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Archive for the ‘Escrow’ Category

The Buyer’s Love Letter

31 Jul

The Summer of 2012 is getting hotter every day in the real estate market!  Almost every home for sale today is experiencing multiple offers sometimes up to 20 offers in a week!  Interest rates are around 3.5% and inventory is in short supply.  Buyers know that if they don’t get in on this market, prices and interest rates will go up and they might not be able to afford their Dream Home!

Recently I wrote an offer on a Standard Sale for a very well qualified Buyer.  I already knew that there were multiple offers on the property.  2 offers were all cash, 3 were FHA offers and 2 were offers using conventional financing with 20% down payment.  So how did I get my offer accepted over all the others?

The Buyer’s Love Letter!

Sounds corny?  Well, it works!  I asked my Buyers to write a letter to the Seller describing who they are and why they wanted to purchase the Home.  In this case, the Buyer included pictures of themselves and their dog.  They explained how they fell in love with the house when they walked through the door.  They also went on to say that they were expecting in the Fall and could see themselves raising a family in the Home.

It turns out the Sellers had in mind their idea of perfect Buyers for their beautiful Home and guess what?  The Buyers matched the profile completely!

Now without the letter, the Sellers would have just seen another offer on their dining room table.  The Buyer’s Love Letter put a “face” on the offer.  We had our offer accepted right away and closed escrow with both parties feeling extremely good about the sale.

Real estate over the last 5 years has been a drag.  Smelly, trashed bank owned houses and “drive by only” short sales have made Buyers and Realtors crazy.  It’s about time that the market gets back to a more realistic place where there are “real” Sellers that care about their Home and neighborhood, not just the bottom line on a bank statement.

If you are a Buyer writing many offers on many houses, you just might want to use this technique.  Like I tell my Buyers, “There is a Home for everyone” but sometimes you need a little edge over the competition.

 

 
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Posted in Buyer's market, Escrow, FHA, Home inventory, Homes For Sale, Real Estate Update, REO, short sales, Uncategorized

 

What is a Final Walk Thru?

14 Jul

The final Walk Thru or final inspection occurs about 5 days before the close of escrow.  The Buyers and the Buyer’s agent conduct the walk thru and sometimes the Sellers and Seller’s agent are also in attendance.

The purpose of the final inspection is to satisfy the Buyers regarding the condition of the property.  The final inspection form that is signed by the Buyers and Sellers states:  Buyer and Seller understand and agree that unless otherwise agreed in the prior contractual agreement between Buyer and Seller, a final inspection is not a contingency of the purchase/sale.

Furthermore, the form states that the Buyer acknowledges that: (1) Property is in substantially the same condition as on the date of acceptance of the offer to purchase/sell and (2) Seller has completed any repairs, alterations, replacements or modifications as agreed to by Buyer and Seller.

The final inspection is also a great time for Buyers and Sellers to talk about things like: how to operate the sprinkler system, what day is trash picked up and what are the neighbors like?

 

 
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Posted in Buyer's market, Escrow, FHA, market value, Real Estate Update

 

5 Top Reasons For Escrow to Fall Out

26 Jun

It is sad, but sometimes escrows fall apart.  This “falling out” can be caused by so many things.

1.  The Buyer has been told that they qualify for purchasing a home but the lender might have used overtime wages to put the Buyer in a higher price range or maybe the Buyer went out and bought a new car which affected their ability to purchase a house.  I encourage a Buyer to shop around for a loan.  That way you will know if you have the best lender to help you in this big ticket purchase.  Overall, your FICO score might be slightly affected but it will be an easy thing to explain.

2.  The house does not appraise.  Home prices are going up.  They are not skyrocketing like back in 2005 -06 but the “experts” say that home prices are up 2-3% over last year.  The comparable recent sales might not show the increase in home prices.  If the Buyer and Seller can’t agree to compromise on the price – then your escrow will fall out – fail.

3.  Short sale cannot be approved.  This can include anything from the seller not having a hardship to the lender cannot agree on the sale price.

4.  House in poor condition – the home inspection reveals a leaky roof or extensive termite work that needs to be done.  As a Buyer, you will need to pay for a home inspection in order to find out if the home is in poor condition but the $250-300 you pay is well worth it if you find out the house is a “money pit”.

