Real Estate of Los Altos

Purchasing a home is one of life’s most important investments and exciting adventures, but even experienced buyers can find the process complex and a bit overwhelming.

Keys to smart home buying

1       Understanding the state-of-the-market

•        The current housing market offers a unique window of opportunity for savvy buyers

•        Mortgage rates remain at historic lows

•        Prices are fairly stable in this very desirable area

•        There are a large selection of homes to choose from

•        Yet the prospects for long-term gains in the market remain strong

•        Since 1968, there has been only five times that the median price of single-family homes have dropped in California, according to the California Association of Realtors. Five times out of 38 years. And the average annual price increase during that time has been just about 9%.

2       Choosing the right broker to represent you

•        Find you the right property

•        Negotiate the best price and terms for you

•        Handle the details and keep you informed

•        Ensure the entire process is smooth, efficient and satisfying

•        Provide the level of service that is desired

3       Establishing your purchasing power

•        The first step in establishing your purchasing power is to get pre-approved with a proven lender or obtain financial products from several financial institutions

•        This allows the company to control the underwriting and funding process, while also giving it the ability to match your unique needs with the best solution

•        Determine How Much Home You Can Afford:

Your lender will show you a variety of different types of financing (Fixed Rate, Adjustable, Interest Only, etc.) and how much you qualify for with each time

•        Determine What Your Down Payment Will Be:

Based on the funds you have available

•        Determine What Your Monthly Payment Will Be:

•        Before picking a price range, you should be sure that you are comfortable with your total monthly payment:  Principal, Interest, Taxes, Insurance (Mortgage Insurance and Home Owners Association Dues)

•        Here are some of the current documents you’ll need to get started:

•        Income

Current pay stubs

W-2s or 1099s

Tax returns, usually for two years

•        Assets

Bank statements

Investments/brokerage firm statements

Net worth of businesses owned (if applicable)

•        Debts

Credit card statements

Loan statements

Alimony/child support payments (if applicable)

•        Financing a home is an involved process through each step of the way:

•        Loan application is completed and submitted to lender

•        Lender orders appraisal, credit report, verification of your employment and assets

•        Lender provides a good faith estimate of closing and  related costs, plus initial Truth In Lending disclosures

•        Lender evaluates application and support documents, approves loan and issues letter of commitment

•        Closing is held, loan documents are signed and the loan     is funded

•        Lender disburses funds to the settlement or closing agent, seller is paid and title to the home is yours

•        Required documents are recorded at the County office of records

4       Determining the characteristics of a home that are important to you

•        LOCATION

•        Convenient to work    

•        Convenient to transportation Convenient to schools

•        Convenient to shopping

•        Near recreation facilities

•        Neighborhood

•        FEATURES                     

•        Preferred style (colonial, ranch, townhome, etc.)

•        Number of bedrooms                          

•        Number of bathrooms                         

•        Family room

•        Bonus/Game room

•        Fireplace                                

•        Home office                            

•        Kitchen amenities                               

•        Garage (no. of cars)

•        Central air conditioning                      

•        Lot size                                   

•        Pool                            

•        View                           

5       The home-finding process

•        Several real estate websites offer a glimpse into the homes currently available for sale.  Visit the following:

•        CaliforniaMoves.com and/or CaMoves.com

•        MLSListings.com

•        ColdwellBanker.com

•        OpenHouse.com

•        Realtor.com

•        NYTimes.com

•        Google.com

•        Trulia.com

•        Zillow.com

•        Yahoo.com

6       Work with the Brokers:

•        You can ask about any properties that are advertised, no matter who the broker is

•        The broker will provide you with detailed information and show you the homes that interest you

•        If you see an “Open House” or “For Sale” yard sign, the broker can arrange a private showing

•        When visiting an open house on your own, give the Agent your broker’s card to tell them that they are your Agent

•        Based on your wants and needs, we will schedule property tours in which you view the homes that are currently on the market and meet your needs

•        Have the Broker pre-screen all of the properties in your price range so that they may properly communicate the home’s value

•        Have the broker share their evaluation of the homes you see, including factors that may affect their value

•         

7       Making an offer

•        Prepare an offer that will meet your needs and provide a solid base for negotiating with the seller

