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Introduction!!!In a real estate transaction the buyer assumes all of the risk. The seller walks away from the property and is free of any obligation or responsibility. The buyer pays for inspections, appraisals, closing costs, and ends up with the house and a mortgage. At best, buying a home is a complicated process. At worst, it can be an emotional and financial nightmare. The list of things to consider is seemingly endless. It’s not possible for a person who buys only a few homes in their lifetime to understand all the rules and procedures involved with buying a home. You must rely on professionals to guide you through the process. But, as we saw in the great real estate crash of 2008, some professionals are thieves and they take advantage of a flawed system in order to profit at your expense. HelpUBuy America has been protecting the rights of homebuyers since 1995. In a nutshell, it’s our job to ensure home buyers don’t get ripped off! The following are our top ten tips for first time homebuyers. We are here for you if you have any questions about buying or home or any of the information in this report.

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1.!DON’T&Hire!Your%Realtor’s%Favorite)Inspector!

A home inspector’s job is to go through every square inch of a house, and disclose to the buyer any and all defects they find. Because Realtors only get paid if you buy a house, they have an interest in the outcome of the inspection. Inspectors get most of their business from Realtors. In an effort to maintain their relationship with the Realtor, some inspectors will fail to report defects in the property that might kill the deal. This is a nightmare scenario for a homebuyer who just paid an inspector $300-600 to have a property inspected, and who might be borrowing thousands of dollars to purchase a home with serious undisclosed defects! Don’t!Let!Them!Make!a!Monkey!!Out$of$You!!$ A good inspection takes 2-5 hours, and you should find your inspector on your own by asking your family, friends, or co-workers for recommendations. You can also visit the real estate commission website for your state and receive a list of licensed inspectors. In many areas, licensed inspectors can access the property in the same way that Realtors do, so there is no reason for your Realtor to attend the inspection. The inspector works for you and it’s not appropriate for them to spend their time schmoozing your Realtor, or for your agent to manipulate the inspector for a better report. If it’s necessary for your Realtor to unlock the property, let them do so and then ask them to leave.

2.#!DON’T&Hire!a"Dual"Agent!

A dual agent is one that works for the buyer and the seller in the same transaction. The following is an example to illustrate what it is like to work with a dual agent. Suppose you drive by a house that interests you and notice that there is a Century 21 sign in the yard. You decide to call the number printed on the sign, and a very nice Realtor answers the call. This Realtor was hired by the owners of the house to sell their property and get them as much money as possible. On the phone, the Realtor offers to show you the house, so you set up a time to meet and view her listing. You like the house but are not ready to commit, so the Realtor offers to show you some other homes that you might like. While looking at the first house, the Realtor represented the seller. Now she’s showing you other agent’s listings in which she would represent you as a buyer’s agent, should you opt to buy one of those homes. In the meantime, she’s asked you all kinds of questions and has a clear picture of your purchasing power and the level of your motivation. If you decide to buy the first house she showed you (or any of her other listings) she’d have to turn you over to someone else in her office, but would be legally obligated to tell her seller/client everything she knows about you. And, from the seller’s standpoint, the agent used their house as a source of buyer leads. The seller most likely shared all of their secrets with this agent, only to have that information used against them if both the buyer side and seller side of the transaction are handled in-house with the same broker. It’s a convoluted mess, and it is unfair to both the seller and the buyer, and the only person who wins here is the Realtor and their broker.

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Technically, dual agency is not legal in many states, but there is always a way around the law that works against both sellers and buyers, and it is still quite difficult to tell the difference between a “buyer agent” and a “dual agent”, or a “seller agent” and a “dual agent.” Should a Texas Realtor, for example, wish to sell a seller/client's house to one of their buyer/clients, they use a third party in their office to handle negotiations for one of the parties, to the detriment of everyone except the broker. Don’t!Let!Them!Make!a!Monkey!!Out$of$You!!$ Hire an Exclusive Buyer Agent. EBA’s represent buyers 100% of the time; they never take listings or represent sellers so there is never a conflict of interest that will jeopardize your negotiating position. HelpUBuy America is an Exclusive Buyer Agency representing homebuyers in Dallas/Ft. Worth. For a referral to an EBA in your area, contact the National Association of Exclusive Buyer Agents at www.NAEBA.org.

3.!DO#Know!How$to$Get$a$Firm$Quote&From&a&Lender!

Interest rates are based on risk; the better your credentials, the lower your interest rate. Because it is a risk-based system, you will not learn your final interest rate until after you make formal loan application or until you lock your rate. It's a "chicken or the egg" scenario. Lenders don't want to commit to pricing until you make a formal loan application, and buyers don't want to commit to a loan without knowing the costs.

