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First Time House Hunting

There are so many emotions as you set out to begin the process of searching for your first home. It can be challenging with all the many steps, tasks, and requirements. Once you have your finances together and you are prepared for both the purchase of the home as well as any ongoing expenses, here are a few tips you shouldn’t overlook:

Hire the Best Realtor. Ask family and friends for recommendations, search online, read reviews, and check out social media presence. Buying a home can be complicated and it’s in your best interest to involve the best Realtor for his expert negotiations and familiarity with contracts and the extensive paperwork.

Location. Decide on this first to eliminate “buyer’s remorse” down the road.  Do the homework and research neighborhoods. School districts, local safety, and crime statistics can affect a home’s value. Even if you have found your “dream home”, the neighborhood could be completely wrong.  Drive through the neighborhood at different times of the day and night and watch the traffic, how are the streets and sidewalks? What are the neighbors like and how do they take care of their homes? Is the home close to places you might frequent (gym, grocery, schools)? Are there children playing safely outside?

Shop Online: Now that you know where you want to buy a home, there are plenty of online options to start the search. Zillow, Trulia, Realtor.com, and any local real estate agency. Digging in and scouring homes online allows you to determine which you want to go see in person. Homes are going fast right now, and you don’t want to waste time looking at the wrong properties! A great tip: Type the address of the home you like on Google and get the street view. You can literally scroll down the entire street and get a sense of what the neighborhood is like.

Be Frugal: Zero in on homes that are listed for less than the amount of money you have been approved for. Many first-time homebuyers don’t calculate the other monthly expenses or problems that go along with homeownership (broken appliances, etc).  Furthermore, other than the down payment, there will be money needed at closing.

Negotiate: This is where having the best Realtor will come in beautifully. Once you make an offer, the seller might come back with a counteroffer and after discussing all of the pros and cons with your Realtor, you will know if you should offer more or walk away. Keep your emotions out of the entire process. Too many people pay too much for a home because they have “fallen in love” and this type of emotion can lead to very bad financial decisions.

Do an Exhaustive Inspection: Do the homework and find the very best Home Inspection Company with the top ratings. Be there with the inspector and learn about the home, ask questions – you need to know that the home you are purchasing is structurally sound.  See the good and the bad – what repairs will be needed? Is the electricity adequate for today’s use? How are the water pipes, heating, and air conditioning systems?  When the inspection is complete, get a verbal and a written report. Bonus – the company will be available at a later date for more questions.

The Bottom Line: The above tips are just a few important ones to help navigate the process, save money, and avoid common mistakes.  Find a Realtor. While it’s easy to go through online homes and narrow down what you want, it’s not so easy to get from that point to the closing. There is the transfer of the deed, title search, negotiating, asking for “extras” that you might be entitled to, completing all paperwork, and being the single point of contact with the seller.

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Is It Time To Reduce The Price of My Home

Every seller wants to get the best possible price for their home but after some time on the market, you and your Realtor should have a discussion on whether it’s time to reduce the price. No one wants to lower their asking price for their home, but in some scenarios, it’s a necessary step if you want to sell your home. Some of the reasons it might make sense:

No showings. The market right now is so hot that you should be getting showings, even if your price is on the high end. If you’re getting no showings – or an abnormally low number – this tells you that you’re way off base and buyers don’t even want to waste their time seeing the property.

Lots of showings, no offers. Perhaps you have the opposite problem. You’ve had dozens of showings, but not a single offer. This tells you that your house meets the criteria of buyers, but something is off. Price could be the issue.

Shifting market. The real estate market changes on a daily basis. Depending on the sale price of other houses in the area, it’s possible that the valuation of your property has changed since you put it on the market. Maybe you need to lower the price in order to match up.

However, although the market usually plays a role, there are many reasons why houses don’t sell. So before you lower your asking price, you and your Realtor should discuss if everything is being done to sell your home. Some questions you should consider:

How has the Realtor been marketing your home? When a house sits on the market, ineffective marketing is often to blame. Does your listing include high-quality images, and does the written copy clearly highlight your home’s best features? Is it being promoted on social media? Has a direct mail campaign been launched? If buyers don’t know your home is for sale (or they haven’t seen it in the best possible light), you don’t yet know whether they’re willing to make a great offer.

