Understanding the Basics of Buyer Agency Agreements

Buying a home is an exciting journey but can also come with unexpected costs and hurdles. If you’re buying or selling a home, using seller concessions can often make buying a home more accessible for homebuyers or can sweeten the deal and speed up the selling process after you’ve listed your home. In this guide, we’ll break down what seller concessions are, how they work, and why they’re beneficial for both buyers and sellers. What Are Seller Concessions? Seller concessions are agreements between the buyer and seller during the homebuying process. These agreements typically involve an agreement for the seller to pay some of the buyer's closing costs, such as appraisal fees, title insurance, or even points on their mortgage. Essentially, it's the seller chipping in to help cover the expenses associated with closing on the home. By offering concessions, sellers can attract more potential buyers and make their property more appealing in a competitive market. For buyers, seller concessions can alleviate some of the financial burden associated with closing on a home to make their home purchase more affordable. If negotiated properly, seller concessions can hugely benefit all parties to help make the homebuying process faster, smoother, and more affordable. How Seller Concessions Work When a seller agrees to provide concessions, it's typically negotiated as part of the purchase agreement. The specifics of the concessions, including the amount and what expenses they cover, are outlined in the contract. Both parties need to agree on the terms upfront to avoid any misunderstandings later in the process. Once the agreement is in place, the concessions are typically applied as a credit towards the buyer's closing costs. Instead of the buyer having to pay these costs out of pocket, they can be rolled into the mortgage and paid incrementally over the loan’s term. It's important to note that there are limits to how much a seller can contribute towards closing costs, which can vary depending on the type of mortgage and the lender's guidelines. How Seller Concessions Benefit Both Buyers and Sellers Seller concessions offer numerous benefits for both buyers and sellers. For buyers, they provide much-needed financial relief during the homebuying process. By having some of their closing costs covered by the seller, buyers can preserve their savings for other expenses, such as moving costs or home improvements. On the seller's side, offering concessions can help expedite the sale of their property. In a competitive market where multiple offers are common, providing concessions can make a listing stand out and attract more potential buyers. Additionally, by helping buyers with their closing costs, sellers may be able to negotiate a higher sale price for their home. Seller concessions are a valuable tool in the homebuying process that benefit both buyers and sellers alike. By understanding what seller concessions are, how they work, and their mutual benefits, homebuyers can make informed decisions that help them achieve their homeownership goals while navigating the complexities that commonly come when closing on a new home. If you have any questions about seller concessions throughout your homebuying process, feel free to reach out to your UMortgage Loan Originator. They’ll be able to help you make an informed decision before negotiating your purchase agreement to make sure your mortgage works with your individual financial situation.

As you're gearing up to embark on your homebuying journey, you'll probably want an experienced real estate professional to guide you through some of the intricacies and nuances that come with the process. When you find a trustworthy real estate agent to work with, they might ask you to sign a buyer agency agreement. This agreement outlines the terms of your collaboration as you navigate the ins and outs of securing a mortgage for your dream home. What is a Buyer Agency Agreement? Simply put, a buyer agency agreement is a contract between you and the real estate agent or agency that you choose to work with during your homebuying journey. It will outline the terms, conditions, and expectations a buyer can expect from their real estate agent. As a result of the recent NAR settlement, buyer agency agreements are required to be signed by buyers and real estate agents before the pair begin working together on the purchase of a home. These agreements aren't anything new, and they simply exist as a means to set clear expectations for both the agent and the buyer before the process beings. What are the Usual Terms of a Buyer Agency Agreement? These buyer agency agreements can vary based on the agent you choose to work with. Before signing this contract, it's important to understand exactly what's expected to ensure that you're getting exactly what you expect throughout the buying process. Below are the most common terms included: Agent's Responsibilities: The most common and often most important terms you'll find in your buyer agency agreement are the agent's responsibilities. Simply put, these responsibilities are the tasks you can expect your agent to perform for you until you close on your home. It can include scouting potential listings and open houses, writing and sending your offer letter, and completing your closing paperwork. Term Length: The homebuying process is complicated, and, because of a multitude of factors, can be drawn out for as long as a year. Your buyer agency agreement will typically