California real estate laws specifies the responsibility and duty an agent has to the public by stipulating
"agency relationships". The law recognizes 3 types of agency "seller agency", "buyer agency" and "dual agency".
An agent actually represents you, the client, in either buying or selling. Whether buying or selling,
to represent you properly, the agent must disclose all material facts that could affect your decision and work
to get you the best possible outcome. They must always deal with you honestly and in good faith. They must also perform
their duty with utmost skill, care, integrity, honesty and loyalty.
Agents (both brokers and salespeople) are able to work with buyers as either a dual agent
(representing both buyer and seller) or as an exclusive buyers agent. The dual agency arises when the buyer decides to
buy a property that is listed by his/her agent or one that is listed within the same office as the buyer's agent.
The agent must disclose all material facts to BOTH parties. This means that the buyer must withold facts from a dual agent
that would put him at a disadvantage. For example, the buyer may want to see if he/she could buy a property below the listing price,
but be willing to pay more if another offer were to come in during negotiations. The buyer can not share this info with the dual agent because
dual agency requires that the facts must be disclosed to the seller. Since the buyer witholds this strategic negotiating
information from the agent, the agent will go into negotiations with the seller with a lower offer unable to compete with other offers
if need be. This cripples the agent's effectiveness and the buyer's chances of buying the home they want. It also hurts the seller
in a multiple offer situation since there is a buyer with ability and desire to pay more for the property, but that fact is
undisclosed to the dual agent.
The exclusive buyers agency agreement puts the agent to work exclusively for the buyer's best interests! In the same scenario as above,
the buyer may disclose his desire to pay more if a multiple offer situation arises. The buyer and agent could write up two
offers and formulate a strategy of presenting the low offer first. If another offer were to come in, the agent would be
authorized and instructed to present the second offer to assure that the buyer has the best chance of buying the home at the best price for the buyer.
A buyer's agent works solely on behalf of the buyer and owes duties
to the buyer which include the utmost good faith, loyalty and fidelity. The agent will negotiate
on behalf of and act as an advocate for the buyer. The agent must disclose to potential sellers
all adverse material facts concerning the buyer's financial ability to perform the terms of the
transaction and whether the buyer intends to occupy the property. A separate written buyer
agency agreement is required which sets forth the duties and obligations of the broker and the
client.
Typical questions to ask when discussing
exclusive buyer agency are:
- Will you point out all the negative aspects of each property as well as all the positive aspects to keep me fully informed?
- Will you provide information on comparable sales and help me to formulate an offering price based on current and actual market
conditions?
- Do you have a list of lenders, home inspectors, and insurance agents and other professionals that you have dealt with in the past and
that you can recommend?
- Will you show me all the homes on the market that meet my needs?
- Will you guarantee that any information I give you will be kept confidential?
- Will you guarantee me your undivided loyalty?
- Will you guarantee me you will not try to change your relationship with me to "dual agency" or any other form of agency that offers reduced levels of service?
- Can you guarantee me 100% loyalty 100% of the time?
- Will you work solely on behalf of the Buyer and represent the Buyer's best interests?
- Will you work to get the lowest possible price and the best terms for the Buyer, not the Seller?
Request more info ...
Get ready for your house hunting expedition by doing some planning ahead of time.
To prepare for your meeting with me to plan your house hunting, it's a good idea to so some planning
on your own. Take some time to think about the things that you feel are abolutely necessary to have in
your new residence. Although it is never possible to completely describe what you want, there are
always things that are uniquely important to you. It's crucial that I understand what these things are.
List the features that you want in their order of importance.
Type of residence - House, townhome, condo.
Style of residence - Two story, ranch, split-level, contemporary.
Location - Proximity to work, recreation areas and schools.
Schools - Ages of children and any special educational requirements they may have.
Financial - Must sell current residence, amount available for down-payment, maximum expense of ownership.
Space Requirements - Bedrooms, square footage, special requirements such as in-home office, space for
special hobby, garage space, finished basement, in-law apartment, etc.