Has your Realtor gotten any feedback from the buyers that have visited your home? Asking the right questions can help you figure out how to make a better impression moving forward. Ask a family member or friend to stop by and give you an honest, objective opinion of how your home looks. Sometimes, we need a fresh pair of eyes to see anything you and your agent may have missed. Find it, and fix it; it might be the sole reason your house is still on the market.

Have there been many showings? If so, your home is making a positive impression online. Buyers aren’t being turned off by the asking price, which is a good thing. But if you’ve had many showings and no offers (or no reasonable offers), then there might be something about your house that needs to change. 

The Bottom Line: Make sure you have the top agent in your area. Because of their constant engagement in local markets, Realtors are an invaluable resource for determining price, marketing your home, and managing all aspects of a sale. Before lowering your price, consider if you and your Realtor have exhausted all avenues to sell the house for what it’s worth. If your price is perfect, your home looks its best and your marketing is reaching its targeted audience, showings should increase, and, hopefully, offers will follow.

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Accepting the First Offer Because it is the Best Offer is Not Cliche

Often, when a seller has taken the time to properly prepare their home for sale, and they’ve hired the best Realtor who takes pride in presenting and marketing that home well a seller will receive offers right away. And, it’s not just a cliche, “your first offer is the best offer”, it’s more often than not, the truth.

So that first early offer? Sellers tend to reject it because they felt it happened too quickly and they want to hold out. They’re feeling adamant and confident because there is some good activity. Real Estate agents see good offers rejected early because the seller thinks they can get more.

Then, days, weeks even months later, the owners find themselves settling for less. That first offer should always be taken seriously and it’s probably the best opportunity to control the price and terms. It might not be what the seller was hoping for but, a good Realtor will walk the seller through a counteroffer, and even the ability to negotiate for other details can work for the seller.

The time a home is on the market to sell decreases its value. The longer it is listed the less interested buyers and Realtors are in the property. People will begin to wonder what is wrong with the property. Sellers are in the best position to get a good price for their home when it is new to the market. If the home does not sell buyers become suspect.

With a “for sale” sign in any yard too long, no matter the reason, it makes it more difficult to stir up interest. As the days go on, the home becomes less desirable. The market could change and take a downturn leaving the home that is priced on the comps when it was listed, now priced too high. An identical home could enter the market at a lower price. 

The Bottom Line: The first three weeks are usually the most active. If an offer is made during that time, there are three possible outcomes:

1. After some negotiation, the offer is accepted

2. After some negotiation the offer is rejected as being too low and the home continues to be marketed. Eventually, the home is sold for a better price

3. After some negotiation, the offer is rejected. Months later the Realtor is asked if the original buyer is still interested only to find out they have purchased elsewhere. The owner ends up reducing the price and sells for less than the original offer.

It’s worth working with that offer unless it’s ridiculously low.

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Experienced Realtors

Be sure to vet and find the best Real estate Agent before you set out to look for your next home. They have a huge role in one of the most important financial decisions you will make. When it comes to buying, selling, leasing, or renting, they will lead us through a sometimes bumpy and overwhelming process.

Websites can help you find the area you want to live in, even some of the houses that you want to see. But, an experienced Realtor can offer a level of expertise in the market that you won’t be able to get without her.

1. Advice. Expect your Realtor to provide advice relating to homes even before you tour them. A good agent will have already learned from you about what you want & need, what your preferences are and what your budget is. She will be able to help you narrow your search and identify your priorities.

2. Educate. Your Realtor will be able to provide data on the local home market and comparable sales. The home-buying process can be complicated. A good agent will explain the steps involved and make sure that you understand them and provide counsel to you.

3. Network. An agent who is familiar with the neighborhoods that you are interested in and will often know about pocket listings. Experienced agents tend to know other agents in the area and have good working relationships with them; this can lead to smooth transactions. Your agent may also be able to refer you to trusted professionals including lenders, home inspectors and contractors.

4. Advocate. When you work with a buyer’s agent, their fiduciary responsibility is to you. That means you have an expert who is looking out for your best financial interests, an expert who’s contractually bound to do everything in their power to protect you.

