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Posts Tagged ‘Montclair’

Final Walk Thru

05 Dec

Step 15

About 5 days before the close of escrow, your Realtor will schedule a walk thru of the home.  The purpose of a walk thru or verification of property condition is to establish that the property is in similar condition to when your offer was accepted.  If it is a standard sale with the Seller still living in the home, the landscaping should have been kept up and the home in good condition considering the owners are in the moving process.  The walk thru is also a time to see that any agreed upon repairs are complete. The part I like best about a walk thru is that the Buyer and Seller are usually more relaxed and can talk about the house and how things work.

If the home is a short sale or REO (bank owned home) then things are quite different.  There have been no repairs or regular maintenance done to the home during escrow so you hold your breath as you enter the home and hope that it has not gone down hill any more than on the day your offer was accepted.

 

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

 

Signing Loan Documents

21 Nov

Step 14

So at this time you are about 3 weeks in to the escrow process. The home inspection has been completed and any repairs needed to the home have been agreed upon by the you and the Seller. The lender has ordered an appraisal and it has come in at the agreed upon price and the conditions of the loan are being taken care of by the lender. You have approved the disclosures and signed all escrow documents. You have scheduled your tentative move date.

Escrow will call you approximately 5 days before the close of escrow date to schedule an appointment to sign the loan documents. It is always nice to have your Buyer’s agent present for this appointment so don’t hesitate to ask. Many agents will try to coincide the “walk thru” on the same day as you sign loan docs. That way you know that you are about 5 days away from closing your escrow.

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

 

What is Escrow?

18 Nov

You hear the word Escrow over and over when talking about buying a house but what is it anyway?

I like to describe escrow as a neutral third party that is in charge of gathering and dispensing information about the home purchase. They work for you so if you have any questions, please call the escrow officer. They will be happy to answer questions.

Most escrows last 30 days, “Time is of the essence” is the rule of thumb. Gone are the days of 60-90 day escrows. The sooner escrow can close, the better. Escrows on bank owned homes are also as short as possible. Now of course if your escrow involves a short sale – who knows when that escrow will close!

Escrow will gather title information about the property, insurance information, homeowner’s association information (if it applies), lender and loan information. Escrow will check on the progress of the loan and report on it to the agents. Escrow will also gather all funds – from the EMD (Earnest Money Deposit) to the down payment and loan funding money. Escrow instructions are given to both Buyer and Seller to be signed and returned. There is a lot going on at Escrow!

Escrow also can change terms of the contract for the Buyer and Seller however the change will have to be in writing and agreed upon by both parties. One party cannot make a change without the other one knowing about it. For example, if the Sellers need to change the date of the close of escrow, they will need to write a letter to escrow asking for the date change. If the Buyers agree and sign the change of date form, then it happens.

What act signifies the “Close of Escrow”? The recording of the Grant Deed with the County Recorder with the new owner’s name on it! And the best part – Escrow will be the one to call your agent with the good news – Escrow has closed!

 

image courtesy of lynnchuba.com
 
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Posted in Escrow, Homes For Sale, Real Estate Update, Title, Uncategorized

 

Multiple Offers

09 Nov

I sort of skipped over the multiple offer situation but would like to talk about it now.

For most of my career in real estate in the Inland Empire I have been more of a Buyer’s agent. During these years what I have experienced is multiple offers on most homes for sale.

There is a huge demand for homes and the proof is the fact that every time, and maybe you think I’m exaggerating but it is true, every time I write an offer there are other offers on the same house. It doesn’t matter the price of the home, it can be $125,000 or $950,000 and there are more than one offer that my Buyer has to compete with. So that is the word I want you to remember – compete.

Because the number of homes for sale is low, the demand is high, there is no place for low-ball offers. If the house proves to be well priced, then offer your best. Especially when you are dealing with a bank owned home. The bank will always come back to the listing agent and ask for “Highest and Best”.

Yes, I know you say you don’t want to get in a “bidding war” but if you want to buy a home in this area, you will be competing. Read some of my earlier posts and you will find that competing is not only about price but the terms of your offer.

 
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Posted in Homes For Sale, Real Estate Update

 

Contingencies

28 Oct

Step 11

I thought I would go a little more in depth about the contingencies that are a part of the California Purchase contract.

Inspection contingency – If there is a problem with the house such as something not working properly, you as the Buyer will be advised by your Buyer’s agent to ask for repairs to that item. This works for a standard sale, not a short sale or bank owned home, they for the most part will not repair anything. Also, the Seller will give you disclosures about the property. Read them all as the disclosures are very important. If there is something disclosed by the Seller of the property that you do not agree or like, then tell your Realtor that you want to withdraw your offer. Be sure to do this by the 17th day, after that you might lose your deposit money.