Lifestyle - Entertain a lot, want minimum maintenance site for maximum liesure time, great deal of time is
spent at home with family activities, retirement community with total recreation package (pool, golf, tennis,
jogging, organized children's activities).
Special features - View, fenced yard, pool, horse facilities, handicap access, close to public
transportation.
After we have thoroughly discussed all of the things you want in your next residence, I will carefully select properties that could
be of interest to you. I promise to show you only those properties that are within the price-range you specify, in the areas
you specify, and of the style of your choosing.
As many of your needs and wishes as possible will be considered in finding the right communities and
properties for you to see. If you are uncertain about features of neighborhood and residence, I'll show you a
variety of each. Continually let me know what you like and don't like.
Keep in mind that in an active market the number of homes for sale at one time that fit your needs
may be limited. I will continually monitor the homes currently for sale and new listings that come on the market daily. By doing
this I give you the opportunity to be one of the first if not the first to see these new listings.
Ask Questions - About the neighborhood, the construction of the house, the schools, property
values in the neighborhood, how long will it take to get to work, why is this a good place to live, where do
I shop, where is the church.
Totally forget properties you didn't like - But tell me first why you didn't like them.
Take notes (and even a camera if you wish) - Looking at a number of properties can lead
to confusion about the features of each. After you have seen a property that might be a possiblity, jot
down a few things you liked about it to jog your memory later on.
Compare properties you have seen - Keep a ranking on paper or in your head of the three
best properites and rank them in order of desirability.
When you find the property you'd like to buy, make your offer as quickly as possible - If you
like the property, someone else probably will also. Don't delay in asking me to write your offer.
Type home: New______Resale______Other_______Condo________
Price range of present home:$_____________________Do you need to sell before you buy?________
Present Monthly Payment:$__________________
Preferred Monthly Payment:$__________________
Down Payment Available:$__________________
Style Preferred:$_________________________________________________________
Bedrooms:$__________________Baths____________Diningroom_____________
Family Room:$__________Fireplace_____________Air Conditining__________
Basement:$________Full_________Partial_________Finished________
Other:$________________________________________________________
Parking Requirements:Garage________Carport________Spaces_______Other______
Fence:____________Acreage___________Horses___________
Preferred Closing:$_________________________
Comments on special desires for new home:__________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
I will assist you in finding the right home. We'll look at -
Size,
Design,
Location,
Price range,
Neighborhood.
I will show you all homes available including - Other brokers listings, all new listings in the
multiple listing service (MLS), and new homes.
I will write your purchase contract and explain the elements of your offer - Price and terms,
inclusions/exclusions, possession, inspections, appraisal, loan process.
I will help you obtain financing - Recommend a lender, educate you about the loan process
and different types available, inform you of your ability to lock interest rates, set your appointment for your
application with a lender that offers the best loan(s) for your situation.
I will coordinate other professionals involved in your purchase - Inspectors, Appraisers,
Insurance, Title Company.
Things I cannot do (by law)
Give you tax or legal advise,
Guarantee that the seller or any professional will do what they promise,
Guarantee that school boundaries will not change,
Disclose confidential information.
Things you will need to do
Furnish all information and documents required by the lender,
Pay for credit report at application,
Provide earnest money when your home purchase agreement is written,
Arrange for your homeowners insurance policy prior to closing,
Transfer utilities into your name by possession date,
Bring funds to closing in the form of a cashier's check.
At the time an offer to purchasee is written, it must be accompanied by earnest money. This is
evidence of the fact that you are in earnest about the purchase of the home. Earnest money is
paid in the form of a personal check to be tendered to the listing brokerage with the contract and
deposited in the listing broker's trust account or an escrow company at listing company's direction, or an
earnest money note may be tendered which is usually redeemed in cash or certified funds upon the
acceptance of the contract or upon satisfaction of certian contract clauses.
