Thinking of Buying?

What you need to know before you buy a home today !

Ten Valuable Questions & Answers to Guide You

Q. I've decided to buy a home. I haven't purchased a property in many years, or I am a first time buyer. Where do I begin?

A. You know the saying, "You've got to get your ducks in a row?". Well, that was never more true than in the home buying experience. You're a busy person and you want to do this right. So, we recommend not to start running around to open houses when you do not know, for sure, what kind of mortgage you will qualify for. Even if your credit scores are high and you have a nice income, today's loan qualification rules and regulations have probably never been more stringent. Talk to friends, family member and co workers. Obtain some referrals on local direct lenders and mortgage brokers and start making calls. Ask them about the qualification process, costs and loan rates. Have the person you feel most confident with prepare a loan pre approval letter or certificate for you. Now, you are almost ready to speak to a realtor.

Q. What should I do before I speak to a realtor?

A. Put together a list of features you would like in your "ideal home".. Include "would like" and "must haves". Be prepared to not get everything you want. Even buyers of upper end properties often do not get everything they want in the home they purchase. Think in terms of things that you can change or add later on. Concentrate on location and value. This list will greatly assist your realtor in evaluating the best possible homes to show you.. Expect your realtor to also ask you a series of questions to access you needs including why are you moving, your timeframe, your employment location, your childrens' needs, your financial situation and future plans.

Q. How do I select a realtor?

A. Again, ask your contacts for referrals. Rapport with a person is important, as well as experience. Remember, this is one of the most expensive purchases in your lifetime, so be selective in who you choose. Check references and prepare questions for your interview process. Remember, if you were selecting a contractor, accountant, attorney, etc. you would probably do the same thing.

Q. How should I best prepare for for my outings with a realtor?

A. Dress comfortably. Bring water or an appropriate drink - especially in hot weather. Bring a notebook/pen to take down details on each home and identify the property with a feature(s) that will help you remember it later. Ask you realtor to run MLS (multiple listing service) descriptives on each home you are going to see. After the first three homes, it becomes more difficult to remember what you saw and which home had what! Make a list to fill in regarding the schools, parks, access to shopping and freeways, and other features that are important to you.

Q. I'm very interested in two homes I viewed with my realtor. What's next?

A. Ask your realtor to run a comparative analysis of homes that have sold in the neigborhood, as well as anything currently in escrow. Have your realtor do some more in - depth research for you. Find out the seller's motivation. How long has the house been on the market. Has it had price reductions. Have there been any offers or are there currently any offers. What are the seller's expectations regarding their price (not all sellers, or agents, will reveal this information, but it doesn't hurt to ask).

Q. I want to make an offer on a particular home. How should I prepare and what should I discuss with my realtor before the offer is written?

A. First, you need to compile a few pieces of information to accompany your offer - ideally, a letter of loan pre approval from your lender, proof of funds for your down payment and closing costs, and a credit report which includes your FICO scores. These three items will go a long way in support of your offer. Three main decisions for your offer include your down payment, your escrow period and your price offer, based on a strategy session with your realtor. Your realtor will go over the offer paperwork with you and explain your other options, including inspection period, escrow and title company, home warranty request, items included with the home, timeframe for seller's response, and other parts of your offer. Make sure you ask questions and fully understand what you are signing.

Q. My offer is accepted. What is the next step?

A. At this point, your realtor will open escrow and obtain a check from you for your "good faith deposit" to be delivered to escrow. You should ask your realtor for a list of what you will need to do in the upcoming days, and reiterate your deadlines based on the Purchase Agreement. You will need to complete a loan application with full requested documentation, if not already done so, select and schedule a professional home inspection, sign escrow instructions (various forms that escrow requires regarding your loan, vesting of title for your home, ordering of required reports/disclosures, and so forth) and select home insurance.

Q. I understand that I will have fees from both the escrow and title companies. What services do they perform for these fees? (Note: In the state of California, escrow companies handle most of the closing details. Other states require that an attorney handle these responsibilities).

A. The Escrow company represents both the buyer and seller; they are an independent body that handles the needs of both. Escrow fees may vary somewhat from company to company. Escrow will coordinate the steps needed to finalize the sale of your home. Initially they obtain the buyers' good faith deposit and place it in a trust account. They will order various reports and disclosures required by the city, county or state. These include a Preliminary Title Report and Natural Hazards Disclosure Report. They will initiate any amendments when a change is made from the original contract, that both buyer and seller need to approve. They will provide your lender with necessary paperwork and monitor the loan process. Other areas they coordinate include the certificate of completion on your Pest/Termite Inspection and government retrofitting requirements (i.e. The home must have an earthquake gas shut-off valve, a carbon monoxide detector, etc.). Once everything is in place, they will facilitate the recording of your purchase with the asssessors office. Other functions are also performed, but the above are some of the major functions they perform.

Q. What are closing costs and what do they include?

A. Closing costs are those fees incurred during your escrow period, and required when you purchase a home. The escrow company can provide you with a good faith estimate of those costs. Besides the escrow and title fees previously mentioned, your closing cost expenses may include - but are not limited to the following. Note that some of these fees may be paid by the seller, per your contract:

  • Loan Fees
  • Loan Appraisal Fee
  • Pest/Termite Company Inspection and necessary work
  • Agent Commissions
  • Fees on required reports
  • Homeowners Association Fees
  • Prorated Taxes/Home Insurance
  • Home Warranty
  • Retrofitting Costs

Q. How can I obtain more information on any of the above topics?

A. Your realtor can assist you with a multitude of materials that can offer more in depth explanations of the aforementioned processes. As well, do not hesitate to consult with your lender, your escrow officer, your title representative or your home inspector if you have any questions along the way. Remember, these professionals are working for you, and look forward to making this the smoothest possible experience for you!

(Note: The information provided above is not guaranteed. We recommend you seek further guidance from experts such as accountants, attorneys, lenders, home inspectors and other appropriate professionals regarding your real estate purchase. The information provided is designed to be applicable to buyers in the state of California).