Home

RESOURCES FOR BUYERS

Checklist For Moving, Before You Leave and On Moving Day

BEFORE YOU LEAVE:

Address Change
Post Office: Give forwarding address.
Charge Accounts, Credit Cards.
Subscriptions: Notice requires several weeks.
Friends and Relatives.

Bank
Transfer funds, arrange check-cashing in new city.
Arrange credit references.

Insurance
Notify company of new location for coverage’s: Life, Health, Fire and Auto.

Utility Companies
Gas, electricity, water, telephone, fuel, garbage.
Get refunds on any deposits made.

Delivery Service
Laundry, newspaper, changeover of services.

Medical, Dental, Prescription Histories
Ask Doctor and Dentist for referrals; transfer needed prescriptions, eyeglasses, X-rays.
Obtain birth records, medical records, etc.

Pets
Ask about regulations for licenses, vaccinations, tags, etc.

And Don’t Forget to:

  Empty freezer
  Defrost freezer and clean refrigerator. Place charcoal inside to dispel odors.
  Have appliances serviced for moving.
  Remember arrangements for TV and antenna.
  Clean rugs or clothing before moving; have them moving-wrapped.
  Check with your Moving Counselor; insurance coverage, packing and unpacking labor, arrival day, various shipping papers, method and time of expected payment.
  Plan for special care needs of infants or pets.
ON MOVING DAY:
  • Carry enough cash or travelers checks to cover cost of moving services and expenses until you make banking connections in your new city.
  • Carry jewelry and documents yourself; or use registered mail.
  • Plan for transporting pets; they are poor traveling companions, if unhappy.
  • Carry traveler’s checks for quick, available funds.
  • Double check closets, drawers, and shelves to be sure they are empty.
  • Leave all old keys needed by new tenant or owner with Realtor or neighbor.
AT YOUR NEW ADDRESS:
  • Obtain certified check or cashiers check necessary for closing Real Estate Transaction.
  • Check on service of telephone, gas, electricity, water and garbage.
  • Check pilot light on stove, hot water heater, and furnace.
  • Have appliances checked.
  • Ask Mail Carrier for mail he or she may be holding for your arrival.
  • Have new address recorded on driver’s license.
  • Visit City offices and register for voting.
  • Register car within five days after arrival in state or a penalty may have to be paid when getting new license plates.
  • Obtain inspection sticker and transfer motor club membership.
  • Apply for State driver’s license.
  • Register family in your new place of worship.
  • Register children in school.
  • Arrange for medical services: Doctor, Dentist, Veterinarian, etc.

BUYER’S FINANCIAL CONSIDERATION

There are many financial factors involved in buying a home. Here are some of the factors to consider.

  • Annual Income of all buyers
  • Length of time employed at current job
  • Other Assets or Income
  • Current Credit Report
  • Estimated Closing Cost
  • Type of Loan
  • Maximum Down Payment Available
  • Source of Down Payment
  • Maximum Monthly Payment, Including Principal, Interest and Taxes
  • Present Monthly Payment
  • Prepayment Penalty on Current Loan
  • Do you need to sell a home in order to buy?

GUIDE TO FULL DISCLOSURE

Recent legal decisions and new legislation provide that the seller has a responsibility for revealing to you the true condition of the property. The concept of selling a property “as is”, with the buyer assuming all responsibility for determining the property condition, is not acceptable in the present marketplace. The sellers must disclose the known condition of the property to the buyers. This information should be made available to the buyer as soon as possible.

Charm or Irritant?
Having lived in this property, the seller has become accustomed to the peculiar conditions that have may have developed. But for the buyer, that peculiarity may be more than a mere inconvenience. It may be an irritant which the buyer cannot tolerate. It is important for the seller to review the condition of the property with the real estate agent and take special note of any problems on the Disclosure Statement. Civil Code Section 1102 requires that the seller provide the buyer with a completed “Real Estate Transfer Disclosure Statement.”

All Systems Go
A basic assumption in every sale is that the house and the systems in the house are functional. For example, the roof will hold out the rain and sun, the hot water heater will provide hot water, and the heater will provide heat. If it is known that any of the systems do not function properly, such facts should be included in the purchase agreement and acknowledged by the buyer.

“As Is”
An “as is” purchase is perfectly acceptable, as long as the buyer understands exactly what the “as is” condition entails. Thus, it can be said in the purchase agreement that the buyer accepts the roof and the plumbing and the electrical system in their present condition and acknowledges that they have defects. This acknowledgement provides a defense for the seller if it is later claimed he did not disclose the problems.

Environmental Hazards
It is required that the seller discloses any knowledge of environmental hazards in the home or area such as asbestos or pollutants. You will be provided with a Real Estate Transfer Disclosure Statement filled out by the seller as to his awareness or knowledge on this subject.

  • TAKE A TIP FROM US:
    Environmental Hazards: A Guide for Home Owners and Buyers is a handbook prepared by the California Department of Real Estate to inform you of the various toxins and hazardous wastes and what you can do about them. A copy of this publication will be given to you.