Don’t!Let!Them!Make!a!Monkey!!Out$of$You!!$ To get a firm quote from a lender, send them the following six pieces of information:

• Your full name(s) • Your monthly income(s) • Your Social Security number(s) • The property address • The loan amount • The property value or sales price Providing them this information triggers the requirement that a GFE be delivered within three days. The lender is required by RESPA (mortgage law) to give you a GFE and all the price guarantees that come along with it. Some charges cannot be raised, and same charges can only be raised 10% at closing, and the lender must reimburse your for items that were raised illegally.

4.!!DON’T&Focus!Only%on%a%Lender’s(Interest(Rate!

Mortgage companies make money several different ways; it’s not just about the interest rate. They can manipulate these potential profit avenues all day long to come up with their desired profit. The following sections describe the various ways mortgage brokers make money. Closing Costs - This includes fees for applications, credit reports, appraisals, processing, underwriting, document preparation, and so forth. These fees are sometimes referred to as "junk fees.” Origination Fees - Origination fees are usually one percent of the loan amount. This is simply

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a fee that the broker charges for writing the loan. Discount Points - Points are prepaid interest. They are usually only charged when the buyer wants an interest rate that is below market rates. Discount points are expressed as a percentage of the loan amount. One point is equal to one percent of the loan amount, three points is equal to three percent of the loan amount, and so forth. Example: If you are quoted an interest rate of 7.25 percent with zero points, but you have your heart set on an interest rate of seven percent, you could pay one point and buy the interest rate down to this amount. Yield Spread Premiums (YSP) - YSPs are rebates paid by wholesale lenders to mortgage brokers for writing loans that are above "par" or market interest rates. If the par rate is eight percent but your mortgage broker can get you to pay 8.5 percent, the wholesale lender will pay your broker an extra commission called a Yield Spread Premium. YSPs can help consumers who are short on cash. They can pay a higher interest rate and have their mortgage broker pay some of their closing costs. But mortgage brokers can make a lot of money with YSPs without the consumer's knowledge or consent, until the day of closing. Don’t!Let!Them!Make!a!Monkey!!Out$of$You!!$ Now let's talk about how you can get ripped off. It is tragically simple to rip off an uneducated consumer. Closing costs - some closing costs are legitimate fees for services performed by a third party. Your credit report and appraisal are examples of legitimate fees - some of these fees are collected up front. Some

legitimate fees like fees for processing are collected at closing. Are all other fees junk fees? It is impossible to say. There are an endless number of ways that predatory lenders can manipulate closing costs. They can waive most of your closing costs and charge you a higher interest rate (you still pay, of course, just not up front). They can charge you for services that are never performed. They can charge you $400 for an appraisal that costs $250. Origination Fee - There are legitimate costs associated with loan origination and your lender is entitled to make a fair profit. To charge a 1% origination is fine, BUT to charge a 1% origination fee in conjunction with inflated or fabricated closing costs and premium interest rates could be considered excessive. Discount points - Points paid for their stated purpose - to reduce the consumer's interest rate are fine. BUT, a dishonest lender can quote you a certain rate at the time of loan application and produce something quite different at the closing table. For example, you may be told that because of a past credit problem you don't qualify for the best rate. You are 'forced' to either buy down the interest rate by paying additional discount points, or you agree to a higher rate, in which case the broker receives a rebate in the form of a Yield Spread Premium. Yield Spread Premiums - If your loan officer can get you to pay a higher than market interest rate, they get a 'rebate' called a Yield Spread Premium. Here's what happens. You agree to a 30-year loan at 6.5%. Since interest rates change daily, your loan officer won't lock in your interest rate right away. They will 'float' your loan until there is a little dip in rates and then they will lock in your loan - let's say at 6.25%. Since your loan

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officer has you committed to pay 6.5%, he/she will get an extra commission for selling you a loan at a higher than market interest rate. These commissions are often in the multiple thousands! An upfront and ethical loan officer would have rebated YOU the YSP or given you the 6.25% interest rate. Since the lender is not required to disclose this extra profit to you until closing, you are none the wiser until it is too late to do anything about it. YSPs provide a useful option to some borrowers. For those with little cash, YSPs make no-cost mortgages possible, on which settlement costs are paid by the lender. For those who expect to be in their house only a few years, YSPs permit a favorable exchange of higher rate for lower fees. BUT, in the hands of unscrupulous lenders, they can cost the borrow thousands and thousands of dollars. How can all this happen? Easily, unfortunately. Mortgage brokers are regulated by RESPA and the Texas Savings and Loan Department, but it's tough to enforce the rules, and even educated consumers are very easy to manipulate. The system is broken and there is no easy fix. The best thing you can do is to educate yourself and hire an Exclusive Buyer Agent who will recognize fraud when they see it; chances are you won't. The bottom line is that you MUST take the time to learn how lenders get paid, how you can recognize fraud when you see it, how to structure a loan that will help you achieve your financial goals, and how to find a great lender to help you. And, as already mentioned, hire an Exclusive Buyer Agent to represent you.