5. Negotiate. Your agent will handle the details of the negotiation process, including the preparation of all necessary offer and counteroffer forms. Once your inspection is done, the agent can also help you negotiate for repairs. Let the agent do the “dirty work” and ask for things to be fixed. They know how to negotiate from experience and what will and will not work.

6. Paperwork. A real estate transaction can be exhaustive, not to mention all the federal, state, and local documents required. If you forget to initial a clause or check a box, all those documents will need to be resubmitted. A good real estate agent understands the associated deadlines and details and can help you navigate these complex documents.

7. Knowledge. Plenty of issues can kill a deal right before the closing; perhaps the title of the house isn’t clear, the lender hasn’t met the financing deadline or the seller has failed to disclose a plumbing problem. An experienced real estate agent knows to watch for trouble before it’s too late, and can skillfully deal with challenges as they arise.

The Bottom Line: You can buy a home without a Realtor. People do it all the time. But, going at it alone can be a risky bet. There can be a lot of legal loopholes that can be overwhelming and confusing for someone not experienced in the real estate business. Buying a home is a long and often very emotional process. The Realtor will handle all the stress for you that goes with finding financing, negotiation, and closing.

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Contingent Offers

Contingencies are conditions that must be met to finalize a real estate transaction. They are in the contract to protect the buyers and sellers. A contingency is an opportunity to cancel the sale if issues develop with the property and/or transaction process. Removing or not including contingencies can make an offer more attractive to a seller but it can also leave the buyer unprotected.

5 Home Contingency Clauses:

The home inspection contingency clause is the most critical. It should be done by a neutral professional inspector to assess the major systems of the home. This will include electrical, plumbing, roofing, and structure. Without this contingency, the buyer has no recourse to issues and problems with the house. This is also true for waving the buyer’s ability to request the seller to make repairs. This is an important secondary negotiation between the parties. Many are selling “As Is” sales and there are buyers also that agree not to ask for repairs.

The home appraisal contingency clause tells the value of the home you want to buy. It will tell you whether you’re offering a fair price for the home or offering to pay too much. If the appraisal is too far below the price you’ve offered for the home, you can change your offer or back out of the deal altogether, if you wish.

The appraisal is also what the banks use to determine the amount and terms of the home loan to offer you. If the appraisal comes in too high, the bank loan you’re offered may not be enough to cover your costs to buy the home, and, to proceed with the transaction in spite of that, you’ll have to come up with the difference on your own.

The financing or mortgage contingency clause is another extremely common clause in real estate contracts. This clause states that your offer will be contingent on your ability to obtain financing. The financing clause will specify the type of financing you wish to obtain, the terms of the financing, and the amount of time you will have to apply for and be approved for a loan.

The financing contingency can be helpful for buyers because it protects you if your loan or financing falls through at the last minute and you are unable to secure financing at the last minute. This contingency will allow you to back out of the transaction without facing any legal consequences or losing the money you put up as part of your earned deposit. The financing contingency is one reason why sellers prefer working with all-cash buyers who will not need financing in order to buy.

The financing contingency protects the buyer because the buyer will only be obligated to complete the transaction if they are to secure financing or a loan from a bank or other financial institution.

The home sale contingency clause you can add to an offer to protect you in case your current home doesn’t sell. It states that you won’t purchase the home unless your existing house successfully closes within a certain time period—usually between one and two months. 

After that, you may be able to extend the contract with the seller’s permission. But if the seller doesn’t want to wait any longer for your home to sell, the contract will be void.

The title contingency clause will investigate the title of a home to make sure there are no problems with the ownership of the home. The title serves as a record of homeownership and is essential to the sale of the property. In most cases, any issues with the title can be resolved before the closing process. However, this situation could lead to several challenges for the potential new homeowners in some cases. A few examples include a lien on the property that must be paid before the sale or perhaps an ownership dispute if the seller cannot legally prove they own the property. A title contingency protects potential owners from these situations by allowing them the opportunity to walk away if these issues are not resolved before closing.

The Bottom Line: As a buyer, contingencies are vital: They provide you with an escape hatch from the property purchase if, for example, your mortgage financing falls through or other uncontrollable events or discoveries create barriers to your finalizing the deal. However, they make your offer less attractive to the seller. In hot markets with competitive bidding situations, buyers sometimes omit or waive certain contingencies altogether.