outline the duration of time that you can expect to work with your agent. The term length is negotiable, so if you have a clear idea about your homebuying time frame, be upfront with your agent so it's agreed upon in the contract. Commission: Real estate agents earn their living on a commission when they close a deal. Most commonly, the buyer's and seller's agents receive a commission that ranges between 4-6% of the property's sale price. If the buyer's and seller's agents are the two brokers of this transaction, they will typically split the commission. Most commonly, agents receive this compensation through seller concessions or closing costs, but it's important to understand exactly how your agent expects to be compensated before you get started to avoid any unexpected costs. Exclusivity: As we mentioned above, your agent receives their compensation at the end of the deal. Because of this, it's often in their best interests to ensure that you will commit to working exclusively with that agent to protect themselves in the long run. There are buyer agency agreements that include non-exclusivity and exclusivity, so make sure to scan your agreement for these terms to avoid breaking the terms of your contract. Termination: It's not ideal, but if you or your agent partner are either unsatisfied with the partnership or you face an unexpected roadblock in your homebuying journey, there will typically be a termination contingency baked into the contract. Why Should You Care About Your Buyer Agency Agreement? Buying a home is one of the biggest commitments you can make. It's crucial to work with experienced real estate and mortgage professionals who can guide you through the process and look out for your best interests. Having set agreements in place and a thorough understanding of every party's expectations is the first step towards a smooth and stress-free homebuying experience. When you begin working with an agent, it's important to be straightforward and upfront with your desires, expectations, and timeline for your homebuying journey. While putting pen to paper can feel like a big moment, a buyer agency agreement is a commonplace contract that protects both you and your agent and lays the foundation for a successful homebuying experience. By formalizing your relationship with a mortgage professional, you gain reassurance knowing you have someone in your corner who's advocating for your best interests. If you're searching for a trustworthy and experienced real estate agent to help you achieve your dreams of homeownership, feel free to reach out! I have plenty of experienced partners who possess the necessary market knowledge, neighborhood savvy, and value to help you find a house that feels like home sweet home.

Mortgages can be complicated. That’s why, at UMortgage, we’ve broken down the loan process into 8 easy digestible steps. A strong buyer is a well-informed buyer, so to help you know what to expect every step of the way, let's walk you through the 8-step mortgage process from pre-approval to your first mortgage payment. Step 1: Pre-Approval To set yourself up for a successful homebuying experience, you must first work with your UMortgage Loan Originator to get pre-approved for your future home loan. Not only will your pre-approval give you an accurate budget to help you shop for homes, but it will also expedite your approval process once you’ve had an offer accepted on your home-to-be. Your pre-approval is a document from your lender stating that they are willing to let you borrow a certain loan amount based on your creditworthiness, income, and other financial considerations. In a competitive housing market, a strong pre-approval can go a long way to help you stand out among the sea of competing offers. This first step demonstrates that you are a serious buyer by proving that a lender is willing to provide the loan necessary to purchase the property on your shopping list. Once you’re pre-approved, you will have a quoted figure that you can use to help yourself narrow down your home search to those that are in your budget. Pre-approvals typically last up to 90 days, so be in contact with your UMortgage LO as you shop to make sure your pre-approval is up to date for a smooth homebuying process! Step 2: Application Submitted Once you’ve worked with a real estate agent to shop for homes and have had your offer accepted, it’s time to apply for a mortgage! This is where your pre-approval will come in handy because the financial documents that are used for your pre-approval are the same documents needed to apply for your mortgage. When you’re filling out your mortgage application, you can talk with your UMortgage LO to figure out the loan product that will work best for your financial situation. Once your application is complete and submitted, our Operations team will verify your credit, income, and other supporting documentation submitted with your application. Step 3: Disclosures The next step for your loan is disclosures. This step provides you with an overview of the specificities regarding your loan, including your loan terms, mortgage rate, rights, and a full breakdown of all fees associated with your mortgage. After your application and documentation have been verified, it moves to disclosures. During disclosures, our Operations team compiles estimates for all fees associated with your mortgage, including title fees, closing costs, and other third-party fees. Once all necessary fees have been confirmed, your loan disclosure will be sent. This document