5.   There is a lien on the house that the Seller thought was taken care of.  Sometimes there are liens on a house from a contractor that didn’t get paid for work done on the property.  Maybe there is an IRS lien from back income taxes that have not been paid.  If there is not sufficient equity in the home to pay off the liens, then escrow fails – falls out.

 

 
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Posted in Escrow, Homes For Sale, market value, Real Estate Update, Uncategorized

 

What Does A Seller Need To Do During Escrow?

14 Feb

Escrow has been opened by your listing agent, now comes the paperwork.  Your Realtor will have you fill out and sign all the necessary disclosures that you as the owner are required to do according to the California Purchase Contract.

1. Transfer Disclosure which allows a Seller to state the items and condition of the property.

2. Water heater/smoke alarm disclosure which tells a Buyer that you have properly installed and strapped the water heater and installed smoke alarms as needed.

3.  Lead Based Paint Disclosure if your house was built before 1978.

4. Seller Property Questionnaire goes in to detail about any repairs made to the property, deaths that might have occurred in the last 3 years, any neighborhood noises and any other known material fact.

5. Termite inspection report and completion of work report.

6.  Natural Hazards Disclosure stating where flood, earthquake, fire zones are located in the area of the property.  This is a report supplied by a reputable company and paid for by the Seller.

7.  Most Real Estate agencies have their own local disclosures that include a myriad of things.

8.  The escrow instructions also need to be signed and sent back to the escrow officer.

The California Purchase contract allows 17 days for the Buyers to conduct all inspections.  As the Seller, your part is to allow access to your home for any and all inspections.  The inspections are all at the Buyer’s expense.  After the inspections are complete and the Buyers are satisfied as to the condition of the property, they might have a Request for Repair list of items that they would like you to fix. This is a negotiable thing and quite frankly a part of the process where communications between both parties can break down.   Remember, the Buyers think they are paying top dollar for your home while you, the Seller think that the Buyers are getting a “deal” on your beautiful home.  Fairness always wins out.

Once the 17 day inspection period is up, your Realtor will ask the Buyer to remove all their contingencies.  In other words, the Buyers will sign the Contingency Removal and that means that they are moving forward with the purchase.  This is a big step for both parties because now there is commitment.

Of course there is packing to do and moving plans to be arranged.  Then about 5 days before the close of escrow the Buyers will request a Final Walk Thru (Verification of Property Condition).  Any repairs that were agreed upon will be checked by the Buyers as will the general condition of the property.  The property needs to be maintained during escrow and kept reasonably in the same condition as on the day of acceptance of the offer.  This is also a great time to talk with the Buyers about how to operate the major components of the home – A/C, heater, pool equipment and sprinklers.   It is also a time to share the gardener’s phone number, when is trash day, etc.

 
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Posted in Escrow, Homes For Sale, market value, Real Estate Update, Seller's market

 

Face to Face – is it still the best way to do business?

13 Feb

For the last week I have been driving past an apartment building on my way to the office with a For Rent sign in front.  An older gentleman in a cowboy hat is sitting on a folding chair next to the sign.  I’ve seen him there in past years but this time I had to stop and talk to him.  I wanted to find out more about him and his way of doing business.

I introduced myself and as I expected, he is the owner and builder of this building with six apartments.  He’s retired and likes to meet the people who will eventually rent from him. He showed me the apartment and we had a great talk about real estate.

Very refreshing!  This is the way real estate used to be done – face to face.  When I received my real estate license 15 years ago, real estate agents would “present” offers to the Sellers in person.  Of course there were no cell phones and email was just becoming popular.  Now days offers are emailed, scanned or faxed back and forth with buyers, sellers and agents never meeting.  Ok, I admit the world works faster now but sometimes I wish I could present my offer to the Seller so that my Buyer would have their offer looked at in a better light.  Investors are snapping up properties that in my opinion should be going to first time buyers.  The investors have cash and “cash is King” so they say.  My buyers want a piece of the action!

 
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Posted in Buyer's market, Escrow, FHA, Homes For Sale, market value, Real Estate Update, Seller's market, Uncategorized

 

We’re in Escrow – Now What Happens?

04 Feb

Congratulations!  You accepted the best offer from the best qualified Buyer and your agent has opened escrow.  Now what happens?