The amount of money varies from $500.00 up to $10,000 or more depending upon the price of
the property and seller's requirements. Your Realtor will advise you in this
matter.
Title insurance is issued in almost all real esate transactions in California. Title insurance protects against
loss or damage resulting from defects in the chain of title that may have occured in the past.
The process starts with a search of the public records to determine the facts relating directly toward
the property. Such as:
Easements and Restrictions,
Ownership,
Judgements or liens against the property,
Any other
recorded
interest in the property.
All defects of the title have to be removed or satisfied prior to closing. Once clear, the title is available
so we can start working on getting the title insurance policy. When all this information is compiled or
completed, then we can work on closing the transaction.
The title insurance policy is a one-time fee that includes the cost of the title search, examination,
production and risk. The title commitment is issued stating conditions under which the title will be insured.
The mortgage lender must be satisfied with the quality of the title because the property is security
for the new mortgage loan. The mortgage lender requires assurance that they will have a suitable position
if they have to forclose on the loan and take possession of the subject property.
Whether called 'Points', 'Discounts', 'Loan Brokerage Fees', or 'New Loan Fees', they are all the same.
Points provide the 'magic' in over half the home sales made in this area. Without Points, most new
loans and sales with low down payments would not be possible. Since Points are a vital part of selling
a home, a clear understanding is important.
What are Points? Through the use of Points, money is paid to lending institutions
(banks, savings and loans, mortgage companies, insurance companies, etc.), so lenders will
be able to make loans on property under the existing money market conditions. Points result
in "increasing the yield or rate of return" of lenders.
How are points figured? Very simply - one point is just one percent of the new loan,
NOT the selling price of the property.
| 1. Mortgagee's Title Policy & Endorsements (varies w/loan amount) |
| 3. Record Deed of Trust ($6.00 1st page / $5 thereafter) |
| 4. Tax Certification ($25.00) |
| 5. State Document Fee (1% of sales price) |
| 6. Loan Closing Fee ($180.00) |
| 7. Real Estate Closing Fee ($180.00) |
| 8. Fed Ex Overnight Fee ($20.00) |
| 9. Tax Service Fee (per lender) |
| 10. First Year's Homeowner's Insurance Premium |
| 11. Hazard Insurance Reserve (per date closed) |
| 12. Loan Origination and Discount Fee |
| 13. Appraisal |
| 14. Credit Report |
| 15. Interest on New Loan (per # of days on date closed) |
| 16. Tax Reserve (per date closed) |
| 17. Mortgage Insurance Reserve |
| 18. Water & Sewer Escrows |
| 19. Underwriting Fee |
| 20. Lender Document Preparation |
| 21. Misc. Loan Fees (per lender) |
ARM - Adustable Rate Mortgage - A loan that allows the interest rate to be changed periodically.
Agency - A legal relationship in which an owner principal engages a broker-agent in the sale
of property or buyer-principal engages a broker-agent in the purchase of property.
APR - Annual Percentage Rate - The total finance charge (interest, loan fees, points) expressed
as a percentage of the loan amount.
Amortization - The gradual repayment of a mortgage by periodic installments.
Appraisal - An estimate of the value of the property.
Assessed Value - The valuation placed on property by a public tax assessor as the
basis of the property.
Assumption of Mortgage - Agreement by the buyer to assume responsibility for a mortgage
owned by the seller; the seller remains liable to the lender unless the lender agrees to release him or her.
Balloon Mortgage - A mortgage that has a substantial amount of the principal due at the
maturity of the note.
Buy-down - A payment to the lender from the seller, buyer, or third party, causing the
lender to reduce the interest rate during the early years of the loan.
Cap - A maximum amount ot interest that can be charged.
Closing - The final step in transferring ownership of a property from seller to buyer.
Closing Costs - Fees and expenses, not including the price of the home, payable by the
seller and the buyer at the time of closing (e.g., brokerage commissions, title insurance premiums, inspection,
and appraisal fees).