Appraisal contingency – the property must appraise at the value (price) agreed upon. If the appraisal comes in higher, then you are lucky but if it comes in lower then it opens up negotiations again. Hopefully this won’t happen but if it does, your Buyer’s agent will need to go to bat for you. This is a critical point. Sometimes the Seller will not accept a lower price.

Loan contingency – the lender that you have chosen to give you a loan is doing their part to obtain financing on the home. They are also concerned with the appraisal. If there is a discrepancy in the value then the lender will have to wait to see if you and the Seller can agree so they can proceed with the loan process. During escrow the lender checks and double checks again just before the close of escrow on your employment and FICO scores – so stay employed and don’t run up any bills!

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

Acceptance of Your Offer

24 Oct

Step 10

After negotiating the details of the offer, you have what is referred to as Acceptance. The date of acceptance is the key to escrow. The date of acceptance will be used and referred back to throughout escrow.

For example, 17 days after the date of acceptance, is the time allowed for in the contract(California contract) for you as the Buyer to conduct all inspections of the property. This is very important because at the end of the 17 day period the Seller will ask you to remove this contingency.

Let’s talk about contingencies, there are 3. You have the inspection contingency, the appraisal contingency and the loan contingency. This means that the house needs to pass inspection, the appraisal has to come in at the agreed upon value and the loan must be in place and ready to “fund” by your lender of choice. If any one of these contingencies do not happen, then the escrow “falls out” – no sale. Now you know what it means when you hear that a house has “fallen out of escrow”!

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

The Counter Offer

17 Oct

Step 9

Expect to receive a counter offer from the Seller. In 15 years of writing offers for Buyers, I have only had maybe a dozen original offers accepted as written.

The most common thing that is countered by the Seller is the price.

Some of the other terms of the contract that can be countered is the amount of time for escrow. 30 days is the most common escrow length but sometimes the Seller wants to close escrow on a specific date. The Seller will also counter the escrow and title company that they will want to use. It is customary in this area for Sellers to use the escrow and title company of the listing agent.

If you have written an offer on a bank owned home – REO – then the bank will send you a counter offer that looks like an offer and can be 15-20 pages long. Don’t be alarmed, this is the way they do things. If you have written an offer for a short sale then be prepared to wait as the bank will want to do an appraisal before issuing a counter offer. If you have written an offer on a standard sale home then the Seller will most likely respond within the 3 day time limit that is stated in the contract.

Something that has been happening in the last year or more with REO’s and short sales is that they will counter back that they do not want to pay for any termite work or home warranty. Again, the banks are trying to increase their bottom line any way they can. So buying a bank owned home or short sale places more responsibility on the Buyer because the Buyer will need to pick up these fees.

Next blog post: Multiple Offers

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

Making an Offer on a House

04 Oct

Step 8

It’s not all about price.

The terms of the contract are very important. The main term of the contract that all listing agent’s eyes go directly to is the type of financing. Financing is the type of loan you are using. Are you an FHA Buyer? A conventional Buyer with 20% of your own money to put towards the purchase? A VA Buyer who can use the Veteran benefit that has been awarded to you by being a Veteran? Or a cash Buyer?

At this moment in the San Bernardino/Riverside areas, the conventional Buyer and cash Buyer are King! Sorry to break this to you. Yes, the bottom line is all the Seller is looking at. No, it is not fair. The American Dream of home ownership is being beat to pieces! The investor/buyer that has all cash or the conventional buyer have a definite advantage. An FHA buyer most times is hoping that the seller won’t “mind” paying some of the closing costs but the truth is – they do “mind”. The VA Buyer is at the bottom of the heap and it breaks my heart to say this. The Veteran should have first “dibs” but in this still extremely greedy society, sellers don’t care. Whether the seller is the owner or the dreaded “bank”, they want all the money they can drag out of a buyer.

For a while now, the banks have started saying they will not supply a buyer with a termite inspection or termite repairs, so don’t ask. The banks also will not pay for a one year home warranty which is about $350. So what do you do? You as the buyer pay for these items. Yes, this is a messy time to buy a home but if you get lucky and get your offer accepted, then it is the best of times to buy a home!

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

House Hunting – Short Sales

23 Sep

Step 6

The market in the Inland Empire is about 45% short sale listings at this time. If you have unlimited time on your hands and don’t mind waiting and waiting and waiting some more – then a short sale is for you!

I’ve been on both sides of a short sale. I have listed short sales and actually sold them! My hairdresser thanks me for that as I needed lots of touch-ups to hide the gray hairs that started sprouting when I was worried that the bank would foreclose before I could get a short sale approved for sale. At this time, a short sale listing is just that – a listing for sale. There is no guarantee that the house OR the seller will qualify for a short sale with the bank. So let’s back up, the short sale listing might not be able to be sold?