Escrow starts the process with opening a title search.  The title report will give all the information about the property in regards to mortgages, liens, easements, taxes, etc.  As escrow is the gathering place for all money and information, they will receive the Buyer’s earnest money deposit (EMD) within 3 days.  Escrow will also prepare the escrow instructions for both sides – Buyer and Seller.  The new grant deed will be prepared in the Buyer’s name and will need to be notarized.  Escrow will start a conversation with the Buyer’s lender and continue to monitor the loan process throughout escrow.

The most important thing to remember about the escrow process is that escrow is a neutral party to the transaction.  They gather and disburse money and information.  They are not on anybody’s “side”.  If there is anything that arises in the escrow process that warrants both sides making decisions to move forward then these issues must be put in writing.  Escrow can only act when both sides approve in writing of a change to the approved purchase contract.  Any other action on escrow’s part is not allowed.  For example, the Buyer’s agent cannot call escrow and tell them to change the closing date without getting it in writing and approved by the Seller.

Since the average escrow for a standard sale in Southern California’s Inland Valley is 30-45 days, there is enough time to thoroughly get to know and understand the process of escrow.  Please ask questions of your agent or escrow officer if you do not understand what’s going on, after all they are the ones that do this for a living and can help with any concerns you have.

p.s. if your escrow involves a short sale, the time frame can be much longer…….

 
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Posted in Escrow, Real Estate Update, short sales, Title

 

We Have An Offer!

23 Jan

This is such an exciting thing to say to a Home Seller!  All the hard work has paid off.

As a listing agent, the first thing I do is verify all the information on the offer.   The source of funds for the deposit and down payment should be a part of the offer package that the Buyer’s agent has sent over.   A letter of approval from a bank or direct lender should also be in the offer package.  A call to the lender will confirm the ability of the Buyer to purchase the home.  The lender has verified the Buyer’s funds and FICO scores and is willing to give a loan to the Buyer based on the information they have obtained.

With the Buyer’s qualifications verified the offer becomes valid.  The next thing to check are the terms of the offer.  How much is the Earnest Money Deposit (EMD)?  3-5% of the sales price is acceptable.  The length of escrow is important – 30 to 45 days is the most common.   Does the Buyer want the Seller to contribute to the Buyer’s closing costs?  Does the Buyer want a termite inspection and clearance?  What other reports or services is the Buyer asking the Seller to contribute?  And of course, what is the dollar amount offered?

Once the offer is reviewed by the listing agent, a net sheet can be prepared.  The net sheet tells the Seller what amount of money they will walk away with from the sale of their home to this Buyer’s offer.   After all this information has been gathered, a meeting as soon as possible between the Sellers and the listing agent is suggested.  You can strategize with your Realtor and decide if the offer is good enough as it is or if you want to counter offer any of the terms of the Buyer’s offer.  If the offer is not quite what you had hoped for in terms of dollar amount, length of escrow, etc.  don’t fret – Counter offer.

On the other hand, you might have several offers to review.  Now that is a nice problem to have.  You might want to pick the offer that is the highest dollar amount – but will it appraise at that amount?  Maybe you were home when one of the Buyers toured your home and you have a “gut” feeling that they are the right people to buy your home, then go with it.

 
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Posted in Buyer's market, Escrow, FHA, Home inventory, Homes For Sale, market value, Real Estate Update, Seller's market

 

How Many Homes are for Sale?

19 Jan

Its been a while since I posted the number of homes for sale in the Inland Empire/Foothill corridor area of Southern California.  We are two weeks in to 2012 and the news is that home sales are up.  Is inventory up too?  Well not yet but we are about 6 – 8 weeks from the start of the Spring selling season so let’s take a look at how many homes are for sale right now. Why is this important?  For the same reason you get a checkup at the doctor’s office, it’s good to know how healthy you are.

Upland has 207 homes for sale – 61 are short sales and 29 are REO’s (bank owned)

Rancho Cucamonga – 454 homes for sale – 220  short sales and 47 REO

Ontario – 377 homes for sale – 199 short sales and 52 REO

Montclair – 56 homes for sale – 28 short sales and 3 REO

Fontana – 574 homes for sale – 301 short sales and 67 REO

Claremont – 89 homes for sale – 21 short sales and 5 REO

La Verne – 86 homes for sale – 26 short sales and 7 REO

Pomona – 355 homes for sale – 175 short sales and 47 REO

San Dimas – 99 homes for sale – 29 short sales and 11 REO

Total homes for sale – 2297.  Short sales – 1060 and REO – 268

Overall, 46% of homes for sale today are short sales and only 11% are REO, 43% are standard sale.