Contingency - A condition that must be satisfied before a contract is binding.
Conventional Loan - A fixed-rate, fixed-term loan that is made without government insurance.
Co-op - A buyer purchases shares in a co-op corporation, made up of the residents in the
co-op property. The buyer owns the shares rather than owning the real property. In exchange, the buyer has
the right to occupy the co-op unit.
Deed - A legal document conveying title to a property.
Earnest Money - A payment given to the seller by a potential buyer indicating the
buyer's intent to complete the purchase of the property.
Equity - The owner's value of interest in a property.
Escrow - The placement of money or documents with a third party for safekeeping pending
the fulfillment or performance of a specific act or condition.
FHA Mortgage - A mortgage loan insured by the Federal Housing Administration, permitting
lenders to offer better terms.
HUD - Housing and Urban Development - A U.S. Government agency established to
implement certian federal housing and community development programs.
Lien - A legal claim against a property that must be paid when property is sold.
Loan Origination Fee - The charge you must pay to the lender for processing your mortgage.
Market Value - The highest price a ready, willing, and able buyer will pay and the lowest
price a seller will accept.
Mortgage - A lien on real estate given by the buyer as security for money borrowed from
a lender.
Mortgage Insurance - A policy that provides protection for the lender in case of default
and guarantees repayment of the loan in the event of death or disability of the borrower.
MLS - Multiple Listing Service.
Points - A dollar amount, expressed as a percentage of the mortgage amount, which
is paid to lender as a consideration for making a loan. A point is 1% of the amount of the mortgage;
also called discount points.
P & I - Principal and Interest Payment- A periodic (usually monthly) payment that includes the interest
charges for the period plus an amount applied to amortization of the principal balance.
PITI - Principal, Interest, Taxes, and Insurance Payment - The periodic payment that includes
the principal and interest payment plus a contribution to the escrow account set up by the lender to pay
insurance premiums and property taxes on the mortgage property.
Realtor and Realtor Associate- Registered collective membership marks that identify real
estate professional who are members of the National Association of Realtors and subscribe to its strict
Code of Ethics.
Title - A document that is evidence of ownership.
Title Insurance - Protection for lenders and homeowners against financial loss resulting
from legal defects in the title..
Title Search - A check of title records to identify liens, encumbrances, and ownership rights
to the property.
VA Mortgage - A mortgage loan guarantee by the Veterans Administration, an agency of
the federal government that provides services for eligible veterans.
A growing trend in home sales today is the use of a home warranty.
This one year home warranty covers the component parts of a home, such as the appliances, central
heating and cooling systems, plumbing system, electrical system, water heater, and garage door openers.
It does not cover the structure itself such as a roof, walls, foundation, etc. The cost range is around
$295 to $350 which may be paid by the Seller or Buyer.
Additional coverage for roof, swimming pools, wells, etc. are available at an additional cost.
If the home you intend to purchase was built before 1978, it may contain lead-based paint. Approximately three
out of every four pre-1978 buildings have lead-based paint.
Lead poisoning means having high concentrations of lead in the body.
Lead Can ...
Cause major health problems, especially in children 7 years of age.
Damage a child's brain, nervous system, kidney's, hearing or coordination.
Affect learning,
Cause behavior problems, blindness and even death,
Cause problems in pregnancy and affect a baby's normal development.
Anyone can get lead poisoning, but children under 7 are at the greatest risk, because their
bodies are not fully-grown and are easily damaged. Women of childbearing age are also at risk,
because lead poisoning can cause miscarriages, premature births and the poison can be passed onto
their unborn babies.
The lead hazards that children most often touch are lead dust, leaded soil, loose chips and
chewable surfaces painted with lead-based paint. A child may be harmed when it puts into it's mouth
toys, pacifiers or hands that have leaded soil or dust on them.
If your home contains lead-based paint, contact a company that specializes in lead-based
abatement. Have professionals do the job correctly and safely.
