Home Buyers

Buyer Information
Buying a home can be one of the most important decisions in a persons life. Assembled below are some helpful resources to help you in the buying process.
The Basics
Why Use a Real Estate Agent

It’s always a good market in real estate — when you know what you’re doing. Structuring transactions, arranging financing and finding the right buyers are some of the keys to success. There are few entities that know as much about the trends in today’s market as your local real estate agent or broker. Real estate has become a very complicated business. Selling (or buying) a home can be one of the most important financial transactions in your life. That’s why it pays to work with a professional who specializes in this field — a licensed real estate agent or broker.

Becoming a licensed agent or broker requires thorough training and examination. Several states, including California, require continuing education in real estate for license renewal. These specialists are compensated on their ability to sell properties quickly and cost-efficiently — and their expert abilities are chargeable only when a transaction is complete.

Why It Pays to Use a Professional

When you use an agent, you’ll get the benefit of professional experience from the moment you consider selling your house. Your agent will help you establish a fair market value from his or her daily dealings in your neighborhood, and arrange financing terms that make it easier to obtain a quick sale in today’s market — helping you receive the equity in your home.

If you wish to participate in financing the purchase of your property, your agent or broker can structure a workable plan that helps reduce risk from unusual terms — and give you an estimate of the anticipated yield from carrying a property-secured financing plan.

Real estate agents are professionals at marketing properties — that’s their job. They can choose the media — and the message — that brings interested prospects to your home. They’ll interview and qualify buyers for you. They’ll use their sales skills and negotiating techniques to help you receive the best possible return on your sale.

Every brokerage office has a steady stream of prospects that no individual can match. National referral networks and multiple listing services also help to reach buyers from out of town — or out of state. Many corporate relocation clients may be working with a broker before a move is made.

When you work with an agent or broker, they will follow-up with other agents who have shown your property and share their constructive comments on cosmetic repairs, financing arrangements, or re-evaluating your list price.

An agreement between buyer and seller is just the beginning of a final transaction. From that point on your agent or broker can handle the details and paperwork necessary to make it complete: from building and termite reports to fire insurance and closing arrangements with the escrow company, title company or closing attorney.

As an expert in real estate, your agent or broker will give you advance estimates of your closing costs and net proceeds from the sale, as well as keeping you informed of the details to assure a smooth and timely closing.

So, Where Do You Find a REALTOR®?

Like finding any good professional, the best way to locate a REALTOR® is through recommendations from friends or those who have bought or sold homes recently. Ask for references and check each thoroughly. Also, interview several REALTOR® before you decide on one.

It’s important to find a professional who is a REALTOR®. Why? A REALTOR® is someone who, as a member of the local, state, and national trade associations, adheres to a strict code of ethics. Recently, the National Association of REALTORS® commissioned a nationwide survey to determine whether REALTORS® were doing their job professionally. The results were impressive: 97 percent of respondents indicated they received “excellent” or “very good” service from their REALTOR®.

If You’re Selling a Home

Here’s a Quick Read on How a REALTOR® Can Help You Realize Your Goal. You probably know that working with a REALTOR® is an indispensable part of selling your home. For one thing, your REALTOR® can list your property in the Multiple Listing Service (MLS), providing your home with incomparable exposure and ensuring you have as many REALTORS® as possible helping to find a buyer. But that’s not all a REALTOR® does to market your home. He or she knows how to specifically target advertising to reach buyers for your home, and uses all the marketing tools available to ensure that your home is sold expediently. Additionally, a REALTOR® conducts a variety of other marketing efforts on your behalf, from holding open houses and handling phone inquiries to showing your home to the prospective buyers.

What does a REALTOR® do for you besides find buyers? Plenty. A REALTOR® provides information on local market conditions to help you price your property realistically and fairly, and keeps you abreast of changes in the market which may affect your property. And let’s face it: buying or selling a home means paperwork, lots of it. When it comes to closing escrow, a REALTOR® can be invaluable, leading you through the paper trail with a steady hand, and familiarizing you with escrow, insurance, property disclosures and inspection procedures, to name a few.

If You Are Buying a Home

For most of us, a home is the single biggest purchase in our lives. The enormity of the financial transaction aside, finding the right home to fit our particular needs and wants is no easy undertaking. Just as you wouldn’t buy a car, computer or camcorder without doing some research into various models and prices, you shouldn’t consider purchasing a home without some expert advice and guidance. Though some people may think of using the services of a REALTOR® only when selling their homes, a REALTOR® can be invaluable when buying one as well. For instance, a REALTOR® can help you determine how much home you can afford based on your financial situation, help you get prequalified for a loan, and even inform you about available financing options.

A REALTOR® also is an expert on the neighborhood, and can provide detailed information about schools, transportation, local taxes and community characteristics. Using a REALTOR® also means gaining access to homes listed in Multiple Listing Service (MLS), an important marketing tool used by REALTOR® to inform other REALTOR® about available properties. That means a REALTOR® can give you information about a wide range of available homes from which to choose.

