Holding a real estate agent's or real estate broker's license does not make someone a Realtor. Membership in the National Association of Realtors entitles licensees to use the term "Realtor" on their business cards and in their marketing materials.

Being a Realtor also means that the agent is a member of a local Board of Realtors and the Texas Association of Realtors with access to education opportunities. As a member of a Board, a Realtor also has access to a multiple listing service (MLS). The most valuable benefit, however, is that the Realtor is bound by the National Association's Realtor Code of Ethics. This code creates the true value that makes the real estate business a profession. It ensures that, in business involving a Realtor, the client's interests are protected.

Until a few years ago, the listing agent and the selling agent in Texas represented the Seller. As a result of the agency law passed by the Texas Legislature, a Buyer can now have an agent represent their interests. Sellers have a Listing Agreement with their agent; Buyers now have Buyer Agreements available to them. Services to the Buyer will include such things as:

• Advising you about market trends and financing
  
• Review and analyse markets, neighborhoods and properties
  
• Assisting you in negotiating the best price and terms
  
• Guiding you through the inspection process and any additional negotiation
  
• Representing your interests throughout the transaction
  
  

When you first meet with your agent, they will give you a one-page form called Information About Brokerage Services; it is provided by the Texas Real Estate Commission, and it explains the various types of representation. Agents in Texas are required by law to present you with this form. The form is for information purposes only - it is not an agreement of any kind; the actual agreement is called a Buyer Representation Agreement.

Your agent will go over the Buyer Representation Agreement with you and give you examples of the services they can provide with and without a Buyer Agreement. You can then decide on the type of representation you want. The Buyer Agreement can be for whatever length of time you are comfortable with, and can be extended upon you and the agent's mutual consent.

In general, there are three broad areas to consider:

Conventional vs Government Loans ó Most mortgage loans are made by savings institutions, banks and mortgage companies. On government (FHA and VA) loans, the government does not actually loan the money but rather guarantees (or insures) the lender if you default for some reason. Generally, a lender will require you to buy mortgage insurance if you are putting less than 20% down. This insurance may be paid at closing or added to the loan amount. VA loans require no mortgage insurance, but only qualified veterans may apply for them. Mortgage insurance gives the lender some protection in the event the monthly payments are not made. Government loans have important advantages - they generally require a lower down payment, they can be assumed and their interest rates remain the same (the new buyer has to qualify, though). On the negative side, government loans limit the amount you can borrow, often take longer to process, and have higher closing costs.

Fixed Rate vs Adjustable Rate ó With a fixed rate mortgage, the interest rate stays the same over the life of the loan, usually 15 or 30 years. That means your payment will not change except for tax and insurance adjustments. Adjustable rate mortgages go by a variety of names, but basically these loans have interest rates or monthly payments that fluctuate over time according to a pre-determined index. These mortgages typically start out with a lower interest rate, lower monthly payments, and lower fees and points than fixed rate mortgages. They often appeal to first-time home buyers who expect their incomes to grow in the coming years. If you consider an adjustable rate mortgage, ask the lender to explain the terms fully. Also ask about the index that will be used to calculate future interest rates and how index changes will affect your mortgage.

Assumable loans vs New loans ó Some loans, particularly FHA and VA loans, are assumable. That means a buyer can assume an existing loan usually at the same interest rate and terms as the previous owner. Assuming a loan may save some costs and time. The lender will charge a fee for processing the assumption and most lenders will require you to qualify for the existing loan.

Recent changes in mortgage disclosure rules have made it easier for borrowers to compare mortgage lenders. While the interest rate is important, don't judge the financing by the interest rate alone. Compare several items on the Truth in Lending Statement, including:

Points and Junk Fees - A "point" or "discount point" is one percent of the loan amount. On a low-interest-rate loan, points can be double those for a loan with a higher interest rate, causing you to pay more up front at closing. Also, some lenders are fond of charging "junk fees" at closing. Junk fees go by more names than you can imagine (i.e. processing fees, review fee, inspection fee....), and are a source of income for the lender, making up for a lower interest rate in some cases.

Total Fees Charged by the Lender ó Some lenders will absorb the cost of many services, while other do not, so be sure and read their disclosure closely. Unless a private investor is involved, the cost of money is the same.

Term ó In general, the longer the life of the loan and the more fixed the payment, the more you can expect to pay in interest. For example, with a 30-year fixed-rate loan you will pay interest equivalent to what you originally borrowed by the 15th year, at current rates. You may wish to consider 15 or 20-year fixed rate loans as well.

