FAQs
HOME SELLER'S GUIDE
Thank you for giving me the opportunity to help guide you through your home selling process. It can be very confusing and sometimes complicated, but it is important to you, your family, your future and to me. Please be assured you will receive my best service incorporating all my experience and training to make a committed effort to have this process be understandable, hassle free and a pleasure for all involved. So let’s get started!
The information in this page will educate and assist you with the following:
1. Help determine your wants and needs
2. Steps of the selling process
3. Loan information
4. Writing, presenting, and negotiating the offer
5. Explaining the escrow and title process
6. Physical inspection process
7. Home warrants
I look forward to working with you during the entire home selling process. I welcome any questions you may have after reading this information. Please feel free to contact me at anytime.
SELECTING AN AGENT
Congratulations! You’ve taken the first step toward selling your home by deciding to select a real estate professional to represent you. You couldn’t have made a better decision than to choose a Realtor® for help and guidance through the process. You can be assured that you will receive excellent service along with the best opportunity to sell your home with far less hassle and worry.
You can expect your realtor to:
Assist you in setting the right price for your home. They know the market and will help you get the best possible price.
Assess your home’s marketability and show you ways to create more demand.
Actively market your house in the most effective possible manner.
Negotiate on your behalf with qualified prospective buyers.
Allow you to make your own decisions. A professional agent works for you and respects your opinion. They will not try to force you into a decision with which you don’t feel comfortable.
Protect your rights. Real estate laws have become increasingly complicated and your realtor is there to assist you in every way.
CONTRACT TO CLOSING
1. Contract signed and dated.
2. Escrow opened and earnest money deposited.
3. Title Report Requested
4. Seller orders termite inspection
5. Property inspection ordered by the Buyer Original termite certificate to Escrow Company
6. Buyer arranges insurance for home and provides information to lender and Escrow Company
7. Loan application made
8. Copy of inspection to Buyer & Seller Buyer provides Seller with repair priority list
9. Lender orders appraisal
10. Completed appraisal
11. Seller/Buyer negotiates and then orders repair work
12. Buyer is approved by Lender
13. Other inspections, if needed or requested by Buyer
14. Repairs completed and approved by Lender and Buyer
15. Final contingencies removed
16. Final closing date set
17. Confirm closing figures with Escrow Officer Buyer must bring check in order to close
18. Closing
19. Title Policy Issued
HOME BUYER'S GUIDE
WHAT IS AN ESCROW?
HOW DOES THE ESCROW PROCESS WORK?
HOW DO I OPEN AN ESCROW?
WHERE DOES THE BUYER'S MONEY GO?
WHAT INFORMATION DO I NEED TO PROVIDE?
HOW LONG IS THE ESCROW?
WHAT A
TITLE COMPANY DOES
An escrow is an independent “stakeholder” account and is the vehicle by which the interests of all parties to the transaction are protected.
The escrow is created after you execute the contract for the sale of your home and becomes the depository for all monies, instructions and documents pertaining to the sale. Some aspects of the sale are not part of the escrow. For example, the buyer and seller must decide which fixtures or personal property items are included in the sales agreement. Similarly, loan negotiations occur between the buyer and the lender. Your real estate agent can guide you in these non-escrow matters.
The escrow is the process of having a neutral party manage the exchange of money for real property. The escrow holder is known as an escrow officer. The buyer deposits funds and the Seller deposits a deed with the escrow holder along with all of the other documents required to remove all “contingencies” ( conditions and approvals ) in the purchase agreement prior to closing.
The escrow officer takes instructions based on the terms of your Purchase Agreement and the lender’s requirements. The escrow officer can hold inspection reports and bills for work performed as required by the purchase agreement. Other elements of the escrow include hazard and title insurance, and the grant deed from the seller to buyer. Escrow cannot be completed until these items have been satisfied and all parties have signed escrow documents.
Either your real estate agent or the buyer’s agent may open escrow. As soon as you exclude the Purchase Agreement, your agent will place the earnest money deposit into an escrow account at the escrow company.
Written evidence of the deposit is generally included in your copy of the sales contract. The funds will then be deposited in a separate escrow or trust account.