Yes, that is the truth! The owner/seller of the home has to qualify for a short sale of their home. A short sale means that the bank will sell the home for LESS than the current mortgage amount. But, in order for the bank to agree to selling the house as a short sale there MUST be a hardship. A hardship is a loss of job, death, divorce or illness. A hardship is not a loss of equity in the house. In other words if the seller bought the home 4 years ago at the top of the market and they owe more on the mortgage than what the house is worth then unless you have a hardship, there will be no short sale. I get calls daily from distressed sellers about this but if you remember back in the 90′s when we first experienced short sales, these rules were not in place. An owner back then could short sell their home and go right across the street and buy another home for less and many did. The rules are pretty strict this time around. In fact, do you know that the bank asks the seller for 2 years of tax returns, current bank statements and pay stubs? The reason they do is so they can look for assets. If the seller has assets, the bank wants them and they are not shy about asking for them! After all the seller signed on the dotted line for the mortgage and they promised to make the payments.

Ok, so how does this affect a Buyer, well like I said in a previous post – don’t fall in love with the house – because the bank might not grant a short sale. As a Buyer, find an experienced Buyer’s agent that knows the right questions to ask of a short sale listing agent. It takes more research to determine if the house you are interested in is able to be sold. Another thing to remember, the short sale owner because of their hardship is usually not in a good frame of mind. They are sad, depressed and can have no motivation to cooperate. That leads to not wanting to show the house to prospective Buyers. It is very common to hear that there are no showings on short sale listings or even that it is available to view at restricted times. Some sellers decide to rent their home out and then there are tenants to deal with – messy! My all time favorite showing restriction – the house is drive by only – meaning you buy it without seeing it until the bank approves the sale!

I’m sure you have friends and family that have bought short sales and can tell you all the horror stories they went through. Trust me, they are true. According to today’s newspaper, our area will not return to normal for another 5 years. So call me if you want more information about short sales, they can be negotiated and you shouldn’t be afraid of them just educate yourself and decide if you are willing to wait.

 
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Posted in FHA, Homes For Sale, Real Estate Update

 

House Hunting – REO’s

20 Sep

Step 5

I would like to discuss bank owned homes with you. At this time about 13% of the homes on the market are bank owned. You’ve seen REO (real estate owned) on many homes in the last couple of years. These homes have been repossessed from the owner by the bank. Sometimes these homes were on the market previously as a short sale but didn’t sell for whatever reason. So now the bank owns the home.

Many banks will go thru an extensive renovation of a home before putting it on the market. Because of either bad treatment by the previous owners or vandalism while the home sits vacant for months, the bank needs to “fix it up”. Please remember, no one from the bank has ever lived in this home. The bank is relying most times on the REO listing agent to be in charge of the rehab work. Tip #1 – always hire the best home inspector you can find to inspect this home. Sometimes you will need to hire other service providers to inspect things like the roof, plumbing and air conditioner. This can be very costly. Once you are in escrow and you are conducting these inspections, you must understand these inspections are for your knowledge only. The bank has already done all the improvements they intend to do. You are buying the house “as-is” so unless there is something majorly wrong with the house – the bank won’t take care of it. In fact, many times you won’t even get a termite report from the bank. Oh and by the way, some of these REO homes do not have stoves, dishwashers and other appliances – that’s for you to buy.

Another thing to keep in mind, and I’m focusing on the Inland Empire when I say this. In almost all cases of bank owned homes, the bank has lost money, somewhere in the range of 50-60% of the amount of the loan. Well I’m sure you don’t feel sorry for them but it does affect you if you want to buy a bank owned home. Let’s say a 3 bedroom home is foreclosed on in Rancho Cucamonga. The loan on it was $450,000. In today’s market the house is now worth $250,000. That’s a $200,000 loss for the bank. And for this case we aren’t going to figure how much money it takes to fix up the house for sale. So one night you can’t sleep and you stay up watching TV. There is a show on how to buy bank foreclosures at 20% off the list price. Can it be true? No. Maybe you can do this in Barstow but not in Rancho Cucamonga. There are way too many Buyers in today’s market and many are cash buyers. This bank owned home will sell for market value.

I can’t finish this post until I talk about my all time favorite Buyer, the Flipper. Lately busloads of “Flippers” have been roaming the streets of the IE looking at REO and foreclosed homes to buy, fix up and sell – Flip! The only people making money here are the ones conducting the tours and the bus drivers. If you want to “flip” a house, go buy one for all cash on the courthouse steps and rehab it, then sell it. If you buy a bank owned home at market value and expect to fix it up and sell it, well my advice is forget about it…. It sounds like a fun way to make money but in the long run this is not an amateur sport. There are large corporations out there buying up homes in bulk on the court house steps and flipping them, this is their business not a weekend project.

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

 
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