5.#!DON’T&Waste!Time$on$Short%Sales!or#Foreclosures!

It has been said that 91% of first time homebuyers are looking for foreclosures or short sales. These buyers mistakenly assume that they are going to be able to find the home of their dreams for .50 cents on the dollar. It doesn’t really work that way. First, homes that have been foreclosed upon are often in horrible condition. The bank is the seller, and they have no information to pass along to you about the history of the house. You are forced to sign a thousand documents holding everyone involved (Realtors, inspectors, mortgage companies, title companies, insurance companies, etc.) harmless if you discover a major problem with the house. You have to spend hundreds of dollars on an inspection, before even knowing if the house is really worth owning. Imagine touring a home that has the plumbing and electricity turned off. After getting your offer accepted, you pay for the utilities to be turned on and hire an inspector, only to learn that there is a major problem with the plumbing system. The house is being sold “as is”, and the seller (the bank) won’t make any repairs. You’ve just wasted hundreds of dollars if you do the smart thing, which is to walk away. My experience with foreclosures has demonstrated to me that it is difficult to make the math work. Let’s say there is a bank owned property (foreclosure) that interests you, that the sales price is $200,000 and you estimate that the home needs roughly $35,000 worth of repairs and improvements. Your Realtor analyzes the market for you and determines that homes of similar size in good

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condition sell for an average of $245,000. Assuming you do not have any unexpected surprises, you fix up the house and make a $10,000 profit, before selling expenses. Is $10,000 enough to justify the substantial risk and effort involved with buying properties that are typically in poor condition? It is very difficult, in my opinion, to buy a foreclosed upon house cheap enough to make it worth the trouble and to justify the risk. In a short sale, the seller is trying to sell the home for less than what they owe, so they need to get the banks approval to sell. Buyers can wait for months for a bank to approval the sale, and in the mean time they miss out on dozens of other properties. Don’t!Let!Them!Make!a!Monkey!!Out$of$You!!$ If you want to buy a home below market and fix it up, there are always plenty of homes on the market that are dogs. Tell your Realtor that you are interest in ‘fixer-uppers’ or homes that need ‘TLC’. Absolutely avoid homes that have structural issues like foundation problems; leave foundation repairs to the investors. You can buy a house below market and get some ‘sweat equity’ without assuming so much risk. If you do decide to focus your search on foreclosures, hire a Realtor that is a foreclosure specialist. !!6.!!DO!Read"Your!Contracts"and"Disclosures!

Unless someone is holding a gun to your head and forcing you to sign a contract, you are bound by the documents you sign. Most, if not

all, states have taken extraordinary steps to protect the consumer in real estate transactions, but they can’t protect people from their own laziness and stupidity. A contract is legal and binding; it’s not a “pinky swear”. You are responsible for the terms of the contracts you sign. Don’t!Make!a!Monkey!Out$of$Yourself!!! Read and understand every single thing you sign. If there is something you don’t understand, ask your agent or loan officer to explain it to you. It is imperative that you understand the terms of your purchase contract and mortgage documents. Know what’s included in the sale, when your contingencies end, what “out” clauses you have, etc. If you end up in a bad situation because you didn’t understand the terms of the contract, or because you misunderstood what your agent told you, you have no one to blame but yourself! !7.!!DO!Understand!the$Difference$Between&Market&Value&and&the&Tax$Assessed$Value!(TAV)!

