Tip Answers

There are 4 major parts to the agreement, all of which are negotiated depending on the property:
1. Sales price – set up front, good until the end of the agreement.
2. Option deposit – non refundable deposit, usually 1% of the sales price, goes towards your purchase at the end of agreement.
3. Monthly rent credit – set up front, each month accrues towards the purchase at the end of the agreement.
4. Time frames - when the lease starts and when it expires. It usually coincides with the rental agreement, but does not have to.

Your monthly rent credit, option deposit, security deposit will all total towards your closing costs when you are ready to purchase. At the end of the option term, if you do not buy the property, you forfeit all monies except for your security deposit like a traditional rental.

If you're interested in purchasing now, you can negotiate your closing costs now, because it's a buyer's market. You will NOT be able to get the same type of deals when the seller's market picks back up.

Tip#9 - Don't pay any contractors cash! 
Contractors can not be trusted! It doesn't matter how long you have known them or if they come from a trusted referral. Do not pay any contractors unless you have a written, signed agreement about what works is going to be done and pay only with a credit card. Do not work with any contractors that do not accept credit cards! If they do not show up to do the work, you can always call the credit card company to dispute the charge.

Tip #8 - Seller/Listing agents get paid: Traditionally, sellers will hire an agent to market their home for sale. The commission for that seller's agent is negotiable typically from 4-6% based on how much marketing is required to sell your home. The more marketing that is required, the higher the commission. In years past with a strong seller's market, there were more buyers than there were houses. The national average commission was 5%. In today's market where a home will take significantly longer to sell, more marketing effort is required, so we're seeing a return in higher commissions. Seller agents will typically take half of the total commission and apart of their marketing strategy is to offer a commission for any agent that brings the buyer. Buyer agents get paid: Buyer agents represent the buyer's best interest in the transaction, and is paid the other half of the commission by the seller as agreed by their agent. If a buyer doesn't have an agent representing them, the seller's agent can conduct the transaction for both parties, but represents the seller's best interests only. In most cases, it is free for a buyer to use a buyer's agent. Rental agents get paid: Typically, the owner/landlord pays the agent one month's rent to find a suitable tenant. Agents can represent tenants and will receive half of the month's rent. Note: this is merely a synopsis of how agents get paid, every situation is negotiable. The numbers may vary, the data here is strictly for informational purposes.

Tip #7 - The federal interest rate just dropped Sept. 18, 2007. Find out what it is.

 See how the rate has fluctuated through the years.  

Tip #6 - Buyer market cycles typically run 2-3 years and Seller market cycles typically run about 5 years. Your personal timelines will dictate when is the right time to buy for you. Contact your realtor to create a strategy for your future, whether it involves putting down on a bigger house, starting your own business down the line or for wealth building. A great realtor will be able to provide you with valuable insight, experience, tax tips and creative financing to achieve your goals.