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Transaction Coordination - PN Real Estate Group form

hello everybody this is Tim Brooks with the Brooks group at Keller Williams Realty today I'm very excited to present to you real estate transaction overview a bird's eye view of the real estate transaction from the very beginning when we're first meeting with a prospect all the way through the end and we're collecting a check at the closing table now I want you to start thinking about the deal flow of a real estate transaction in two phases the first phase is going to be the sales process so that's going to be meeting your client prospecting and going all the way through negotiating and ratifying a contract the second phase is going to be the contract to close phase and that's going to be from contract ratification to closing now this is an overall view of the transaction deal flow with the sellers portion of the transaction being on the left hand side and the buyers side of the transaction is on the right hand side notice the seller has a comparatively fewer steps in the transaction process where the buyer actually has a lot more steps in that transaction so let's start on the seller side and as you can see there really just isn't a whole lot to it so we're going to start out with a seller we're going to have a listing appointment go on that listing appointment and we're going to go over the market analysis with them we're going to go over the listing paperwork itself that makes them a client we're also at that time there we're going to have them sign all of the disclosures that were ultimately going to give to the buyer which will then come back to the seller in the form of an offer and then a ratified contract so present the CMA establish a listing price which is part of the listing agreement have the listing agreement signed preferably at that initial meeting that you go to with them and then from there you have a signed listing you're going to come back to the office that's going to go in the MLS we're going to put in all of the advertising we're going to do which most of it gets fed in through the MLS and lists hub and some of the other means that we advertise through we're also going to be in boomtown making our cold calls everything else hold open houses and really once that marketing goes out there and our prospecting calls with our buyers that's about it on the the seller side don't forget we're going to have at that point we're going to order professional photographs we're going to make sure that the lockbox gets put on that property but one of my goals is really to go out to that property as few times as possible so again go to the property meet with the seller establish the price get the listing agreement signed get your disclosure sign put it in the MLS have your professional photos done and then that's it that's why sellers are so awesome to work with because it's really it's fire-and-forget guess who's actually going to go sell that listing is it going to be you know it's going to be somebody else that's why I've always loved listing more than anything in the world you do the work up front let somebody else sell it now moving over to the buyer side there are a few more moving parts each one of these parts is very important so it's important that you follow the deal flow that you don't skip any steps that's usually where agents start getting themselves in trouble when it comes to the buyer side of the transaction now initially the first thing we're going to make contact with a buyer we're going to identify which buyers in the market within the next six months and the very first thing is get that buyer agreement sign we never ever ever take a client out looking at a property without a signed by our agreement and without a pre-approval so that stands to reason that the very first things you're going to do is get a buyer agreement and then we're going to work on the pre-approval process once we've spoken with that buyer we've done our comprehensive buyer interview we've gone through all of their their wants their needs their top tens we've talked to them about the buyer agreement and why that's important for them and how that benefits them we've also spoken with them about the lender and why that's important to be pre-approved prior to us going out then it's time for them to actually speak to the lender whether you conference that lender in on a conference call three-way with them or whether you send them to the lender or if they've brought their own lender to the table the next step is for them to actually apply with that lender so the lender does the the application and at that point there they're going to either be pre-approved for a certain amount or they're going to be unable to qualify whether it's because of their debt to income ratio was too high credit scores weren't high enough they didn't have enough money to close etc if they are unable to qualify because of any of those reasons then it's time to develop a plan such as in a lot of lenders will have plans as far as credit repair or we need to figure out do they need a cosigner to go on there and help them with the purchase do they need to pay off some credit cards to make sure their debt to income ratio works etc whatever it is it's causing them not to qualify we need to come up with a plan and put them on a nurturer campaign and make sure that that lender is staying on top of them and that they're moving towards their creditworthiness goals to qualify now if they do qualify right off the bat that the lender is going to give a pre-approval letter it's very important that we have that pre-approval letter in hand prior to going out and searching so the next step from there is we have a pre-approval letter we've done our comprehensive buyer interview so we know exactly what they're looking for we know exactly how much they're qualified for now never never never take them out looking at properties above what they're qualified for because you're just going to end up disappointing your buyer at that point and they're going to become very frustrated and not buy anything so from there we're going to take them out looking and we're actually going to send them the all of the homes within their buying criteria and their price range we're going to have them narrow that down to their top ten from there we're going to ask them which ones are their top five favorites out of those ten and of those top five we're going to let them know these are the ones we're going to go look at but we're going to look at the top three first so let's narrow down one more time this lets them know that they are looking at the three best properties on the market first so that they don't have a need to have to see everything in the market before making a decision now that we've looked at the top properties on the market and they've indicated an interest in making an offer and it's time to actually put together and craft the offer itself so we're going to find out what are our terms of our offer are going to be settlement date how much of a deposit are we going to put down is there a seller contribution towards closing costs that