When it comes to finding out if you’re paying too much, a REALTOR® can provide you with market analyses comparing asking and selling prices of homes in the neighborhood. Finally, a REALTOR® can serve as the liaison between you and the seller, bringing to the table negotiating expertise and knowledge about required disclosures and the housing market.

When You Make the Sale
A vital part of any sale is title insurance. Lenders usually require a loan policy to protect their interests, and buyers need an owner’s policy to protect their equity. Be sure to ask your agent or broker for protection from a reputable Title company.
Getting Pre-Qualified – Types of Loans – Closing Costs – Taxes
Getting Pre-Qualified
Most Real Estate Agents and Lenders recommend that home buyers get pre-qualified before selecting a home to purchase. This way you will be prepared to preview and negotiate your home purchase with confidence.
Types of Loans
  • Adjustable Rate Mortgage
    Adjustable rate mortgages have an interest rate that is adjusted at certain intervals based on a specific index during the life of the loan.
  • Balloon Payment Loan
    A fixed rate loan that is amortized over 30 years but becomes due and payable at the end of a certain term. May be extended or may roll-over into another type of loan.
  • Buy-Down Loan
    Buy-Down Loans are fixed rate loans where the interest rate and the payment are reduced for a specific period of time by passing the interest up front to subsidize the lower payment.
  • Community Home Buyers Program
    A fixed rate loan for the first time home buyer with a low down payment usually 3-5 %, no cash reserve requirements and easier qualifying ratios. Qualification is subject to borrower meeting income limits and attendance of a four hour training course on home ownership.
  • Conventional Loan
    Conventional loans are sometimes more lenient with the appraisal and condition of the property. When you are buying a “fixer upper” you may need to use a conventional loan.
  • FHA Loan
    FHA loans are insured by the Federal Housing Administration under H.U.D. They offer a low down payment and are easier to qualify than conventional loans.
  • Fixed Rate Loan
    A fixed rate loan has one interest rate that remains constant throughout the life of the loan.
  • Graduated Payment Mortgage
    A fixed rate loan that has payments starting lower than a standard fixed rate loan, which then increases by a predetermined amount each year for a set number of years.
  • Mortgage Credit Certificate
    A first time home buyer program is subject to purchase price and income limits to some areas. It is actually a special tax credit and assists the buyer in qualifying for many loan programs.
  • Non-Qualifying Loan (assumable)
    Non qualifying loans are pre-existing loans which can be assumed by a buyer from the seller of a property without going through the qualifying process. The buyer pays the seller for their equity and then starts making payments.
  • VA Loan
    VA loans are guaranteed by the Veterans Administration. A veteran must have served 180 days of active service. The maximum VA loan is currently $203,000 with no down payment.
Supplemental Property Taxes

The Title Consumer
Understanding Supplemental Property Taxes

Supplemental property taxes have been with us since July of 1983, but you and your neighbors still may not know what they are, what they do, and how they affect you and your property. To help you better understand this confusing subject, below you will find answers to some of the questions most commonly asked about supplemental real property taxes.

Q: When did this tax come into effect?
 The Supplemental Real Property Tax Law was signed by the Governor in July of 1983 and is part of an ambitious drive to aid California’s schools. This property tax revision is expected to produce over $300 million per year in revenue for schools.

Q: How will Supplemental Property Taxes affect me?
: If you don’t plan on buying new property or undertaking new construction, this new tax will not affect you at all. But, if you do wish to do either of the two, you will be required to pay a supplemental property tax which will become a lien against your property as of the date of ownership change or the date of completion of new construction.

Q: When and how will I be billed?
 “When” is not easy to predict. You can be billed in as few as three weeks, or it could take over six months. “When” will depend on the individual county and the workload of the County Assessor, the County Controller/Auditor and the County Tax Collector. The assessor will appraise your property and advise you of the new supplemental assessment amount. At that time, you will have the opportunity to discuss your valuation, apply for a Homeowner’s Exemption, and be informed of your right to file, an Assessment Appeal. The county will then calculate the amount of the supplemental tax and the tax collector will mail you a supplemental tax bill. The supplemental tax bill will identify, among other things, the following information: the amount of the supplemental tax and the date on which the taxes will become delinquent.

Q: Can I pay my Supplemental Tax Bill in installments?
 All supplemental taxes on the secured roll are payable in two installments. The taxes are due on the date the bill is mailed and are delinquent on specified dates depending on the month the bill is mailed as follows: (1) If the bill is mailed within the months of July through October, the first installment shall become delinquent on December 10 of the same year. The second installment shall become delinquent on April 10 of the next year. (2) If the bill is mailed within the months of November through June, the first installment shall become delinquent on the last day of the month following the month in which the bill is mailed. The second installment shall become delinquent on the last day of the fourth calendar month following the date the first installment is delinquent.

Q: How will the amount of my bill be determined?
 There is a formula to determine your tax bill. The total supplemental assessment will be prorated based on the number of months remaining until the end of the tax year, June 30.

