What You Can Expect

The Transaction from End to End

Making An Offer/Residential Purchase Agreements
Buyers' Up-Front Deposit
Home Inspections vs. Appraisals
Closing
Utility Company Guide (click link to download .pdf)
Real Estate Tax Calendar (click link to download .pdf)

Now that you've found the perfect home, it's time to get the deal rolling. You'll need to sign a residential purchase agreement, make an offer, possibly put down a deposit, conduct inspections and close the sale.

If this all sounds overwhelming, don't worry. Stacy has handled this process hundreds of times, and will guide you through each step.

Making An Offer
Residential Purchase Agreements and Buyer Representation Agreements
If you're ready to buy a home, you must get all the details in writing. The offer begins with a written proposal spelling out your price and any stipulations regarding the purchase. If the seller has agreed to pay part of the closing costs, for example, that needs to be specified in the accepted offer. In addition, sometimes offers to purchase are contingent upon factors such as a buyers' ability to obtain financing or the sellers finding housing within a certain timeframe.

A residential purchase agreement contains the comprehensive terms including sales price, deposit, closing date, disclosure requirements, inspections, and fees agreed upon by both parties. Other provisions also are included, such as the buyer's final inspection and the method by which all real-estate taxes and other bills will be pro-rated between buyer and seller.

The Buyer Broker Representation Agreement, form BR-11, is a standard form typically used by California REALTORs®. BR-11 is an agreement between a potential buyer of real property and a real-estate broker. It defines the scope of the tasks and duties to be performed by the buyer and broker leading up to the completion of a real-estate sale. The form also provides a written consent to a dual agency if one develops, and informs the buyer that the broker or agents for the broker may be working with other buyers looking for similar properties.

The BR-11 agreement does not, however, obligate a buyer to pay the broker for services rendered. Even if an agreement is signed, a broker must still look to the seller or the listing broker for compensation. This form is non-exclusive, and may be revoked at any time by either the buyer or broker. In addition, the agreement places a limit on the time within which a legal action can be brought against the broker.

Stacy wants you to be aware that some buyers may be more appealing to sellers. This would include those who can pay cash or are already pre-approved for a mortgage loan. They may have an advantage when it comes to negotiating to buy a home. In addition, sellers who are ready to move prefer buyers who don't have a house they must sell first.

An offer to purchase is often followed by a seller's counter-offer, which can be countered again by the buyer. This is common practice, as both sides attempt to negotiate an agreement that meets their individual needs.

Completing a residential purchase agreement is a complicated transaction that buyers shouldn't enter into without the assistance of a REALTOR® such as Stacy Eder. She has access to the forms needed, and receives updates from local, state and national associations on state and federal laws regulating such agreements. With her years of professional experience, Stacy can either answer any questions you might have or refer you to an appropriate, trusted authority.


Buyers' Up-Front Deposit
Stacy wants you to know that buyers are usually expected to put down a deposit at the beginning of a home-purchase transaction. If a buyer completes the sale, this money will be credited toward the down payment. If the buyer doesn't complete the sale for legal or contractual reasons, the money is typically returned. However, if a potential buyer doesn't complete the sale for other reasons, the seller may be entitled to keep the deposit. (Ask Stacy for more details.)

The U.S. Department of Housing and Urban Development (HUD) advises that deposits should be "substantial enough to demonstrate good faith," usually 1 percent to 5 percent of the purchase price. Often, buyers may put up to 20 percent down.


Home Inspections vs. Appraisals
Because buyers frequently pay for most inspections, it may be a good idea to investigate the costs of the inspections you plan to obtain before making an offer. Stacy can recommend inspectors for your consideration.

Home inspections vary greatly. Some check the home's structure; construction and mechanical systems; and appliances, which may be transferred with the property. Different inspectors look for and test different things and may not discover everything that could be wrong with a property. Yet obtaining an inspection is the best way to become informed of necessary repairs or problems with a particular house. Inspectors do not assess the value of your home.

In addition, a house will undergo an appraisal by a trained professional. An appraisal is an opinion of the property's value that is used primarily to protect a lender's interest. In contrast to home inspections, appraisals are based on past sales data, the home location, the lot size, and the home's condition. For mortgages insured through the FHA, appraisers must disclose potential problems relating to the physical condition of the home. Non-FHA mortgages have no similar stipulations.


Closing
The closing is the day you've been waiting for! Ownership of a house officially transfers from the seller to you! Before the closing, the escrow agent will present you with scores of legal documents to review and sign, and you'll be expected to pay the down payment and closing costs. In addition, a number of other legal procedures must be completed before the sale can close, including approving the mortgage application, clearing the title, appraising the property, and recording the deed.

The Real Estate Settlement Procedures Act (RESPA) provides specific protection to buyers before, during and after closing. If a settlement service has referred you to a REALTOR with whom the service has a business connection, an Affiliated Business Arrangement Disclosure is required before closing. You're entitled to receive a preliminary copy of a HUD-1 Settlement Statement, which lists estimates of all settlement fees to be paid by buyer and seller, if you request it 24 hours before closing; the final HUD-1 Statement is a requisite part of closing. In addition, an Initial Escrow Settlement Statement is required at closing or within 45 days of closing. This explains estimated taxes, insurance premiums and other charges that must be paid from the escrow account during the first year of the loan.

Within three days after your loan application is received, your lender must deliver or mail you a "good faith estimate" of the total amount due at closing, as well as a copy of the HUD publication, Settlement Costs: A HUD Guide.

Closing costs typically are comprised of attorneys' or escrow fees, property taxes, interest, loan origination fees, recording fees, survey fees, first premium of mortgage insurance, title insurance, loan discount points, first payment to escrow account, paid receipt for homeowner's insurance (link to Insurance document) policy and any documentation preparation fees. Fannie Mae estimates that most buyers' closing costs amount to 3 percent to 6 percent of the home's sales price.

As with other components of a buying transaction, Stacy can guide you through the closing process.

Source: California Association of REALTORs®

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