Getting Ready to Buy a New Home

Brought to you by Principia Properties LLC

This guide presents information, all in one place, to help you understand the entire home-buying process.  Check the categories to the right for the topics you are interested in.  Feel free to make comments, and ask questions.  Check back often to see what’s new!

There are several things you can do to get ready — and become confident — before you make that big investment:

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Three Things to Know about Working with a Real Estate Agent, Part 1

What is the legal relationship between you and your agent?  How are you represented? 

An “agent” is someone who represents someone else, called his “client,” in a business dealing.  At his first substantial meeting with you, a real estate agent is required to discuss his legal and ethical obligations to you, and present them in written form for your signature, acknowledging that you received this information.

There are basically two types of agent relationships in Arizona, so you should be ready to make a choice between them, and then sign a document that spells out the obligations of each: Continue reading

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Three Things to Know about Working with a Real Estate Agent, Part 2

What your real estate agent owes you – what are his legal, ethical, and fiduciary duties?

An agent is a person who represents someone else, called the client.  The agent must follow the client’s instructions, unless the action would violate the law.  An agent has fiduciary duties to his client, and must protect and promote the client’s interests.  (see also Wikipedia http://en.wikipedia.org/wiki/Fiduciary)

What are these specific fiduciary duties? 

  1. Confidentiality, which remains in effect indefinitely.
  2. Accounting, meaning an agent must be able to report the status of funds received from or on behalf of the client.
  3. Reasonable Skill and Care, requiring an agent to be knowledgeable and perform to the standards the public is entitled to expect.  In addition to state law, realtors are bound by a code of ethics which takes state law as a minimum and goes beyond it, but is not arguable in a court of law, only in disciplinary action by the professional association.
  4. Loyalty, requiring a client’s interests to be placed before all others, including the agent’s own interests.
  5. Obedience, requiring an agent to obey his client unless as long as the instructions are lawful. 
  6. Disclosure, meaning an agent must disclose fully to his client any conflicts of interest, other offers, material defects, etc. 

Real estate is the only “profession” in which the professional owes a fiduciary duty to a client who isn’t paying him.  The seller pays the commission, which, divided between buying and selling brokers, pays for the time the buyer’s agent spent on behalf of his client.  Nevertheless, the agent’s fiduciary responsibility to the buyer is as exacting as if he were representing the seller!

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Three Things to Know about Working with a Real Estate Agent, Part 3

What you owe your real estate agent – understanding your agent’s job

  1.  Understand how agents are paid.  Very few real estate agents work on salary.  Almost all are paid on commission and, in Arizona, the commission is paid by the seller.  If an agent does not complete a transaction, he doesn’t get paid.  The seller’s agent splits the commission with the buyer’s agent.  Say the commission is 6%.  Normally half of that 6% goes to the buyer’s agent, which gives each 3%, which then gets split again (sometimes in half) with their brokers, and then maybe 10% of each agent’s  1.5% goes to the real estate company. As for expenses, agents pay all of their social security tax, and expenses for  advertising properties.  Gasoline, client meals, and MLS dues are not reimbursed by the real estate company.  There is no health insurance, no retirement, and no unemployment. The real estate agent is one of the only or few consultants you can work with who doesn’t have to be paid up front and real estate is the only “profession” in which the professional owes a fiduciary duty to a client who isn’t paying him, the buyer. Continue reading
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Tucson’s Best Golfing

Some of you considering a visit or move to Tucson may be excited by Arizona’s reputation for great golfing.  Accenture Match Play, considered one of the top tournaments of the year, is played each February at Dove Mountain in NW Tucson.   One of three World Golf Championship events, the Accenture Match Play Championship pits 64 of the world’s best golfers against each other in a unique, head-to-head, single elimination format where every shot matters.  Next year’s  tournament runs February 21-27, 2011 and tickets  are now on sale.

Not being a golfer myself, I couldn’t write a review of Tucson’s best golf courses better than the one Peter Saavedra presents.  And I have also added these for you:

  • An online brochure from Tucson Convention Bureau to help you plan a Tucson golf outing
  • Links to all Tucson’s sources for a round of golf (no pun intended!), so you will have price information that will stay up-to-date going forward
  • A Google map showing the location of the best-known courses
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Get Your FHA Mortgage Now — Payments to Rise on October 4

What’s an FHA mortgage?  It’s not is a mortgage loan from the FHA — the FHA is not lending you government money for your home.  An FHA mortgage is a mortgage (from any lender) that is insured by FHA against your leaving the lender in the lurch by defaulting.  

The FHA mortgage program is popular because you can make a down payment as little 3.5%, and the down payment can even be a gift from another person or nonprofit organization.  But in order to qualify for the FHA program that will insure your mortgage, you, the borrower, must meet a standard of credit-worthiness, then you must pay for the mortgage insurance that protects your lender.

This insurance comes in two parts: Continue reading

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How Does FHA Decide How Much You Can Afford?

When you are qualifying for a loan, FHA looks first at your gross income.  Your gross is all the money you earn before taxes, including overtime, commissions, dividends and any other sources — as long as you can show a steady two year history for these sources.

FHA wants you to spend no more than 29% of your income on your house payment, including the mortgage, property taxes, and mortgage and hazard insurance premiums.  FHA calls your monthly housing expense, as a percentage of your monthly gross income, the “front-end” ratio.

Calculate your maximum monthly mortgage payment by using the formula: Continue reading

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