A home inspection is basically a thorough examination of the systems of a home. These are:
Foundations,
Roof,
Structure,
Heating and Cooling,
Electrical and Plumbing,
Appliances,
Overall Condition,
The inspector will be helpful in maintenance tips as well as corrective measures that can be undertaken.
The inspection is not a punch-list for the sellers, but merely as an evaluation of the systems of a home.
After the inspection, a complete report will be given to the purchasers outlining the problems with the home.
A home inspection should not include cosmetic ratings such as carpet and paint. These are
obvious and visible and should be noted by the purchasers prior to making an offer.
After you examine the report, it is time to negotiate on those items which you believe the
seller should fix. The inspector will not tell you who should fix what; this is a negotiation process. An
experienced real estate agent will know the proper steps to take.
Radon is a radioactive gas. It comes from the natural decay of uranium that is found in nearly all soils.
It typically moves up through the ground to the air above and into your home through cracks and other
holes in the foundation. Your home traps radon inside, where it can build up. Any home may have a
radon problem. This means new homes, well-sealed and drafty homes, and homes with or without
basements.
Radon is estimated to cause many thousands of deaths each year. That's because when you
breathe air-containing radon, you can get lung cancer. In fact, the Surgeon General has warned that
radon is the second leading cause of lung cancer in the United States today. Only smoking causes
more lung cancer deaths. If you smoke and your home has high radon levels, your risk of lung cancer
is especially high.
Testing is the only way to know if you and your family are at risk from radon. EPA and the Surgeon
General recommend testing all homes below the third level for radon. Testing is inexpensive and
easy - it should only take a few minutes of your time. There are also professional inspection companies
that can do the testing.
If a radon problem exists, there are simple and inexpensive ways to fix the problem. Even high
levels of radon can be reduced to acceptable levels.
The average indoor radon level is estimated to be about 1.3 pCi/L and about 0.4 pCi/L of radon is
normally found in the outside air. The U.S. Congress has set a long term goal that indoor radon levels
be no more than outdoor levels. While this goal is not yet technologically achievable in all cases, most
homes today can be reduced to 2 pCi/L or below.
Like other environmental pollutants, there is some uncertainty about the magnitude of radon
health risks. However, there is more known about radon risks from most other cancer causing substances.
This is because estimates of radon risks are based on studies of cancer in humans (underground miners).
Additional studies on more typical populations are under way.
Escrow's job is to handle the details to perform the transaction. They order, collect and distribute the
documents and funds as necessary to fulfill the purchase agreement between buyer and seller.
When all the necessary documents and funds have been obtained and title problems,
if any, cleared, the title is recorded in the new owner's name and the money is disbursed as instructed.
Cash or certified funds from the buyer are required to cover the down payment and buyer
closing costs. This figure will be determined one or two days prior to closing, during review of the
lender requirements. Certified checks should be made out in the escrow's name, who will then disburse funds as required at closing.
Has the seller notified utility company, trash removal, post office, newspaper and etc. for change
of service and forwarding address?
Has the purchaser notified the above of beginning service dates?
Have the purchaser and seller agreed on possession date and time if the seller is occupying
the property following closing?
Did the seller leave warranty and operating instructions for appliances?
How will the buyer obtain keys to the property?
Listed below is a checklist of items that you will want to accomplish before the closing of your
new home at _________________________________________, as well as information on the closing.
Arrange for the cancellation of utilities, advise date to shut off service and where final bills are
to be sent.
| Electric _____________ |
Gas ______________ |
| Phone ______________ |
Cable TV __________ |
Send change of address cards to post office, magazines, insurance companies and stores
Cancel deliveries
| Newspapers_____________ |
Milk______________ |
Cancel trash removal.
Have electric and gas billing transferred on the day of closing
Call telephone company to have service transferred
Notify post office to start delivery
Arrange for trash pick up
Hazard insurance covering your new residence in compliance with lender's guidelines
Email: info@california-homestore.com
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