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Home Buying 101

About to start the process of house hunting? Be sure you are armed with the best Realtor in your area. If you aren’t paying cash for your new home and will be getting a mortgage, you will want to follow some quick advice.

Don’t damage your debt to income-ratio by making a major purchase before closing. If for some reason you can not wait to buy a new car, you might have to wait on owning a home. The bank could easily determine that a car payment would hinder your ability to pay your mortgage. Wait until after you get the house to do some spending.

Don’t change jobs.  The lenders like to see consistency versus constant job-hopping. From their perspective, your employment and income are paramount to your ability to make your payments.  Generally, there are three different characteristics of your employment and income that are considered – the amount, the history, and the stability. Many lenders will do a final check to verify that your employment and income haven’t changed since your final loan approval was issued. Further, some lenders will require 30 days of paycheck stubs for new employment. If you can’t provide these stubs, it could delay your mortgage approval. Worse, it could result in your mortgage application being declined.

As a home buyer, never surrender your earnest money to a For Sale by Owner Seller. There isn’t anything stopping the sellers from spending the money before the transaction goes through. If the deal should fall through you’ll have to fight to get the deposit back. It should be put into a trust account. Find an attorney willing to hold the deposit for you until the transaction is finalized. Your contract needs to state what will happen to the deposit in the event that the transaction falls through.

Stay practical and realistic during the home buying process. Don’t let your emotions get in the way.  Occasionally, sellers are willing to fix some of the problems with the home and others may not be as willing. Don’t let that refusal close the door to your dream home. Conversely, you shouldn’t let your loyalty to the home blind you to costly repairs down the road. You certainly don’t want to be in a money pit.

Talk to your insurance company right away.  Failing to line up the insurance will lead to delays in closing.  Your lender will more than likely require that you purchase at least some homeowners insurance before settling on your mortgage. In most cases, you’ll be asked to provide proof that you’ve prepaid one year’s worth of coverage before the lender will consider closing.

If the appraisal comes in too low, don’t panic. There are several solutions to this dilemma.  Your emotions may be running high and making a good decision can be difficult. A skilled Realtor will be an invaluable asset at this point and be able to guide you through.  It’s their job to keep up with the details, daily, of your deal and if the seller won’t come down in price, as painful as it may be, you may have to prepare yourself for the worst-case scenario – walking away.

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Finding the Best Mortgage Loan

Finding the best mortgage loan is about more than just securing the lowest interest rate. It’s also important to make sure you’re comfortable with the company that’s originating the loan.

As you consider available funding options there are some basics to keep in mind. Among other things, the best choice will depend on the length of time you plan to own the property, how much you can afford to borrow, the condition of the housing market in the area you want to buy, and how quickly the purchase needs to be funded. Even if you could be an “all cash” buyer, for some it could make economic sense to finance a new property with a mortgage.

Mortgage loans are offered by different types of lenders. The most common are big banks, local banks, mortgage lenders, and credit unions. You can also get a loan through a mortgage broker.

Big banks have comprehensive networks of branches, financial accounts, and services. Some global banks lend municipalities and international governments large sums of money for massive infrastructure investments. It can be reassuring to work with an easily recognized brand and since many have in-house underwriters and large teams to process loans, they may be an efficient option. 

Regional banks are in your community, so they know the area. This can be especially important in a competitive real estate market since it reassures the seller and their agent that the lender is aware of any local anomalies as well as the relative value of atypical properties. They also may have personal connections with local appraisers and underwriters, helping to facilitate an anxiety-free transaction. 

Mortgage lenders are financial institutions, similar to banks, that originate and fund loans in their own name. Unlike banks, mortgage lenders exist for the sole purpose of making loans against real estate. Mortgage lenders get their money from banks and other investors. Most mortgage lenders do not service their loans and instead may sell the debt to banks or servicing companies who will take on the job of collecting payments.

Credit unions are financial institutions that use a nonprofit, cooperative business model. As a credit union member, you are also a partner (a cooperative owner) of the credit union. You usually have to meet an eligibility requirement to become a member and they may charge a modest membership fee. Since they are not-for-profit, rates and fees may be lower and there may be more flexibility in unique lending situations.