they need etc and we're going to take the disclosures that the seller provided us initially and then we're going to take our offer in in a purchase contract and we're going to mix those two together and submit that in the form of an offer this is actually the exciting part where the two sides finally converge into one as the buyer's agent you're going to have your offer in hand and signed with everything ready to go including a copy of the deposit check and the pre-approval letter you're going to submit that to the listing agent at this point here this is where the really exciting part of the transaction begins it's the negotiations this is where you either save or make your client a lot of money so now we're in the negotiations phase of the process the buyer's agent has submitted the offer as well as a copy of the pre-approval letter and a copy of the earnest money deposit check to the listing agent at this point here the listing agent submits this to the seller comes up with a response of either they're going to accept that offer they're going to counteroffer with a different price or terms or they're going to reject the offer outright without a response so then it goes back to the buyer's agent who then checks in with the buyer for whatever their response is and that can go back and forth a couple times until there's a meeting of a month of the minds and they've agreed upon the price and terms once the price and terms have been agreed upon and the offers then signed by the seller we now have a ratified contract and we then move into the next phase which is contract to close as we move into the contract to close phase things start moving very quickly and then there starts to a lot of moving parts the main things to deal with once the contract has been ratified is the title company the loan approval process the home inspections and then the appraisal which is part of the loan process we're going to break that down here real quick so as soon as that contract is accepted you're going to submit a copy of that contract as well as with that deposit over to the title company as soon as possible you're also going to make sure if you're on the buyer side you're going to immediately submit that same contract to the lender so they can get started with the loan approval process the buyers then immediately going to contact their insurance company and start the homeowners insurance process now from there once that loan officer has that contract they're going to immediately order the appraisal the appraisal is going to be done within say one week of it being ordered the appraiser is going to come out to the property they're going to look at comparable sales and they're going to determine a value on that property the loan is then going to go through underwriting where the mortgage underwriter is going to go through and make sure that all of the things they were submitted during the pre-approval process such as the w2's pay stubs tax returns that those things all actually match and are verified and work for this particular loan they're going to make sure that the credit scores are still good the debt to income ratio fits the guidelines for that particular lending program and that we have enough funds to close and finally they're going to issue a loan approval and it clear to close prior to closing back to the inspections as soon as that contract is accepted if you're working on the buyer side as a buyer's agent you're going to order the home inspection with your inspector now generally you're only going to have between seven and ten days to actually have that inspection done and then submit any requests for repairs if any to the listing agent so you'll have the home inspection completed you're going to review that home inspection report and if there are any items that need to be repaired you're going to make an addendum and you're going to submit that over to the listing agent now the let's go through title work real quick also so your is same thing as soon as that contract is accepted you're going to submit that contract to the title company in the state of Maryland the buyer has the choice of title companies so the title company is then going to go through do the title search preliminary title report and make sure there are no problems there on the seller side just as above in the sales process the seller has very little to do in the contract a closed section really you're just going to make sure that all the disclosures that are required by law were provided you're going to facilitate entry into the home for the home inspector please don't have your sellers be there it gets awkward also finally once the buyer's agent has submitted any requests for repairs if any the listing agent is going to take that to the sellers and then they're going to negotiate one more time you're either going to accept whatever their repairs they're requesting and have a contractor do those repairs or you're going to negotiate some sort of a seller credit to the buyer so they can do the repairs themselves after closing either way it's whatever the buyer and seller agreed to so there's that one final little negotiation and then finally once all of those moving parts have been completed meaning ok we've checked off the home inspection the buyer and seller are good with all of that the the insurance has been ordered and sent to the title company that's all good the the loan has gone through its entire process and we have a clear to close the property appraised all of that finally were able to go to closing and it's very important that we all of those things have to happen by the date that was in the contract that we agreed to close by if not that and sometimes lenders a little slow etc or there's a problem we may need to extend the settlement date but finally though we're ready to close the lender sends over all of its documents and requirements to the title company and the the buyer shows up with a buyer agent the seller shows up with the sellers agent they meet at the Tay they sign all of the the closing documents and finally we're closed the seller will bring the the keys any garage door openers important documents things warranties for the appliances and things they'll bring those things hand them off to the to the buyer the buyer's agent just prior to closing will take their buyers and do a final walkthrough to make sure that that property is in the same condition on the day of closing as it was when they put it under contract that there's no new damage or that the seller didn't move all of their stuff out etc one and as long as everything is good there is a courtesy the the buyer's agent will actually bring the lockbox to closing to give to the listing agent so they don't need to come back out to the property and get it the keys are exchanged checks are exchanged the buyers thrilled they have a new home the sellers thrilled they got their home sold and all is well with the world now that is how the complete transaction works from start to finish if you have any questions let me know down in the comments section thank you very much for attending this training session and we look forward to the next one