Penalties ó Ask what penalties will be charged if you pay off the note early. You may wish to refinance the loan at a more attractive rate at a later time. An existing prepayment clause could require you to pay a penalty if you pay off the loan early.

An important and revealing exercise is to make a list of your needs and wants; needs will take priority. Once your list is made, review it and decide what is most important to your lifestyle. It may be privacy, security, location, number of bedrooms or recreation, to name a few. Decide which items are musts and which you are willing to give up. Discuss the list in detail with your agent so they can better assist you with the home search.

Deciding where you want to live may be the single most important factor in choosing a home. Location affects your day-to-day living, and it influences value significantly, so consider this carefully. Your choice of location may be limited somewhat by price or other factors. Even so, make sure you have your agent consider such things as:

• Prices of properties and property taxes.
  
• Distance to work, schools, shopping, and entertainment.
  
• Proposed changes in land use bringing new shopping centers, highways, airports, etc.
  

From this point forward, your agent will be giving you a great deal of information. Be sure and ask questions about anything you are unsure of. Whether you have purchased before or not, they will help you understand every step of the process.

My agents can help you find a home that you will be delighted with. As your Buyerís Agent they can assist you in what a prudent offer would be, but only you can decide how much you are willing to offer. Once you have determined the price, they will help you prepare a written offer using the various forms provided by the Texas Real Estate Commission. These documents are the most important papers you will sign because they lay out all the terms of the transaction. The contract and appropriate addendums will contain such things as:

• The names of the Buyer and Seller.
  
• The address and legal description of the property.
  
• Any property that will be transferred with the home.
  
• The price, financing conditions and contingencies.
  
• The amount of earnest money deposit.
  
• The name of the escrow agent and title company.
  
• Who pays for the title policy and survey.
  
• Whether the Buyer has received the Seller Disclosure Statement, which we will carefully review.
  
• An option period with consideration.
  
• Dates of closing and possession.
  
• Any special provisions.
  
• Fees to be paid at closing and by whom.
  
• A list of addenda, which are also part of the contract.
  
• And more -
  

For previously owned homes, you may also want to investigate the possibility of having a residential service contract (home warranty). Such a contract is an agreement with a residential service company that certain items will be repaired by the company if such items fail to function beginning when you move in, for a period of one year. Covered items include plumbing, electrical and A/C systems and more. If you purchase a new home, the builder should offer a warranty.

Once you and the seller agree to the terms of the offer, and all parties sign and initial any changes, the document becomes a binding contract. Your option money (see next question) will be given to the Seller and your earnest money will be deposited with the escrow agency. Before the option period expires, we will need to be sure that the condition of the property meets your expectations.

Option money and Earnest Money are very different. Earnest Money is deposited with the attorney or title company once the contract is finalized and is credited to your costs at closing. Earnest Money shows the seller that you are "in earnest" about purchasing their property. Earnest Money can be any amount, although it is usually 1% to 2% of the purchase price.

Option money is given to the seller once the contract is finalized; the seller retains this money, and it may be credited to the buyer at closing. The option money gives the buyer the right to terminate the contract within a certain number of days. In exchange for "taking their property off the market" the seller receives option money. The amount varies with negotiation; I have seen $1 and $9000 but most amounts are in the $200 range.

The option and Earnest monies can play a role in contract negotiations as well. Higher amounts may impress a seller, and may make up for a lower offer. Your agent can advise you about these and other facets of the contract; as your Buyer Agent they are bound to represent your interests.

The closing is the result of weeks or even months of research and decision making. The closing could last a little less than an hour but may take longer, depending on the complexity of the transaction. It often occurs at the office of a title company or attorney. The closing agent, also called escrow agent, will have an impressive stack of documents, most of which will be for you, the Buyer, to sign. The closing agent will explain each document; after each document is explained, you will be asked to sign it. You will be presented with numerous papers, so be sure to review them carefully, and definitely ask questions if you do not understand anything.

As a final step, you will give the closing agent a cashier's check for your down payment and closing costs - personal checks are not acceptable. The cashier's check will need to be made out to the title company or attorney who is closing the transaction. Your agent will let you know in advance how much the check should be for; this amount should be very similar to your agent's estimate that they provided you before your offer to purchase was drawn up. Funding will normally occur within a few hours, upon a final review by your lender if you're getting a loan, and the closing will become final. This is an important event, and your agent will be there to ensure that it goes smoothly. One of their goals is to overcome any issues with the transaction well ahead of the closing.