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Does it pay to read The Real Estate Update? Yes! Country Hills homebuyers who purchase their property through Chuck Chambers and request the Buyer's Premium Package, will receive...
- 20% Escrow Fee Discount
- 20% Title Fee Discount
- 20% Home Inspection Discount
- FREE Home Warranty
- FREE Appraisal Service
- FREE Notary Service
THE BUYING PROCESSEvery home sale is unique.
Despite this fact, most home sales in our area travel through a relatively predictable process and keeping on track can assist in the overall goal of completing a smooth transaction.
CHOOSING AN AGENT ESTABLISHING A TIME FRAME BECOMING PREQUALIFIED SETTING A PRICE RANGE
DETERMINING LOCATION LOOKING AT PROPERTIES MAKING AN OFFER COUNTER OFFERS OPENING ESCROW
PROCEEDING THROUGH ESCROW DISCLOSURE FORMS BUYER'S INSPECTIONS APPRAISAL TERMITE CERTIFICATION
CLOSING THE ESCROW FOLLOW UP
CHOOSING AN AGENTThe real estate agent you choose to work with can help
simplify the buying process significantly. Think of the agent as a symphony "conductor". There are a host of "instruments" involved in the purchasing of a home and coordinating all of the variables in the correct fashion can make a world of
differnce as to how the music "sounds" in the end. An experienced agent will usually resolve potential issues before they become problems, keeping the music beautiful from begining to end. Many buyers think about hiring a real estate
"company" to assist them in purchasing a property. Although the company is important, the bigger element in a successful transaction is the agent chosen to do the job. Some of the questions to consider when choosing an agent include...
is the agent full or part time? Does the agent have sufficient
experience to represent me properly? Will I enjoy working with this person? There are many other variables to consider when choosing an agent. When it comes to developing a working relationship with the agent you are entrusting with the biggest financial investment of your life, it is a good idea to choose an agent that you are 100% comfortable with.
ESTABLISHING A TIME FRAMETiming can be critical when buying a home. Many different factors must be considered before actually starting the process. It is a good idea to start by determining when the buyer wants to be settled in their new home. From that point, a buyer can "back-step" the time frame to determine when the process should start. As an example, if a buyer has the goal of moving into a property by January 1, 2000, it would be necessary to have a home in escrow by November of 1999. To have a home in escrow by then, a buyer should have been viewing various properties in October, to fully understand the current real estate market. As mentioned below, it is a good idea to get pre-qualified for a home loan in order to provide a price range of properties to look at. So, taking this back-step process one step further, it might be a good idea to get the pre-qualifying process rolling sometime in September, to be prepared to look seriously at homes in October. To summarize, a 90 day window of time is usually a safe period to get the ball rolling in most cases. Of course, this process can be rushed and shortened considerably. Some people make the decision to buy a home one month and are cleaning windows in the new home 30 days later. However, like many things in life, rushing can cause stress and buying a home can be stressful enough without adding a crushing time deadline to the process.
BECOMING PRE-QUALIFIEDUnlike the real estate days of old where the seller crossed his or her fingers and hoped that the buyer would not have any problems obtaining the necessary financing, today's sellers take a strong look at a buyer's ability to buy before moving forward with a sale. In fact, this concept is now so engrained in the process that the standard Purchase Contract has a pre-qualifying clause built right in. Even though this commonly used contract allows a buyer a 7 day time frame to become pre-qualified, savvy buyers understand that getting pre-qualified before their offer is presented can help considerably during the negotiating process. Most sellers and seller's agents look forward to seeing this pre-qualifying in writing and it often accompanies the purchase contract at the time of the initial offer presentation. Taking this pre-qualification process to the next level, more homebuyers are now becoming pre-approved before they go house hunting. This loan approval gives the buyer's offer that much more credibility and has the added value of allowing the buyer the ability to close escrow in a relatively short time. Becoming pre-approved takes a bit more paper work than simply becoming pre-qualified, but the advantages usually make the extra effort well worth it.
SETTING A PRICE RANGE Pre-qualifying for a home lets a buyer know the maximum amount of the loan they are able to obtain for the purchase of a new home. However, even though the buyer has the capability to qualify for a loan of such amount, they may not have the desire to purchase a home at this upper end of qualifying. Every buyer is motivated by a unique set of circumstances and all of the variables should be considered before establishing a price range. Once a buyer has established the maximum amount they would like to dedicate towards housing costs, a general price range can be extrapolated from those figures. Total housing costs generally include payments on a new loan, payments for property taxes, and payment for fire insurance. Other variables might include monthly homeowner's fees for townhomes and condominiums and possibly P.M.I. (Private Mortgage Insurance) for home purchases with small down payments.