GUIDE TO THE INSPECTION PROCESS

When you make an offer on a home, your Purchase Contract will likely contain provisions allowing you various inspections of the property. The purpose of these inspections is to educate you as to the physical condition of the property you are purchasing. While these inspections do not provide guarantees of the condition of the property, they do provide valuable information to you as a Buyer, It is important to remember that your Purchase Contract may provide for withdrawal from the contract if these reports are unsatisfactory to you, but inspections should not be considered an open door to renegotiate the purchase price.

Structural Pest Control Inspection
Often referred to as a “Termite Report”, the Structural Pest Control Inspection is conducted by a licensed inspector. In addition to actual termite damage, the Pest Report will indicate any type of wood destroying organisms that may be present, including Fungi (sometimes called “dry rot”), which generally results from excessive moisture.

Section I Conditions
Most Pest Reports classify conditions as Section 1 or Section 2 items. Section 1 conditions are those which are “active”, or currently causing damage to the property.

Generally, Section I items need to be corrected before a lender will make a loan on a home.

Section II Conditions
Those which are not currently causing damage, but are likely to, if left unattended. A typical Section 2 item is a plumbing leak where the moisture has not yet caused fungus decay.

Who Pays?
Typically, this inspection is paid for by the Buyer.

Geological Inspection
You may also elect o have a Geological Inspection to educate yourselves as to the soil conditions at the home you are purchasing. This inspection is performed by a Geotechnical Engineer and involves not only physically inspecting the property, but also researching past geological activity in the area. The primary purpose of a Geological Inspection is to determine the stability of the ground under and around the home.

Who Pays?
Typically the Buyer pays, but as with other inspections, this is negotiable according to the contract.

Home Warranty
Home Protection Plans are available for purchase by a Buyer or Seller. Such plans may provide additional protection of certain systems and appliances in your new home. We will provide you with brochures detailing different companies and options.

TERMS YOU'LL WANT TO KNOW

  • Adjustable Rate Mortgage (ARM): A mortgage with an interest rate that changes over time in line with movements in the index. ARM’s are also referred to as AMLs (adjustable mortgage loans) or VRMs (variable rate mortgages).
  • Adjustment Period: The length of time between interest rate changes on an ARM. For example, a loan with an adjustment period of one year is called a one-year ARM, which means that the interest rate can change once a year.
  • Amortization: Repayment of a loan in equal installments of principal and interest, rather than interest-only payments.
  • Annual Percentage Rate (APR): The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount.
  • Balloon Payment: A lump sum principal payment due at the end of some mortgages or other long-term loans.
  • Binder: Sometimes known as an offer to purchase or an earnest money request. A binder is the acknowledgement of a deposit along with a brief written agreement to enter into a contract for the sale of real estate.
  • Cap: The limit on how much an interest rate or monthly payment can change, either at each adjustment or over the life of the mortgage.
  • CC&R’s: Covenants, Conditions and Restrictions. A document that controls the use, requirements and restrictions of a property.
  • Certificate of Reasonable Value (CRV): A document that establishes the maximum value and loan amount for a VA guaranteed mortgage.
  • Closing Statement: The financial disclosure statement that accounts for all the funds received and expected at the closing, including deposits for taxes, hazard insurance, and mortgage insurance.
  • Condominium: A form of real estate ownership where the owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors and ceilings) serve as its boundaries.
  • Contingency: A condition that must be satisfied before a contract is binding. For instance, a sales agreement may be contingent upon the buyer obtaining financing.
  • Conversion Clause: A provision in some ARMS that enables you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed-rate mortgages. This conversion feature may cost extra.
  • Cooperative: A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means of Proprietary leases or similar arrangements.
  • CRB: Certified Residential Broker. To be certified, a broker must be a member of the National Association of Realtors?, have five years experience as a licensed broker and have completed five required Residential Division courses.
  • Due-On-Sale Clause: An Acceleration clause that requires full payment of a mortgage or deed of trust when the secured property changes ownership.
  • Earnest Money: The portion of the down payment delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith.
  • Escrow: A procedure in which a third party acts as a stakeholder for both the buyer and the seller, carrying out both parties’ instructions and assuming responsibility for handling all of the paperwork and distribution of funds.
  • FHA Loan: A loan insured by the Insuring Office of the Department of Housing and Urban Development; the Federal Housing Administration.
  • Federal National Mortgage Association (FNMA): Popularly known as Fannie Mae. A privately owned corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by the VA, as well as conventional home mortgages.
  • Fee Simple: An estate in which the owner has unrestricted power to dispose of the property as he wishes, including leaving by will or inheritance. It is the greatest interest a person can have in real estate.
  • Finance Charge: The total cost a borrower must pay, directly or indirectly, to obtain credit according to Regulation 2.
  • Graduated Payment Mortgage: A residential mortgage with monthly payments that start at a low level and increase at a predetermined rate.
  • GRI: Graduate, Realtors? Institute. A professional designation granted to a member of the National Association of Realtors? who has successfully completed three courses covering Law, Finance and Principles of Real Estate.
  • Home Inspection Report: A qualified inspector’s report on a property’s overall condition. The report usually includes an evaluation of both the structure and mechanical systems.
  • Home Warranty Plan: Protection against failure of mechanical systems within the property. Usually includes plumbing, electrical, heating systems and installed appliances.
  • Index: A measure of interest rate changes used to determine changes in an ARM’s interest rate over the term of the loan.
  • Joint Tenancy: An equal undivided ownership of property by two or more persons. Upon the death of any owner, the survivors take the decedents interest in the property.
  • Lien: A legal hold or claim on property as security for a debt or charge.
  • Loan Commitment: A written promise to make a loan for a specified amount on specified terms.
  • Loan-to-Value Ratio: The relationship between the amount of the mortgage and the appraised value of the property, expressed as a percentage of the appraised value.
  • Margin: The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment.
  • Mortgage Life Insurance: A type of term life insurance often bought by mortgagors. The coverage decreases as the mortgage balance declines. If the borrower dies while the policy is in force, the debt is automatically covered by insurance proceeds.
  • Negative Amortization: Negative amortization occurs when monthly payments fail to cover the interest cost. The interest that isn’t covered is added to the unpaid principal balance, which means that even after several payments you could owe more than you did at the beginning of the loan. Negative amortization can occur when an ARM has a payment cap that results in monthly payments that aren’t high enough to cover the interest.
  • Origination Fee: A fee or charge for work involved in evaluating, preparing, and submitting a proposed mortgage loan. The fee is limited to 1 percent for FHA and VA loans.
  • PITI: Principal, interest, taxes and insurance.
  • Planned Unit Development (PUD): A zoning designation for property developed at the same or slightly greater overall density than conventional development, sometimes with improvements clustered between open, common areas. Uses may be residential, commercial or industrial.
  • Point: An amount equal to 1 percent of the principal amount of the investment or note. The lender assesses loan discount points at closing to increase the yield on the mortgage to a position competitive with other types of investments.
  • Pre-payment Penalty: A fee charged to a mortgagor who pays a loan before it is due. Not allowed to FHA or VA loans.
  • Private Mortgage Insurance (PMI): Insurance written by a private company protecting the lender against loss if the borrower defaults on the mortgage.
  • Purchase Agreement: A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions. Also called a sales contract, earnest money contract, or agreement for sale.
  • Realtor?: A real estate broker or associate active in a local real estate board affiliated with the National Association of Realtors.
  • Regulation Z: The set of rules governing consumer lending issued by the Federal Reserve Board of Governors in accordance with the Consumer Protection Act.
  • Tenancy in Common: a type of joint ownership of property by two or more persons with no right of survivorship.
  • Title Insurance Policy: A policy that protects the purchaser, mortgagee or other party against losses.
  • VA Loan: A loan that is partially guaranteed by the Veterans Administration and made by a private lender.