Market Value and Tax Assessed Value are apples and oranges. A TAV is the value of a property based on the valuation by your local government. Some tax authorities value the property based on the sales price of the home (market value), and some tax authorities use a different formula. For example, some require that the TAV is no more than 70% of the market value of the home, so if a house sold for $200,000, the TAV is $140,000. Market Value is a comparison of all the homes in a specific area that are of like size and condition. If, for example, you’re buying a

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home in Villages of Coppell, your Realtor pulls from the MLS homes that were sold in the past four to six months, that were close to the same square footage, and were not sold under duress (like foreclosure). Many homebuyers mistakenly believe that if they are paying more than the tax value for a home, they are overpaying. Wrong, wrong, wrong. Market value has nothing to do with Tax Assessed Value. Don’t!Make!a!Monkey!!Of$Yourself!$ Determine the value of a property based on Market Value, not Tax Assessed Value. You won’t really get ripped off if you don’t, but you’ll rip yourself off. You might walk away from your dream home because you mistakenly assume the house is overpriced. NOTE: Zillow Zestimates are inaccurate to the point of being absolutely worthless. No one, even Zillow, stands by the algorithm that they use to determine the price of a home. Ignore all Zestimates, although their national trend reports have value. The only way to accurately determine the value of a house is through your agent or appraiser.

8.!DON’T&House&Hunt&First&and&Hire!an#Agent#Second!

Here’s how unsophisticated buyers find their agent. They start looking at homes on Zillow or Realtor.com, find one that they like, and then click on a Realtor’s ad to schedule a showing. Or, they call off of a yard sign, as previously discussed. What they don’t know about house hunting on the Internet is that new, inexperienced agents

pay thousands of dollars to make themselves appear credible. Zillow, Realtor.com, Trulia, and all the others make their money selling buyer and seller leads to Realtors. A Zillow “preferred” agent is simply the one willing to pay for the title, and they pay plenty! These agents “fake it till they make it”. Don’t let them “fake” it at your expense. !Don’t!Let!Them!Make!a!Monkey!!Out$of$You!!$ When you’re serious about buying a home, hire an agent to represent you. The highest level of representation available is through an Exclusive Buyer Agent. EBAs represent homebuyers only, so there is no conflict of interest to jeopardize your negotiating position. They are the ‘Cadillac’ of Realtors for homebuyers. Go to www.NAEBA.org to get a referral to an EBA in your area. Note that HelpUBuy America does not make any money for promoting the services of Exclusive Buyers Agents or NAEBA. It is simply our mission to protect the rights of homebuyers from predatory lenders and realtors. !!9.!DO#Communicate#with#Your$Agent!by!Email!

Smart Realtors communicate with their clients mainly through email. Why? It helps to have a written record of conversations with clients. Fewer errors are made when an agent work with multiple clients, and it helps to keep assistants/co-workers in the loop. For buyers, it’s important to communicate in writing because buying a home is complicated and new. You can’t possibly retain and understand all the information that you are given on the phone. You are going to be expected to adhere to specific timetables after

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you’ve found a house, and you are going to have to talk to your lender about the specifics of the property. It’s easier to stay organized and to be clear of what is expected of you when you receive your instructions in writing. And, in the event you are working with an unscrupulous professional, you have hard copy documentation of your claims against them. The process is just more efficient when everything is reduced to writing.

!10.!!DO!Understand!Realtor'Incentives!

A lot of homebuyers don’t realize that sellers offer incentives to the Realtor who brings them a buyer. The bonus can range anywhere from a Starbucks Gift Card to an extra $5,000 to a new Mercedes! By law, your Realtor has to disclose this bonus to you but when they do, it’s either when you are writing a contract or at closing, when you’re already psychologically committed to buying a house.

A good buyer’s agent owes the buyer undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability. Encouraging a buyer to purchase a particular home because they get a nice bonus for doing so falls into the “scum sucking pig” category. Some Realtors justify this behavior by claiming that it is not the buyer’s business how much money they make. In fact, it is your business. It’s your money and your financial future.

Don’t!Let!Them!Make!a!Monkey!!Out$of$You!!$

You will no doubt be asked to sign a buyer’s representation agreement of some kind when you hire an agent. The terms of these agreements are always negotiable. Specify in your agreement that all agent bonuses are to be passed along to you. Negotiate their fee up front, and put it in writing. !

Buy$the$Book!

Learn how to buy a home without getting ripped off! Written as a guide for first time homebuyers or anyone in the market for a new home, Buying a Home: Don't Let Them Make a Monkey Out of You shows you how to avoid the financial traps and pitfalls that the real estate and mortgage industries have set for you. An Amazon best seller, it’ll be the best $7 you ever spend! Available in paperback and for the Kindle at Amazon.com.

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HelpUBuy America is a flat-fee Exclusive Buyer Agency. Our fee is the same whether you buy a $150,000 home or a $900,000 home, and since our commission is paid out of the seller's proceeds at closing, there is no additional cost for our services. Not only do you get the highest level of buyer protection available, you can save thousands and thousands of dollars at the same time. If you are purchasing a home in the Dallas/Ft. Worth area, we’d love to assist you. Learn more at http://www.HelpUBuyAmerica.com. !!!