outlines your loan amount, mortgage rate, required down payment, closing costs, and estimates of third-party fees. When you receive this document, it’s crucial that you sign these documents as quickly as possible to avoid any delays and get you into your home faster. After signing your closing disclosure, your loan team will order an appraisal and all third-party services. Step 4: Appraisal & Third Parties As your loan awaits processing, UMortgage orders an appraisal on the home and any other requested third-party services such as an inspection, title services, and more. Appraisals assess the fair market value of the property being purchased. Lenders require an appraisal to be conducted on every property they’re helping finance to ensure that the property is worth the amount of money being loaned to the borrower. This step protects you and the lender from overpaying or lending more than the property's actual value. Appraisals are conducted by certified and impartial third-party professionals who have no vested interest in the outcome of the transaction. These third-party appraisers thoroughly evaluate various aspects of the property, including its size, condition, location, and comparable sales in the area. Step 5: Processing When your loan is in processing, it’s being assessed by a Processor on our Operations team. The Processor’s job is to ensure all financial documents associated with your loans are accurate and verified. Throughout the processing phase, you may be contacted by your loan’s Processor with any updates and requests for other supplementing documents to ensure your loan passes underwriting and is approved. Once they receive your loan, your Processor will be your main point of contact. You can expect them to reach out for a formal introduction when your loan enters Processing. As soon as all the necessary information has been collected and approved by the processor, they will submit your loan to the lender’s underwriters who do one final review of all the documentation before deciding to approve or deny the mortgage. Step 6: Initial Approval After your loan is approved by underwriting, your next step in the loan process is initial approval. During this stage, your UMortgage team might reach out for a few more pieces of documentation to get your loan across the finish line. These requests are a completely normal part of this step in the mortgage process, so don’t panic if you’re asked to send new or updated documents! After all conditions have been met, you’ll get your final closing disclosure which, like your initial closing disclosure, outlines your loan amount, mortgage rate, closing costs, and all other fees that you’re required to pay to close your loan. Unlike your initial closing disclosure, the figures on your final closing disclosure are the exact fees and terms associated with your mortgage. When you sign your closing disclosure, you’ll close three days later. Step 7: Cleared to Close When you’ve reached step #7, your loan is cleared to close! This means that you’re one final step away from homeownership! When a loan is cleared to close, that means it has passed underwriting and been fully approved by your lender. Before you head to your appointment to sign the final paperwork and close on your home, you’ll need to secure the required funds that have been outlined in your final signed closing disclosure. You’ll pay these funds with either a cashier’s check or a wire transfer. Please note that you will NEVER receive wire instructions from a UMortgage team member. If you do, please report it immediately. Only your Title company will reach out with wiring instructions once your loan is cleared to close. Closings most commonly take place at a title company or real estate office with your real estate agent, title agent, the seller’s agent, and any co-borrowers purchasing the home with you.You’ll need to bring a state-issued photo ID and all documentation related to your purchase, including proof of homeowner’s insurance and a copy of your purchase contract. Expect to spend up to an hour at the closing table, carefully reviewing and signing a multitude of documents, including the mortgage agreement, title deed, and various disclosures. Once this paperwork has been signed, the keys are handed over and you’re officially the owner of your new home! Step 8: Funding The final step of your mortgage process is the funding of your loan. Here, your lender contacts the seller’s agent to distribute the funds needed to complete the purchase of your home. After funding, you’ll hear from your UMortgage LO with more information on paying your first mortgage payment and a request for feedback on your mortgage experience. Your first mortgage payment will likely be due the first of the month 30 days after your closing date. So, if you closed on April 10th, your first mortgage payment would be due on June 1st. When it comes time to make your first mortgage payment, please take a look at the final documents signed at closing for all the details including your exact payment and due date. You also may receive correspondence from the new servicer via email or postal mail about where and how to make future mortgage payments. If you have any questions about your mortgage payment, feel free to contact your UMortgage Loan Originator. Finally, purchasing a home is part of the public record. After you close, you will most likely receive various forms of spam. Wire fraud is on the rise in the mortgage industry and the last thing we want is for you to become a victim.