Q: Can you tell me how the proration factor works?
 The supplemental tax becomes effective on the first day of the month following the month in which the change of ownership or completion of new construction actually occurred. If the effective date is July 1, then there will be no supplemental assessment on the current tax roll and the entire supplemental assessment will be made to the tax roll being prepared which will then reflect the full cash value. In the event the effective date is not on July 1, then you may wish to contact your County Tax Assessor’s office.

Q: Will my taxes be prorated in escrow?
 No, unlike your ordinary annual taxes, the supplemental tax is a one time tax which dates from the date you take ownership of your property or complete the construction until the end of the tax year on June 30. The obligation for this tax is entirely that of the property owner.

Reasons To Get Pre-Qualified

With pre-qualification you can determine which loan program best fits your needs. (List of loan programs to follow)

You will know exactly how much you are qualified for. It’s no fun to find your “ideal home” and then find out you can not afford it.

It allows you to see what the down payment and closing will be.

If you are a first time homebuyer, you may be able to qualify for a special first time homebuyer program, saving money or allowing a larger purchase price.

Meeting with your lender to preview your financial options prior to shopping for your new home affords you the opportunity to consider what you really want and need before the emotions of purchasing your home engage.

Closing Costs
  • Title Insurance Premium
    Fee paid by an individual to insure he has a marketable title or-in the case of a lender-to insure their lien position.
  • Real Estate Commission
    Fee paid to a real estate broker for services rendered in listing, showing, selling and consummating the transfer of property.
  • Transfer and Assumption Charges
    Fees charged by a lender to allow a new purchaser to assume an existing loan.
  • Recording Fees
    Fees assessed by a county recorder’s office for recording the document of a real estate transaction.
  • Loan Fees
    Fees charged by a lender in connection with the processing of a new loan. These may include points, origination fee and credit report.
  • Escrow Fees
    Fees charged by a title and/or escrow company for services rendered in preparing documents necessary in the consummation of a real estate transaction.
  • Additional Settlement
    Taxes, insurance impounds and interest prorations, termite inspection fees, tax prorations. Title or escrow company personnel will review and explain your closing statement when you prepare to close your transaction and take ownership of your new home. 5 year short term rate (20% savings in title fees) applies to any property which has had a title insurance policy issued in the past five years.Planning to resell within 2 years? Pay an additional 10% of the title fee at escrow’s close. Sell within 2 years and 100% of the original fee will be credited. The complete title fee cost? Just the 10% of the original title fee. This is an attractive plan for investors and relocation prospects. Refinance rate is 70% of base rate. (Short term rate does not apply).It’s the big day. You go to the title company, sign your name on the dotted line hand over a check and prepare to take ownership of your new home. It’s also the day that you and the seller will pay “closing” or settlement costs on an accumulation of separate charges paid to different entities for the professional services associated with the buying and selling of real property.
Relocation Tips
What to do before moving day

Schedule rental truck and/or moving company at least six weeks in advance.

Begin gathering packing supplies and start packing early.

If you are renting, notify your landlord or management company at least 4 weeks in advance.

Contact utility companies and schedule shut off dates. These include water, electricity, gas, cable, trash service, telephone, etc.

Call your local phone company at least two weeks before your move to either transfer your number or request a new number for your new home.

Have gas, electric and water services connected at your new residence the day before you move in. Have services scheduled to be turned off at your old address the day after you move.

Arrange for cable installation at your new address.

Notify post office of new address and mail change of address forms at least one month in advance.

The following will be forwarded at no charge for the period indicated:

  • First Class, Priority and Express Mail: 12 months unless otherwise requested by mailer.
  • Newspapers and Magazines: 60 days.
  • Packages weighing 16 ounces or more: 12 months locally (you pay forwarding charges if you move outside the local area. If you do not want this class of mail forwarded, contact your local Post Office).
  • Mail Address Change Notification cards to people and businesses who send you mail.

If you have pets and/or plants, you need to arrange for their transfer. Most moving companies cannot move them for you.

If you need to dispose of hazardous products, call 1-800-cleanup.

Last Minute Tasks for the Day of the Move

Pack a survival kit with enough essentials to tide you and your family over for at least 24 hours:

  • Personal needs – eyeglasses, medication, extra clothes, etc
  • Bathroom needs – towels, soap, toilet paper, etc.
  • Cleaning needs – sponges, cleaners, broom, dustpan, etc.
  • Kitchen needs – snacks, drinks, disposable utensils, cups, and plates, etc.
  • Basic tools – hammer, screwdrivers (phillips head & flat head), knife, tape, etc.
  • Payment for movers.
  • Keys and directions to your new home.
Specific Tasks You Don’t Want to Overlook

If you are traveling a great distance, have your car serviced 2 weeks in advance.

Make hotel reservations if you are traveling long distance or are unable to move in to your residence right away.

On moving day carry hard-to-replace items with you, such as jewelry, family photos, etc.

Make sure to back-up your computer files before you disconnect and pack it away.

Responsibilities at your future address

Arrange to register your children in new school(s).

Familiarize your children with their new environment.

Put together your childrens’ and your own health records – keep these handy during your move.

Look for new doctors and dentists.

Update or open new bank accounts.