Buyers of Realestate

Buying Tips

Tip #1 - Be Pre-Approved!

Meet with a lender first! A pre-approval tells you exactly how much you can spend.

Tip #2 - Make that list!

Define your needs on paper to help determine the property you're looking for.

Tip #3 - For Sale By Owner ( FSBO) or Agent

'For Sale By Owner' homes are homes being sold by the Seller without the services of a Real Estate Agent. If you are purchasing a home directly from the seller, you are going to need to negotiate and deal directly with the seller. The process is basically the same.

You may consider employing the services of an agent to help you look for a home. Before you select an agent, do your homework. Interview several real estate agents to determine their level of experience in the area you wish to purchase. Check to ensure that the agent is properly licensed by using the license status inquiry feature in the California Department of Real Estate (DRE) Web site. Review any disciplinary actions that may be reflected on the licensee record and assess whether or not that information is important to you in your selection of an agent.

You Found Your Home, What's Next?

You will make an offer, which should include the following information:

Complete legal description of the property
Amount of earnest money
Down payment and financing details
Proposed move-in date
Price you are offering
Proposed closing date
Length of time the offer is valid
Details of the deal

Remember that a sale commitment depends on negotiating a satisfactory contract with the seller, not just making an offer. If you have an agent, he/she will help you prepare an offer. If you are purchasing from a FSBO there are sample contracts online and in stationary stores to assist you.

Make sure that your offer contains any contingencies or special conditions that you desire in the contract. This would include your need to qualify for a loan, repairs that you want the seller to complete prior to the close of escrow, as well as pest control inspections, home inspections, home warranty programs, and any other specific items. Remember, if your offer is accepted and thus becomes a binding contract, failure to complete the purchase could affect the return of your deposit.

You should thoroughly review the contract before signing it and make certain that you understand it. If there are portions of the document that you do not understand, you should seek appropriate professional advice from a real estate professional or attorney. Make sure that the offer you sign does not contain any blank spaces that can be filled in after you have signed it.

What is Earnest Money? How Much Should I set Aside?

Earnest money is money put down to demonstrate your seriousness about buying a home. A minimum of $500.00 is required to open escrow with Cimarron Escrow, Inc., however the deposit may be higher. The purchase agreement or contract will specify. Escrow companies cannot accept cash as a deposit or down payment. You will need a check, money order or cashier's check. This provides a permanent record of the money that you have deposited.

If your offer is accepted, the earnest money is deposited into escrow and becomes part of your down payment or closing costs. Once in escrow, the deposit money is neither the seller's nor the buyer's, the funds become neutral. Should escrow cancel, mutually agreed upon Cancellation Instructions are required to release the deposit.

Have the Home Inspected!

Absolutely without fail have a property inspection report done as part of your purchase agreement. The cost in terms of your purchase is minimal - average cost $250 to $500 depending on the size of property. Licensed building inspectors can be located in the Yellow Pages.

An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs, that are needed.

The Inspector does not evaluate whether or not you're getting good value for your money. Generally, an inspector checks (and gives prices for repairs on): the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.

You may want to include an inspection clause in the offer when negotiating for a home.

What are "Home Warranties", and Should I Consider Them?

Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner's insurance. Warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped. If the seller doesn't agree to provide a home warranty as part of the agreement, you may wish to purchase one for yourself.

What are Closing Costs?

Closing cost are the fees associated with closing your transaction and are usually made up of the following:

Attorney's or escrow fees (Yours and your lender's if applicable)
Property tax prorations (to cover tax period to date)
Interest (paid from date of closing to 30 days before first monthly payment)
Loan Origination fees (covers lenders administrative cost)
Recording fees
Survey fee
First premium of mortgage Insurance (if applicable)
Title Insurance (yours and lenders)
Loan discount points
First payment to escrow account for future real estate taxes and insurance
Paid receipt for homeowner's insurance policy (and fire and flood insurance if applicable)
Any documentation preparation fees

What Disclosures Should I Look For?

There are a number of disclosures that you are entitled to receive during the course of your purchase. Two of the most important disclosures that you should receive in a residential purchase are as follows:

Property Disclosure Statement - This disclosure is completed by the seller and covers the physical condition of the property and potential hazards or defects that may be associated with it. This document also discloses any special taxes, assessments and other factors that may have a material effect on the value or desirability of the property.

Agency Relationship Disclosure - If Real Estate agents are involved, your real estate agent is required to provide you with a written disclosure stating whom he or she represents in the transaction. The agent may represent you as the buyer exclusively, or the seller exclusively, or be a dual agent representing both you and the seller.

Depending on the location, age and other factors regarding the residential property that you are purchasing, additional disclosures may be required. For more info visit the California Department of Real Estate website.

Financing Disclosures - If your getting a loan, various financing disclosures are also required providing you with important details of your loan. In this regard, the two major disclosures required are the Truth in Lending Statement (Regulation Z) and the Real Estate Settlement Procedures Act (RESPA). Your Loan Officer can help you with these.

Public Report - In all common interest facilities which have homeowners association dues, as well as in the initial offering of homes in standard subdivisions located outside city limits, a public report issued by the DRE is required. The public report is a detailed statement, which discloses to prospective buyers pertinent facts about the subdivision. The report includes information about utilities, water, roads, soil, geologic conditions, title, zoning, use restrictions, hazards, and the financial arrangements that have been made for the completion of the subdivision.

Escrow and Title

You have a right to negotiate with the seller if you have a preference as to the escrow and title company that will be used in your transaction. The Escrow Company is a neutral third party with the responsibility of protecting the interests of both the buyer and seller. The escrow officer ensures that all terms of the contract as detailed in the escrow instructions have been met and that the appropriate deeds are recorded upon the close of the transaction. The Title Company provides an insurance policy to protect the buyer and the lender against any unknown defects with respect to the title to the property. Normally, the lender will require a title insurance policy as a condition of the loan. If you have any questions in regards to how Cimarron Escrow can help you, please contact us.