You may be asked to complete a Statement of Identity as part of the paperwork. Because many people have the same name, the Statement of Identity is used to identify the specific person in the transaction through such information as date of birth, social security number, etc. This information is considered confidential.
The amount of time necessary to complete the escrow is determined by the terms of the purchase agreement. It is normally 45 to 60 days, but can range from a few days to several months.
What happens next?
Unless he/she is paying cash, the next step will be that the buyer will apply for a mortgage loan. Your real estate agent will be able to keep you informed about the progress of the loan application. During the escrow process, you are still required to make your payments on existing loans so that you do not incur any late fees or damages to your credit rating.
PREPARES A PRELIMINARY TITLE REPORT AND POLICY
Prelim report: a preliminary report contains the following vital information, which can affect the close of escrow: ownership of the subject property, how the current owners hold title, matters of rec that specifically affect the subject property or the owners of the property, a legal description of the property and an informational plat map.
Title report: A report showing the condition of title before a sale or loan transaction. After completion of the transaction, a title insurance policy is issued.
Policy: Title insurance is insurance against loss resulting from defects of title to a specifically described parcel of real property. Defects may run to the fee (chain of title) or to encumbrances on the property.
PAYS OFF EXISTING LOANS
The title company pays off existing loans when so ordered.
RECORDING DOCUMENTS
The title company records the appropriate documents with the county office, giving public notice.
PAYING OFF YOUR EXISTING LOANS
Unless the buyer takes over your existing loan(s) on the property, the loan(s) will be paid off during the escrow process. You will need to furnish complete information to your escrow officer and real estate agent on each loan against your property. Please be prepared to provide the name of the lender, the loan number, address, and phone number of the lender. Your escrow officer will need this information to order the loan payoff demands, so the loan(s) may be paid off correctly during the escrow. Homeowners’ Association information may also be required if you are selling a condominium, townhouse or property located in a planned unit development. All of this information will help to insure the timely closing of the escrow.
DISCLOSURES AND CONTINGENCIES
During the process of selling your property, you will be asked to fill out a property disclosure form, which is now required by law. In this document, you will inform the buyer of any significant facts you have about the condition of the property.
There will be various contingency dates in your real estate sales contract. You should be very aware of these and be sure that the actions required are performed in a timely manner. Such contingencies include: the buyer’s loan approval, approval of the Preliminary Title Report and approval of termite and other inspections. Stay closely in touch with your real estate agent regarding these important dates.
When the loan is approved and the loan documents are sent to the escrow officer or the escrow assistant handling your transaction, the escrow instructions and the deed will be prepared.
TITLE INSURANCE
Most real estate transactions are closed with a title insurance policy. Many home buyer’s just assume that when they purchase a piece of property, possession of the deed to the property is all they need to prove ownership. This is not true. Hidden hazards may attach to real estate. A property owner’s greatest protection is a policy of title insurance.
WHAT IS A TITLE INSURANCE?
It is a contract of indemnity that guarantees that the title is as reported and, if not reported and the owner is damaged, the title policy covers the insured for their loss up to the amount of the policy.
Title insurance assured owners that they are requiring marketable title. Title insurance is designed to eliminate risk or loss caused by defects in title from the past. Title insurance provides coverage only for title problems that were already in existence at the time the policy was issued.
THE TITLE SEARCH
Title companies work to eliminate risks by performing a search of the public records or through the title company’s own plant. The search consists of public records, laws and court decisions pertaining to the property to determine the current recorded ownership, any recorded liens or encumbrances or any other matters of record that could affect the title to the property. When a title search is complete, the title company issues a preliminary report detailing the current status of title.
THE PRELIMINARY REPORT
A preliminary report contains the following vital information, which can affect the close of escrow: ownership of the subject property, how the current owners hold title, matters of record that specifically affect the subject property or the owners of the property, a legal description of the property, and an informational plat map.
INSPECTIONS
Real estate contracts often contain contingency clauses that allow buyers to inspect the property physically (usually at their expense). This inspection provides a comprehensive review of the infrastructure of the property.
