In a crackdown of the U.S. mortgage industry, the Justice Department last week revealed it has charged more than 400 real estate players with fraud over the past four months. The sweeping investigation, dubbed Operation Malicious Mortgage, has uncovered predatory practices among appraisers, brokers and lenders -- the very people you hire to represent you in a complex deal.
Who then is a potential homebuyer to trust? The first step comes long before you’re ready to sign a mortgage -- it starts with your real estate agent. Purchasing a home is a large undertaking, but it doesn’t have to be scary. Understanding adjustable rate mortgages (ARMs) and traditional 30-year loans can be overwhelming, but a good realtor, or real estate agent, can guide you by offering referrals to reputable lenders.
Here are some tips to keep in mind when starting your search for a good real estate agent:
Tip #1: Titles and Accreditations Carry Weight
The National Association of Realtors has 1.2 million members, but there are more than 2 million people that hold a license to sell real estate. For some, selling houses might be an avocation, for others it’s a profession. If your real estate agent is a member of the National Association of Realtors, he or she must commit to a code of ethics and must train to re-qualify every four years to be a part of the professional organization.
Tip #2: You Might Want to Consider a Specialized Agent
A realtor may be trained in specific areas that could be of use to you based on your particular needs. Designations like SRES (senior real estate specialist) indicate experience and training to meet the special needs of homebuyers that aged 55 and over. A few other designations include the highest designation for a sale associates Certified Residential Specialist (CRS) and the highly trained Graduate Realtor Institute (GRI).
Tip#3: Full Disclosure Keeps You in the Know
When you’re searching for a home, ask your broker exactly whom he or she represents in the transaction. It is generally legal for a broker to represent both a home’s buyer and the seller, but knowing in advance where a broker’s interests lie can help you make an informed decision.
Tip#4: Communication Is Key
Make sure your agent communicates appropriately with you about the progress of your transactions. Whether the updates come daily, weekly or monthly, you should work out with your realtor or real estate agent beforehand how frequently and by what means you’d like to be updated on the status of your search or transaction.
Tip #5: Know your Agent’s Sales History
Using the locality as a barometer, you can determine how successful your agent is at buying or selling property. Also, it can help you determine if you will be offered more time for individualized care. Your agent’s traffic can help you determine if he or she will be able to provide for your needs. This may demonstrate how successful they are at moving your home or even how busy they are.
As many consumers know, nothing can relieve you from research. Not just in regards to obtaining an agent but in understanding your loans. Consumers are urged to “do their homework, and check with the Better Business Bureau,” says Stephanie Singer, a senior public affairs associate at the National Association of Realtors based in Washington, D.C. The NAR provides a list of questions to ask your realtor. “Not all financing tools are appropriate for all situations.
Keep in mind that real estate brokers and lenders are under an intense spotlight now that the federal government is watching the industry so closely. True, the subprime mortgage mess has homeowners across the U.S. struggling to make mortgage payments, but even large firms like Citigroup (C) and AIG (AIG) are feeling the effects from their exposure to these loans. So potential homebuyers can actually take comfort in knowing the mortgage industry is being policed, which means buying a home now very well may be a safer venture than it was even a year ago.