Mortgage brokers are intermediaries between the borrower and the source of funds; they are able to offer loan products from a variety of lenders. In exchange for this service, the lender pays the broker a commission called a “yield spread premium.” It’s logical to assume that the extra layer between lender and borrower would drive costs up. However, that’s not necessarily the case. Mortgage brokers reduce the bank’s cost of doing business. In return, the bank gives the broker access to rates and fees that are similar to those a consumer would get from a bank. 

There are many types of mortgages, but the primary options will usually be between those with a fixed interest rate and an adjustable rate (ARM). Besides the interest rate, the final cost of a mortgage will depend on the type of loan, the term (such as 30 years), and any lender fees. Mortgage rates can vary widely depending on the type of product and the qualifications of the applicant.

As you are considering what lender to use, it makes sense to compare your options. Here are a  few general questions to ask:

How long does it take to get a pre-approval? This is the best way to learn how much you can realistically borrow. Your pre-approval letter will show sellers that you’re financially able to complete the home purchase.

How often do customers’ closing dates need to change due to issues with the loan? Make sure you know what to expect from your lender around closing times and what they’ll do if something doesn’t go as expected.

What is the turnaround time for appraisals? In a busy market, appraisers get busy too! Be sure your lender can facilitate a quick appraisal turnaround time.

Do they fully underwrite their loans? If the lender is working with an outside underwriter, the time it takes to collect or verify documentation may also slow the process.

The Bottom Line: Before you begin your home search in earnest, it’s ideal if you know how you will fund your purchase. While it’s not the most exciting part of the home buying process, it’s most essential. This is one of the biggest investments you will make in your life, so you need to make sure that you are working with the right lender. The right lender will make sure that you have the right loan for your situation and guide you down the right path.

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Be Vigilant When House Hunting

House hunting can be is exciting and challenging. You’ll get to see different properties, each with its own features. Purchasing a home is also a huge financial commitment—you can’t just get carried away due to excitement at the cost of overlooking important details of the home, which could lead to bigger and more expensive problems down the road. Depending on the size of the problem, it could signal that it’s time to walk away. Some slight problems or minor defects can be fixed, but some issues can seriously detract from your investment, and even endanger your health and safety.

Foundation Issues: If your home inspection report lists concerns with the integrity of your home’s foundation, don’t ignore them.  While all poured concrete foundations will crack at one time or another, hairline cracks are not an indication of a problem. If a crack is wider than 1/2 inch, however, it’s a good idea to have a foundation contractor examine the area. This also holds true for cracks that appear to have been recently patched. Large cracks can indicate an unstable foundation. Not all foundation issues are expensive to fix. However, major structural problems that require stabilization using hydraulic piers can cost a lot of money.

Electrical Issues: If a light switch does not work when you flip it, it’s probably just a minor electrical issue that can be fixed later. But, Outdated wiring or too little voltage is cause for concern. Not only will you not be able to hook up all your electronics and appliances, but problems with your electrical setup can also increase your risk of a home fire. Major electrical issues can end up being costly projects that require permits, professionals, and inspections to bring up to code. 

Roofing Issues: A complete roof teardown is a substantial investment, so it’s important to know how old the roof is, particularly important in areas of the country where there is a lot of snowfall since that can shorten the life span of a roof.  Besides the costs of replacement or repairs, leaky roofs can lead to other problems like mold, rot, and water damage. 

Mold: If water damage or mold is found in the home, consider it a red flag. In truth, most homes will have some mold in crawl spaces and attics, and not all mold is bad for your health. But, important: mold can mean there are other problems, like water leaks from the roof or major appliances, that could be costly to correct. It’s imperative that the source of the mold is found. Otherwise, the problem could worsen, and you could end up with a health hazard.

The Bottom Line: For most of us, buying a home is one of the biggest investments we will ever make. Because of this, we should be extremely vigilant during the house hunting and home buying process. Though it’s all too easy to get swept up in a home’s bells and whistles, buyers must remember to look out for important real estate red flags – no matter how incredible the house seems.

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Is Your House Just Sitting On The Market?