DETERMINING LOCATIONLocation, location, location! You have heard it before and you will hear it again. Location is one of the most important factors to consider before you begin looking for a new home. Factors used to determine an acceptable location include schools, weather, proximity to freeways, employment centers, shopping, and beaches. Once a general location has been determined, locations can then be narrowed down to specific neighborhoods in that particular community. The location of the home purchased is one of the few features a buyer is unable to change after the close of escrow, so it's importance cannot be over emphasized.
LOOKING AT PROPERTIESThe more properties a buyer looks at, the greater perspective that buyer can bring to the table when writing an offer on a property. On the other side of the coin, looking at too many properties in a short amount of time can be confusing. Looking at just a few properties per outing can help maintain some sense of perspective, while still allowing a diverse base of properties to choose from over the days or weeks of house hunting. After looking at a few homes, it is common for the details of the different properties to start "running together". To try to alleviate this problem, many buyers take notes on each property they view and sometimes attach a photograph of the exterior of the property to the notes and fact sheets for the property. It is generally not an acceptable practice to photograph the interior of a property without the consent of the owner in advance.
MAKING AN OFFER Now you are ready! You have done all of your homework and found the perfect house. It would be nice if it all came to a close here, but in actuality, this is where the important work begins. Before sitting down with your agent to write up the offer, it is a good idea to become familiar with the 6 page purchase contract. Key elements in the offer include sales price, deposit, down payment, financing, contingencies, escrow date, possession date, allocation of costs, inspections, disclosures and much more. One important element of the purchase offer that should not be overlooked is the expiration date of the contract. This date is critical, as the seller must respond to your offer prior to this date and time. If the time frame provided is too short, your offer might expire before the agents have had a chance to present it to the sellers. If the time frame is too long, the seller could hold the offer to see if any better offers come in. Purchase contracts in Los Angeles County follow a relatively specific set of regional traditions, such as who pays for the termite report and completion, city and/or county transfer taxes, and various other costs. A good agent will realize these traditional responsibilites and write up the original purchase contract with these normal terms included. Otherwise, these issues might have to be addressed in any subsequent counter offers, adding otherwise unnecessary terms to the contract being negotiated.
COUNTER OFFERS It is a rare purchase contract that accurately addresses all of the concerns of the seller during the initial presentation. Provided there is enough time, it is usually a good idea for the buyer's agent to contact the listing agent prior to writing up the offer, to obtain general feedback about the seller's needs. This brief but informative communication can go a long way towards the buyer writing up a "clean" purchase contract the first time around. Even still, a seller will often give the buyer a counter offer, to negotiate price, as well as some of the other variables in the offer. Just like the original offer written by the buyer, all counter offers have an expiration date, which can be a critical element of the contract. If the seller's counter offer expires before the buyer has the opportunity to respond in writing, the entire contract dies. It is also important to note that up until the time the seller receives notice that the buyer has signed the counter offer, the seller reserves the right to rescind the counter offer. Once all of the terms and conditions in the original offer and subsequent counter offer(s) have been agreed upon, the next step is usually to open escrow.
OPENING ESCROWThe escrow company is a neutral third party whose services are retained by the buyers and sellers to carry out much of the paperwork involved in the sale of a property. The fee for this service is based on the sales price of the property and generally buyers and sellers each pay an equal escrow fee. The escrow instructions drawn up by the escrow company are usually a direct reflection of the terms and conditions previously agreed upon by the buyer and seller in the completed purchase contract. The time frame by which these instructions need to be signed and returned to escrow, along with the time frame by which the buyer must place the deposit in escrow, is established in the original purchase contract. This is usually within a few days of the final acceptance of the offer. Escrow is a bi-lateral agreement which becomes active upon the receipt of the signed instructions from both buyer and seller. In addition to providing the buyers and sellers with the various escrow papers, the duties of the escrow company include opening the title order, providing demands for the payoff of any existing liens against the property, and organizing many additional paperwork needs.
PROCEEDING THROUGH ESCROW The escrow company assists in the organization of many papers throughout the course of the escrow period. These duties include, but are not necessarily limited to, ordering a title search and providing the parties with a preliminary title search, providing the termite inspection and/or completion papers to the interested parties, providing a demand for the payoff of existing loans against the property, maintaining a line of communication with the buyer's lender to assist in providing for the buyer's loan, and much more.