GUIDE TO WHO PAYS WHAT

The SELLER can generally be expected to pay for:

  • Real Estate Commission
  • Document preparation fee for Deed
  • Documentary transfer tax ($1.10 per $1,000.00 of sales price)
  • Any City Transfer/Conveyance Tax (according to contract)
  • Any loan fees required by buyer’s lender
  • Payoff of all loans in seller’s name (or existing loan balance if being assumed by buyer)
  • Interest accrued to lender being paid off, Statement Fees, Reconveyance Fees and any Prepayment Penalties
  • Termite Inspection (according to contract)
  • Termite Work (according to contract)
  • Home Warranty (according to contract)
  • Any judgments, tax liens, etc., against the seller
  • Recording charges to clear all documents of record against seller
  • Tax pro-ration (for any taxes unpaid at time of transfer of title)
  • Any unpaid Homeowner’s dues
  • Any bonds or assessments (according to contract)
  • Any and all delinquent taxes
  • Notary Fees
The BUYER can generally be expected to pay for:
  • Title Insurance premiums
  • Escrow Fee
  • Document preparation (if applicable)
  • Notary fees
  • Recording charges for all documents in buyer’s names
  • Termite Inspection (according to contract)
  • Tax pro-ration (from date of acquisition)
  • Homeowner’s transfer fee
  • All new loan charges (except those required by lender for seller to pay)
  • Interest on new loan from date of funding to 30 days prior to first payment date
  • Assumption/Change of Records fees for takeover existing loan
  • Beneficiary Statement Fee for assumption of existing loan
  • Inspection Fees (roofing, property inspection, geological, etc.)
  • Home Warranty (according to contract)
  • City Transfer/Conveyance Tax (according to contract)
  • Fire Insurance Premium for first year
YOURS OR THEIRS

The Personal vs. Real Property Dilemma
The distinction between personal property and real property can be the source of difficulties in a real estate transaction. A purchase contract is normally written to include all real property; that is, all aspects of the property that are fastened down or an integral part of the structure. For example, this would include light fixtures, drapery rods, attached mirrors, trees and shrubs in the ground. It would not normally include potted plants, free-standing refrigerators, washers/dryers, microwaves, bookcases, swag lamps, etc.

BUYERS TIME AND ACTION FLOW CHART

Flow Sheet

A Golden Opportunity to Make Your Dream Come True