Having a house sitting on the market can be expensive, stressful, and soul-crushing. There may be hundreds of reasons, but the following are the most common.

Priced Too High: Even if everything about your house is on point, if it’s priced wrong for the current market, it’s not going to sell. Be sure to use the best Realtor in your neighborhood who will provide you with a list price that they derived from looking through comps. The Realtor’s price may differ from the price you want to list it for, but at the end of the day, the listing price should be guided by comparables, not emotions. When residential real estate inventory is low, the market is hot for sellers. But that doesn’t mean buyers will overpay for a home. 

Online Presence: The first stop for buyers is usually Realtor.com, Zillow, Trulia as well as Realtor websites. If they see a home with terrible photos and bad lighting, they will keep on scrolling. Don’t use an iPhone, hire a photographer. Professional photos will make your home look at its very best online. They know all the right angles to give you the best light possible. They make homes look larger and showcase their best features. Make your home stands out against all the other homes people are seeing online. Money spent on photography could mean less time on the market and more money at closing time.

Personal Items: Too much furniture, galleries of personal pictures on the walls, or knick-knacks everywhere can make it too hard for buyers to imagine that they live in your house instead of you. Are your bathrooms clean? Is your walk-in closet jam-packed or organized? How about your appliances in the kitchen – do they sparkle? Not every buyer is a pet lover, so seeing, hearing, or smelling your dog or cat is something to be avoided at all costs. Don’t let your mess cost you a sale.

Needs too Much Work: A long list of maintenance issues can turn buyers off and potentially decrease the value of your home. More importantly, buyers expect the condition of your home to match the description. The more repairs that are needed, the less likely a buyer will want your house. Many buyers simply don’t want to deal with the cost or effort of doing repair work, even if it’s just a bunch of small repairs, such as tightening a handrail or replacing a broken tile.

No Marketing: You’ve got great pictures, but your Realtor might not be using the many social media resources. Social media should be an essential piece in your Realtor’s marketing package. There should be very focused marketing – your home should be directed towards the correct audience (age, financial status, and motivation of buyer) for your home. Highly targeted online marketing can include specialty websites, targeted online ads, and targeted and boosted social media engagement. The more buyers your home is exposed to, the more showings there will be, and the higher chance of an offer being received.

The Bottom Line: Hire an experienced, knowledgeable Realtor. To find that person ask neighbors, look at homes for sale in your area on the internet and see the photos used, look through social media at who is using it properly to market homes, and then interview several. Taking for granted the importance of hiring a top agent can stall the sale of your home.

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Clean Title at Closing

For a home sale to close there should be a clean title.

A clean title means there are no standing claims against the property and that the owner has the full legal right to sell the property. The job of the title company is to do the necessary work to ensure that the title is clean and ready for a smooth transfer of ownership.

Sometimes it gets a little bumpy. Hidden claims against the home must be resolved for the sale to go through. Most are easily resolved while others can be challenging.

Here’s ar a few types of claims that title agencies see most often:

Mechanic’s Liens

A mechanic’s lien is typically placed on the property prior to a contractor doing work to improve the property. It covers the cost of materials, equipment, and labor associated with the project. When the job is completed and paid for, it’s the contractor’s responsibility to release the lien. If that doesn’t happen for any reason, it becomes an issue to be resolved prior to settlement.

Bankruptcy Liens

A bankruptcy filing connected to someone holding title to a property is another common problem we see. When the bankruptcy situation is resolved, the lien must also be addressed. From time to time, that doesn’t happen and it takes some effort from the title company to clear the title.

Child or Spousal Support Liens

When a lien is filed for delinquent child support or spousal support, it can still be connected to the title, waiting to be discovered, even generations later.

Delinquent Tax Liens, Fraud & Forgery

Similarly, liens related to unpaid or late tax returns can hold up the process if left unresolved. Fraud and forgery are also common in the event that one person on the title signs the name of another person on the title, typically a spouse.

The Bottom Line: These are just a few issues that can cost a sale. Having the best title agency examine the title on each property is in your best interest. At Title First Agency, we work with Realtors from the signing of a contract to the signing of the closing, ensuring that the transactions run smoothly and close on time.

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