Which inspections to order is usually a matter of observation and knowledge of what is critical to a particular region or area. Below is a list of the three most common types of inspection:
STRUCTURAL PEST CONTROL
1. To determine any active infestation by wood destroying organisms
2. Section I on the report will be items that need immediate attention because of active infestation. Lenders usually want the work performed prior to funding the loan.
3. Section II on the report will be items that could cause infestation and, if not corrected, could cause damage.
PHYSICAL INSPECTION
1. This inspection encompasses roof, plumbing, electrical, heating and any other accessible area of the structure.
2. A detailed report will be written with recommendations for repair or for further inspection by a specialist.
SOME OTHER INSPECTIONS
Well and Septic
Hazardous Materials
Contractor’s Home Inspection
Chimney Inspection
Heating and Air Conditioning
Structural Engineering
Energy Audit
THE APPRAISAL PROCESS
A home warranty plan covers a variety of mechanical, electrical, and plumbing items, as well as some appliances. Optional coverage may be available for additional items such as air conditioners, refrigerators, pools, and spas.
The seller may purchase a home warranty plan prior to sale to protect against repairs needed during the listing period, and the buyer may be able to assume the plan at the close of escrow. Or the seller may offer to purchase a home warranty plan for the buyer. Offering a home warranty plan may provide these benefits:
1. Increase the marketability of your home by reassuring potential buyers
2. Help sell your home faster and at a higher price
3.Ward off potential disputes after the sale for repair and/or replacement of covered items
Most home warranty plans can be paid for at the close of escrow. A copy of the invoice is presented to the escrow company.
HOME WARRANTIES
As a Real Estate professional, it is my duty to inform both Buyers and Sellers about the advantages of home warranty protection. This policy protects the Buyer by paying for certain repairs and costs of major mechanical systems and major appliances in the home such as heating and air-conditioning. There are a variety of plans available, and I would be happy to gather a selection of plans for you to review.
BENEFITS OF HOME WARRANTY COVERAGE TO THE SELLER
1. Home may sell faster and at a higher price
2. Optional coverage during the listing period
3. Protection from legal disputes that occur after the sale
4. Increases the marketability of your home
BENEFITS OF HOME WARRANTY COVERAGE TO THE BUYER
Warranty coverage for your major systems and built-in appliances
Protects your cash flow
Puts a complete network of qualified service technicians at your service
Low deductible
NEGOTIATING
Negotiating the transaction is usually the most complex aspect of buying a home. At the same time, it’s the one that can involve the most creativity. That’s why it’s important to have an experienced and savvy Realtor who has successfully worked through many different transaction scenarios.
IS THIS REALLY THE ONE?
You should be willing to make some compromises to make the deal happen. If that’s not the case, then you should listen to your heart and consider looking for another home. Remember your priorities and respect the Seller’s - don’t let small things get in the way of your better judgment. At the end of the day, if there are disagreements about relative small expenses, split the difference and smile.
THE CLOSING OR
SIGNING APPOINTMENT
THE LIFE OF AN ESCROW
WHAT HAPPENS NEXT?
The escrow holder will contact you or your agent to schedule a closing or signing appointment. You will have a chance to review the settlement statement and supporting documentation. This is your chance to ask questions and clarify terms. You should review settlement statement carefully and report discrepancies to the escrow officer. This includes any payments that may have been missed. You are responsible for all charges incurred, even if overlooked by the escrow holder. It's better to bring any issues to his or her attention before the closing has been completed.
The escrow holder is obligated by law to have the designated amount of money before releasing any funds. If you have questions or foresee a problem, let your escrow officer know immediately.
Don't forget your identification. You will need valid identification with your photo I.D. on it when you sign documents that need to be notarized (such as deed). A driver's license is preferred. You will also be asked to provide your social security number for tax reporting purposes, along with a forwarding address.
If the buyer is obtaining a new loan, the buyer's signed loan documents will be returned to the lender for review. The escrow holder will ensure that all contract conditions have been met and will ask the lender to "fund the loan." If the buyer's loan documents are satisfactory, the lender will send the funds directly to the escrow holder. When the loan funds are received, the escrow holder will verify that all necessary funds are in. Escrow funds will be disbursed to you and other appropriate payees. The keys to the property are the given to the buyer.