•        Carefully review each of the terms of the purchase offer

•        Review and explain each clause and contingency of the contract

•        Buyer’s Packet – Review and sign all documents

•        Cover sheet for upfront disclosures

•        Advisory regarding written reports

•        Agent Authorization to order reports

•        Buyer’s approval of parking and storage

•        Advisory regarding home owner’s coverage

•        Agency Disclosure

•        Sample PRDS Purchase Agreement

•        PRDS Purchase Agreement

•        Counter Offer

•        Environmental Hazard and Earthquake booklet

•        Residential earthquake hazards report

•        Acknowledge receipt of homeowners guide to earthquake safety

•        Lead Paint Disclosure

•        Affiliated business arrangement disclosure

•        Contingency Removal Schedule

•        Market condition advisory

•        Just Listed/ Just Sold Postcard

•        CAR Buyer’s Inspection Advisory

•        CAR Verification of Property Condition

•        CAR Disclosure Representing More than one

•        Mold disclosure

•        Regional disclosures

•        Clue report addendum

•        Custody of Earnest Money Deposit

8       Review reports:

Structural Pest Inspection

Property Inspection

Roof inspections

Chimney Inspections

Pool/Spa Inspection

Structural/Foundation Inspection

Soils/Geological Report

Heating/Radiant Heating Inspection

Carpeting, Painting, Repair etc. Estimates

Environmental Reports

Asbestos Investigation

Lead Investigation

Sewer/septic

Building permit

Homeowners Assoc documents

9       Make sure the purchase offer reflects your wishes and needs

•        Complete purchase contract and all statutory addendums

•        Negotiating the Offer/Acceptance - The sellers will have the choice of:

•        Accepting your offer as presented

•        Rejecting it completely

•        Countering offering it

•        Your Agent will communicate to you the seller’s response and, if necessary, suggest further negotiating options

•        Your Agent will present your written offer to the sellers and negotiate on your behalf, including any post inspection findings

•         

10    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.

•        Once the offer is accepted, we enter the escrow process.  During this time, your Agent will perform several duties on your behalf.  It is their duty to keep you apprised each step of the way.

•        Identify and disclose details concerning property

•        Deliver completed contract to lender

•        Deliver contracts to title company

•        Coordinate and attend all inspections

•        Negotiate post inspection findings

•        Resolve problems and challenges relating to property condition

•        Coordinate appraisal appointment

•        Complete necessary paperwork

•        Arrange appointments at the house for measurements and/or future improvements

•        Negotiate actual occupancy

•        Coordinate actual close of escrow date

•        Coordinate and attend the signing at the title company

•        Arrange and attend final walk through

•        Work with lender to finalize loan documents

•        Arrange for final check to be sent from trust log to title company

•        Resolve any problems or challenges

•        Deliver keys

•         

•        Turn in all contract paperwork within three days

•        Negotiate Request for Repairs

•        Develop Escrow Schedule to track the dates

•        Lenders written confirmation of completed loan application

•        PRDS Seller and Other Financing Addendum

•        Buyer signature on Seller disclosures

•        Remove finance contingency

•        Arrange for deposit increase and RID 11

•        RID Liquidated Damages

•        Review all disclosure signatures

•        Remove property contingencies

•        Arrange for repairs to be completed

•        Notice of work completed form

•        Arrange Rent Back if necessary.

•        Coordinate a home warranty

•        Help with your utility set-up

•        Your Agent will schedule a walk-through prior to closing which lets you confirm the condition of the property.

•        A thorough walk-through will help you determine if the property is in the condition you expect

•        Should a concern arise during the walk-through, your Agent will assist you in resolving it

•        Provide close of escrow package with all home sale documents

•        Ensure transition to new residence is smooth

•        Provide a supporting list of trade professionals who can help with repairs or upgrades to your new home

•        Serve as a resource to your friends and family

11    Closing

•        Collect deposit check if offer is declined

•        Obtain escrow instruction in advance of signing

•        Walk through property for condition verification

•        Turn in all disclosures—read and approved

•        Review against Page 5 Buyer’s Package

•        Turn in all inspection reports—read and approved

•        If no physical inspections done, waiver form by the Buyer

•        Buyer’s Inspection Checklist

•        Arrange rental agreement

•        Review Preliminary Title Report

•        Read and Approved by Buyer form

•        Home Protection Plan (usually from Title company)

•        Condominium documents

•        Condo/CID Disclosure addendum

•        Request for Homeowners Assoc Documents

•        CC&R’s

•        Condo by-laws

•        Review closing statement

•        Signatures of Buyer’s at the Title Company:

•        Escrow Closes

•        Deliver keys to buyers.

