local agents significantly limits the pool of potential buyers.

3. Many buyers do not want to deal directly with the seller. Potential buyers usually feel uncomfortable looking at a home if the owner is present.  They will also be less likely to make an offer if they have to negotiate directly with the seller. Real estate agents create a much needed buffer between the seller and the buyer.

4. A real estate transaction is not always easy. Many times there are potential liability issues. Sellers would need to be well schooled in the real estate laws especially surrounding escrow and disclosure requirements.

When it comes to figuring out mortgages many people use the phrase, “it’s all Greek to me” but figuring out how mortgages work is actually quite simple.

First, a mortgage is a loan from a lender to a borrower to buy a piece of real property (a fancy way to say house, land, etc). The interest on the mortgage is the percentage of money the borrower agrees to pay the lender each year, in return for lending the money.

Here is where it gets complicated, the lender wants to loan to be affordable for the borrower so they spread the interest out over time. This is called amortization. Amortization is the amount of money that goes toward principal (the amount of the loan) and interest. This amount changes over time because the interest owed is spread over time.

There is a booklet put out by the U.S. Department of Housing and Urban Development that explains the mortgage and interest process. You can find the booklet here.

Now often your payment is more than just the principal and interest. A monthly mortgage payment is often called a PITI payment. No, not pity even though you might need pity when looking at your loan statement. PITI stands for:

Principal – the loan balance

Interest – interest owed on that balance

Real estate Taxes – taxes assessed by different government agencies to pay for school construction, fire department service, etc.

Property Insurance – insurance coverage against theft, fire, hurricanes and other disasters

There may also be other fees depending on the kind of mortgage you have. Your monthly payment may also include private mortgage insurance (PMI).

Remember there is a lot to know about mortgages beyond the rate so be sure to talk to a mortgage professional to make sure you fully understand your payment options.

 

 

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