DISCLOSURE FORMS The list of disclosure forms required for a residential real estate transaction seems to increase each year. Although a few disclosure forms may be provided by the escrow company as a courtesy, most of the required forms are provided by the real estate agents involved in the transaction. Most agents try to have these forms signed by the buyer and seller during the first week of escrow. The forms necessary for transferring the title of a property in Los Angles Country include: * REAL ESTATE TRANSFER DISCLOSURE STATEMENT
* LEAD BASED PAINT HAZARDS DISCLOSURE
* SMOKE DETECTOR STATEMENT OF COMPLIANCE
* WATER HEATER STATEMENT OF COMPLIANCE
* EARTHQUAKE SAFETY BOOKLET
* RESIDENTIAL EARTHQUAKE HAZARDS REPORT
* ENVIRONMENTAL HAZARDS BOOKLET
* NATURAL HAZARD DISCLOSURE STATEMENT
* DATA BASE DISCLOSURE FORM
BUYER'S INSPECTIONS A buyer's purchase of a home is usually contingent upon the buyer's approval of the condition of the property and most buyers hire a professional inspector to review the property. Amenities or improvements that require specialized knowledge, such as a pool, spa, roof, asbestos insulation, radon or a geology inspection, may also be inspected during this inspection time frame. These inspections are usually paid for by the buyer and the inspection is generally performed during the first week of escrow. Most inspections last 2 to 3 hours and a written report is given to the buyer, either upon the completion of the inspection or shortly thereafter. If the buyer discovers conditions of the property that are unacceptable, the buyer has the right within the time frame specified in the purchase contract, to request that the seller correct the items in question. Depending upon the particulars of the contract, if the sellers refuse to correct the items, the buyer usually has the right to cancel the agreement and receive the entire deposit back. The buyer also has the option to go forward with the sale and accept the conditions that were discovered during the inspection.
PROPERTY APPRAISAL If new institutional financing is a part of the purchase price, the lender will usually require an appraisal of the property to be included in the loan package. This helps the lender determine the value of the property and to confirm that the value of the property is within the loan-to-value ratios determined at the inception of the loan. The buyer often pays for the appraisal up front when the loan package is initiated. The appraiser usually contacts the listing agent (the agent representing the seller) within the first week or two of escrow to arrange a time to appraise the property. If the amount of the loan is a large percentage of the sales price and the amount of the appraisal is important, the listing agent will quite often meet the appraiser at the property and provide the appraiser with recent comparable sales that justify the sales price. Assuming the property is sold within a reasonable range of these comparables, the value of the appraisal is usually the same as, or very close to, the sales price agreed upon by the buyer and seller. If an appraisal comes in low, it may still be possible to increase the initial evaluation, if the parties to the transaction can provide additional comparables to help the appraiser justify the sales price.
TERMITE CERTIFICATION Most buyers want a property that is free from termites and other issues associated with a termite certification. The cost of the termite inspection, as well as the cost of the work necessary to provide a termite certification, is usually the seller's responsibility. Although the elimination of drywood and subterranean termites are two elements of a termite certification, other issues must also be addressed. Dry rot, moisture conditions, termite damaged wood, earth to wood contact, faulty grade conditions, and debris under a home are all termite certification conditions. If the buyer and seller have agreed that Section 2 termite work is the responsibilty of the buyer, as is usually the case in Los Angles County, the buyer may choose to ignore these Section 2 recommendations or have them repaired at the buyer's cost. Once the work has been completed, the "Notice of Work Completed" is provided by the termite company to escrow, who in turn, provides copies for the parties to the transaction, including the lender.
CLOSING THE ESCROW During the last week of escrow things get very busy. By this time the buyer has obtained a formal loan approval and the escrow officer has requested the loan documents from the lender. Once the buyer has signed and returned the loan documents and delivered the balance of the down payment (certified funds), escrow is ready to close. The recording of the Grant Deed usually takes place at 8:00 a.m. on the day after the buyer's loan has funded. Confirmation of the recording is usually received by noon unless the closing takes place at the end of the month, which notoriously gets very busy. The buyer's possession of the property follows shortly thereafter.
FOLLOW UP After the escrow has closed and the escrow officer has had a chance to balance the file, the Buyer's Final Settlement Statement will be available, along with copies of various papers such as the Home Warranty Confirmation. It is usually a good idea to keep all of the home sale papers in one file, where they can be accessed and reviewed whenever necessary.
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