AFTER THE CLOSE OF ESCROW
THE BUYER
1. Chooses a Real Estate Agent
2. Gets pre-approval letter from Lender and provides to Real Estate Agent
3. Makes offer to purchase. Upon acceptance, opens escrow and deposits earnest money
4. Finalizes loan application with Lender. Receives a Loan Estimate from Lender.
5. Completes and returns opening package from First American Title.
6. Schedules inspections and evaluates finding. Reviews title commitment/preliminary report.
7. Provides all requested paperwork to Lender (bank statements, tax returns, etc.) All invoices and final approvals should be to the lender no later than 10 days prior to loan consummation.
8. Lender (or Escrow Officer or real estate agent) prepares CD and delivers to Buyer at least 3 days prior to loan consummation.
9. Escrow officer or real estate agent contacts the buyer to schedule signing appointment.
10. Buyer consummates loan, executes settlement documents, & deposits funds via wire transfer.
11. Documents are recorded and the keys are delivered.
THE SELLER
1. Chooses a Real Estate Agent
2. Accepts Buyer's offer to purchase.
3. Completes and returns opening package from First American Title, including information such as forwarding address, payoff lender contact information and loan numbers.
4. Orders any work for inspections and/or repairs to be done as required by purchase agreement.
5. Escrow officer or real estate agent contacts the seller to schedule signing appointment.
6. Documents are recorded and all proceeds from sale are received.
THE ESCROW OFFICER
1. Upon receipt of order and earnest money deposit, orders title examination.
2. Requests necessary information from buyers and sellers via opening packages.
3. Reviews title commitment/preliminary report.
4. Upon receipt of opening packages, orders demands for payoffs. Contacts buyer or seller when additional information is required for the title commitment/preliminary report.
5. All demands, invoices, and fees must be collected and sent to lender at least 10 days prior to loan consummation.
6. Coordinates with lender on the preparation of the CD.
7. Reviews all documents, demands, and instructions and prepares settlement statements and any other required documents.
8. Schedules signing appointment and informs buyer of funds due at settlement.
9. Once loan is consummated, sends funding package to lender for review.
10. Prepares recording instructions and submits docs for recording.
11. Documents are recorder and finds are disbursed. Issues final settlement statement.
THE LENDER
1. Accepts Buyer's application and begins the qualification process. Provides Buyer with Loan Estimate.
2. Orders and reviews title commitment/preliminary report, property appraisal, credit report, employment and funds verification.
3. Collects information such as title commitment/preliminary report, property appraisal, credit report, employment and finds verification,. Reviews and requests additional information for final loan approval.
4. Underwriting reviews loan package for approval.
5. Coordinates with Escrow Officer on the preparation of the Closing Disclosure, which is delivered to Buyer at least 3 days prior to loan consummation.
6. Delivers loan documents to escrow.
7. Upon review of signed loan documents, authorizes loan for funding.
In California under Proposition 13 real property is reassesed when a change in ownership has occurred or when new construction takes place. Except for a change in ownership or new construction property assessments cannot increase more than 2% annually.
After the close of escrow the County Tax Assessor may send you a Supplemental Tax Bill. If you do not agrees with the new Assessed Value you have 60 Days from the date of the Supplemental Assessment Notice to file an appeal with your County Tax Assessor.
THE SUPPLEMENTAL
TAX BILL
They have been with us since July of 1983, but you and your neighbors still may not know what they are, what they Dom and how they affect you and your property. To help you better understand this confusing subject, the California Land Title Association has answered some of the questions most commonly asked about supplemental real property taxes.
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.
HOW WILL SUPPLEMENTAL PROPERTY TAX 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 ti 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.
WHEN AND HOW WILL I BE BILLED?
"When" is not easy to predict. You could 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 with appraise your property and advise you of the new opportunity to discuss your valuations, apply for a Homeowner's Exemption and be informed of your right to files 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.
WILL MY SUPPLEMENTAL 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 you 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 of the owner.