But wait, didn’t the banks foreclose on 1000′s of homes in southern California the last week of 2011?  Yes, but they have not hit the market yet.  At the end of the 1st quarter we will take another look at the numbers.  Real estate has always been a numbers game,  by keeping track of the numbers we will have a good idea about the health of the real estate market.

 

 
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Posted in Buyer's market, Escrow, FHA, Home inventory, Homes For Sale, market value, Real Estate Update, REO, Seller's market, short sales, Title, total listings

 

What Are Your Plans for 2012?

09 Jan

Is this the year you will sell your Home?   What’s the next step?

Its been 5 years into this current economy and you have waited long enough for the market to stabilize.  You are tired of waiting for prices to go up and have heard that they probably won’t in the next couple of years.  So you want to sell and move on with life.

Are you going to take advantage of the great prices and move up?  What you will find is that between the unbelievably great interest rates and low home prices, this is quite possibly the best time ever to move up.  Call a lender to check your financial position.

Will you downsize to a condo or smaller home?  What about renting?  Renting  takes away the responsibilities of homeownership such as painting, fixing, yard work.  Do you want to free up your time to travel, take on a project or pursue a new career?

Whatever you decide, get the wheels turning in the right direction.  Make a list of things to accomplish and give yourself a time limit.  Will it take 30, 60 days or longer to put your house on the market?  Start reading everything you can about selling a house.  Talk to your accountant and tax person.

Looking at Zillow.com and Trulia.com is a good idea too but don’t bank on their numbers.  You will get a good idea what your house is worth but call a local Realtor and make an appointment to get a better idea about what your home can sell for.

If you find yourself selling your parent’s home which many Boomers are doing, then this is an especially important crossroad.  It’s not easy to do.  I have assisted many clients and friends take this journey and all I can say is “take it easy” unless you have to rush due to financial reasons.  On average I find that it can take a year or so to accomplish.  It will all come together but usually there are siblings and other family members that need to weigh in on what the right thing is to do.  Keep the family peace by having a “talk” early on.  Have one or at most two decision makers that live closest to the home in question.  That decision maker can communicate to family members the progress of the sale.  And don’t hesitate to rely on your Real Estate Agent.   They can be a wealth of knowledge and help get you the answers you need.

 
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Posted in Escrow, FHA, Homes For Sale, Real Estate Update

 

Fix It!

05 Jan

This seems like a no-brainer.  If something needs repair such as a curtain rod, trim around a door or a sprinkler hitting a window – then it is wise to fix it.   Sprucing up your home to show it off can bring you extra $$.

Now there is a fine line here.  I’m the type of Listing Agent that does not recommend installing new carpet, granite counters and any other high dollar improvement.  Most times the Buyer will have their own ideas and style about home improvements and it is too hard to guess what they want.  About 4 years ago I had a Seller who was insistent on updating her deceased parent’s home before putting it on the market.  It took her about 9 months and $50,000 to accomplish this.  We put the house on the market and it sold for much less than I had predicted 9 months earlier due to declining values.  If she had put it on the market without any improvements she would have sold it for a higher amount and not went through all the improvement drama and money.

Now if you are dealing with electrical, heating or roof problems and you know they are in need of repair or upgrading then by all means have these attended to right away.  These can be expensive but a Buyer will automatically put a high dollar amount on fixing them.  Plus you can give the new Buyer the receipt when you close escrow so that they know who to call if they have trouble in the future.

One other thing that I advise Home Sellers is to have a professional home inspection.  For about $350-400 a home inspector will tell you if any of the major systems of the house need attention.  This is especially a good idea if you find yourself selling a parent’s home.  It might have been your childhood home but since you haven’t lived in it for 20 or more years, you might not know if your parents have been keeping up with repairs.

 

 
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Posted in Escrow, FHA, Homes For Sale, Real Estate Update, Title

 
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