Purchase Agreement

PRDS Real Estate Purchase Agreement

The opening paragraph offers a summary of the purchase agreement:

·       (Buyer): Robert Smith and Mary Smith, not Mr. and Mrs. Robert Smith

·       sum $1,200,000

·       located at: 1234 Able Street,

·       City of: San Jose

1.     Financing Terms

a.      Deposit: usually 1% in the form of a personal check written to the title company. Deposited three business days within acceptance into escrow.

b.     Additional Deposit: Usually 2% in the form of a personal check written to the title company. Upon removal of all contingencies by default, but usually written in as, “upon removal of financing contingency”

c.      Balance of down payment: usually completes the 10% down payment including the deposit and additional deposit. This is deposited into escrow through the bank in time to close escrow on the agreed upon date.

d.     Loan: The amount the bank is loaning.

·       Is/is not contingent upon the Buyer obtaining financing

·       Principle and interest loan or interest only

·       Rate of not more than (give a little cushion)

·       Length of loan: 30 years

·       maximum rate of: (give a little cushion), leave blank if a fixed rate.

·       Pre-approval or pre-qualification letter

·       Within 5 days or ____ days for the pre-approval letter

e.      Additional Financing

f.       Total Purchase Price:

2.     Source of Funds: Obtaining the funds for the deposit and down payment is not a contingency of this contract.

3.     Intent to Occupy: Buyer does or does not intend to occupy.

4.     Fixtures and Personal Property. Explain what a fixture is to the sellers and buyers, any questions, state it here. Note: Items mentioned in advertisements, fact sheets, MLS, TDS, etc. are not included nor excluded unless expressly provided for in this contract.

a.      Items Excluded:

b.     Items Included:

5.     Liquidated Damages: initial to authorize. Advise talking to a lawyer. This paragraph limits the seller to retaining 3% of the purchase price.

6.     Mediation: This paragraph is not optional and binds both parties to agree to mediation before court.

7.     Arbitration: initial to authorize. Advise talking to a lawyer.

8.     Real Estate Transfer Disclosure Statement (TDS), Lead-Base Paint Disclosure, Natural Hazard Disclosure Statement (NHDS), and PRDS Supplemental Seller Checklist (SSC) : Seller must deliver to Buyer within 5 days or ___ days of acceptance.

·       Or check each one that was delivered already

·       Check 5 days or ___ days for sign and return if Buyer elects to terminate the contract based on these disclosures

9.     Property Disclosures (environmental, natural hazard, earthquake, tax assessment, tax status, booklets, FIRPTA): Seller shall provide

10.  Property Condition, Insurance, Property Disclosures, Lead, Contingencies: These disclosures are made part of this contract. Buyer shall approve as part of this contract.

a.      Property condition

b.     Homeowners insurance coverage, CLUE report

c.      Property Disclosures

d.     Lead Disclosures

11.  Structural Pest Report (SPC)

a.      ___Buyer or ___Seller shall within 5 days or ___ days engage a …… at ___Buyer’s or ___ Seller’s expense.  Note: If seller has already completed, the buyer may want to provide their own and decide whether or not to include it in the contract.

b.     Section 1 work must be completed prior to closing.

c.      Inaccessible areas to be paid by buyer if no damage. Within 5 days or ___ days.

d.     Personal property interference may cause additional inspection costs. Garages with storage are the typical problem.

e.      Fumigation requirements. Damage to roof tiles and landscaping is typical. Before or after?

12.  Seller’s Repair/ Maintenance Obligations; Risk of Loss: limited to known or discovered before close of escrow.

a.      Condition of roofs, skylights, appliances, plumbing, heating, etc.

b.     Broom clean condition of the remainder of the property

c.      Risk of Loss: material damage to property prior to close of escrow may terminate this contract, all monies returned.

13.  Repairs/Walk through Inspection: All repairs must be made prior to close of escrow by a licensed contractor. Note: the CAR form allows unlicensed workers.

14.  Home Protection Plan: A plan shall be ordered by __Buyer or __Seller or is __ waived, not to exceed $____ (usually $275) and shall be paid for __Buyer or __Seller or ___split 50/50

15.  Conditions Relating to Title; Disclosures and Reports:

a.      Title: usually paid for by Seller

b.     Public Improvement Bonds and Assessments Disclosure: must be paid current by Seller

c.      Property Taxes: must be paid current by Seller

16.  Contingency Removal:

a.      Financing Contingency: Buyer shall have ___ days

b.     Lead Inspection: Buyer shall have 10 or ___ days…. Note: enter “0” if the Buyer wishes to waive this. 10 to 14 days is recommended.

c.      Homeowners Insurance: Buyer shall have ___ days…. Note: 10 to 14 days is recommended.

d.     Other Contingencies: Buyer shall have 7 or ___ days…. Note: 10 to 14 days is recommended. Also, this is a good place to add the CLUE report.

·       Note: During competitive times, enter “0” days for 16 (a,b,c) and 3 days for 16 (d).

e.      Documents delivered by Seller within 5 or  __ days. Note: Leave at 5 usually.

f.       Repairs not otherwise required by this contract must be in writing and Seller shall have 5 or ___ days to complete.

g.      If Buyer exercises the right of cancellation under this section, Buyer shall be entitled to all monies.

17.  Legal Nature of Agreement:

a.      Entire Agreement: this is the full and final agreement. No alterations except in writing.

b.     Binding Agreement: binding upon heirs, assignees, etc. until close of escrow.

c.      Attorney’s fees: Prevailing shall be entitled to attorney’s fees.

d.     Dissemination of Information: MLS must be notified within 48 hours of closing.

e.      Legal, Tax, Title, and Other Advice: consult an attorney

f.       Governing Law: State of California

18.  Default and Remedies: Liable for the other’s damages pursuant to Paragraph 5

19.  Escrow:

a.      Close of Escrow: State the exact date for close and delivery of the keys.

b.     Prorations and Transfer Tax: taxes, interest on assumable loan, HOA dues, rents.

·       Seller pays county transfer tax, $1.10 per $1,000

·       Buyer and Seller split the cost of city transfer, $3.30 per $1,000 for San Jose, Palo Alto, and Mountain View.

·       Inspect the property one week before closing

·       Have the escrow office fax the closing statement ahead of time to review before meeting with the client

·       Cashiers check the day before closing

·       8:00 AM records, 10:00 AM notification

·       Rent Back problems: Buyer wants the keys and to re-key, seller wants to keep keys.

·       Tues, Wed, Thurs are best days to close, because funding has to occur the day before, so Mon for Tuesday. Friday is a good backup day for Thursday should problems occur.

20.  Additional Contract Docs: Check off:

·       PRDS Seller and Other Financing

·       PRDS Common Interest Development

·       Interim Occupancy Agreement (Buyer in Possession)

·       Residential Lease after Sale (Seller in Possession)

·       Sale of Property Contingency

·       As-Is Addendum

·       Other (CLUE Report)

Notes: CID and HOA docs can be overwhelming and can be read by an expert for a fee – look for assessments and deferred maintenance. Also, CB recommends not allowing a “Buyers in Possession” : The Buyers may not like the place suddenly and back out of the deal.

21.  Other Terms: Note: Don’t get creative here, addendums may cause fraud.

22.  Agency Disclosure: List the brokers

23.  Time is of the Essence statement

24.  Equal Housing Statement

25.  Buyer’s Duty of Care statement

26.  Offer: Contract revoked unless signed copy received by Buyer or __________agent by __________ (date) at ______ (time) or ____ upon presentation. Note: NEVER sign this upon presentation, it means it has to be returned instantly after you stop talking about the offer. However, do keep it as short as possible.

27.  Brokerage Fee: Has to be what the MLS states. Usually 2.5% or 3%

28.  Counter Offer: Seller signs if a counter-offer is made and attached.

29.  Acceptance: this section must be completed even if a counter-offer is included

Notes:

• Number one lawsuits: square footages and school districts. Metroscan is not perfect but better than MLS.
• Any single line item change requires a counter-offer.
• Removal of contingencies, try to do all at once for control