Escrow Processing

April 30, 2007

Your offer has been negotiated and accepted. Your agent now will "open escrow". What will escrow be doing?

The escrow holder will be ordering and collecting documents and monies according to the terms of the California Purchase Agreement.

The escrow holder will
1) Order a Preliminary Title Report which will show all the owners, a legal description of the property, any liens that are outstanding against the property and any easements of record.
As a buyer, escrow will send you a copy of the preliminary title report. It is important that you read it and go over it with your agent. The Purchase Agreement gives you the right to approve or disapprove of it. Along with the prelim, a copy of the CCRS will also be ordered. These are conditions, covenents and restrictions that may affect the use of the property.

2) Type up and send out supplemental escrow instructions and questionaires for buyer and seller to complete. It is important to complete these forms in a timely manner.

3) Order pay off statements from the seller's lender.

4) Receive loan documents from buyer's lender and set an appointment for signing. Tell buyer how much money will be needed in the form of a bank cashier's check in order to complete the escrow.

5) Package the loan documents and send them back to the lender.

6) Order buyer's insurance based on information buyer has given escrow holder.

7) Review the file and if all terms of the purchase agreement have been met, order funding and set up with the title company for recording the deed and transfering the title from the seller to the buyer.

8) Once the recording is confirmed, escrow holder will balance the file, pay all the bills, prepare HUD 1 closing statements and distribute remaining funds to the appropriate parties.

Tomorrow : What escrow holder is NOT concerned with.

For Gardeners and Runners

April 27, 2007

This weekend, April 28th and 29th, kicks off two annual spring events in the City of Redlands.
The Redlands Horticultural & Improvement Society will be hosting the Flower Show and Garden Tour. The Noon Kiwanis Club will hold its "Run Trough Redlands.

This year will be the 95th annual Flower Show for the Redlands Horticultural & improvement Society. It will be held from 2 - 6 P.M. on Saturdayand 10 A.M. -5 P.M. on Sunday. The event begins at the ESRI Cafeteria at 380 New York Street. New York Street is only accesible from Redlands Blvd. The winners of floral arrangements and of plants specimans will be at the ESRI Cafeteria. There will also be a plant sale at the Prospect Park Carriage House. The maps for the private gardens that will be open for tour can also be obtained at the ESRI Cafeteria. The cost of the event is $8.00. You can phone (909) 792-4835 for more information.

As a spin off from the flower show and garden tour, The Redlands Art Association will be hosting "Art Alive". This event is held at the Redlands Art Association Gallery at 215 E. State Street in downtown Redlands. There will be paintings and sculptures and the added attraction of live floral arrangements. For more information call (909) 792-8435.

This will be the 24th annual Run Through Redlands. Racers can register online at www.redlandsevents.com While it is too late for early registration, I believe you can register Sunday. There will be a 5K, a 10K, a half Marathon as well as 2K Run for Fun and a Kinderdash.

All races begin at Smiley Public Library on Vine Street at 7:25 A.M. and end at the Redlands Bowl. This is a great event and competitive atheletes can gather points professionally.

The weather man promises a great day weatherwise and the sponsors of each event are enthusiastic about their offerings.

Step 4 - Opening Escrow

April 26, 2007

Your offer to purchase has been successfully negotiated. Both the Buyer and the Seller have agreed on price, terms, closing date and contingencies and their removal. The agents will now open an escrow. An escrow holder is a neutral party who will collect documents and monies and distribute them by following directions in the Purchase Agreement and Joint Escrow Instructions.

In step 3, I forgot to mention that when you (the Buyer) write the offer, your agent will ask for an "earnest money deposit". This is generally in the form of a personal check made out to your agent's real estate company. It is held uncashed during the negotiations and once agreement between buyer and seller has occured, it is signed over to an escrow holder and deposited into the escrow company account. The amount of the "earnest money deposit" is not determined by law, but most often by practice in the real estate market area in which a home is being purchased. In our Riverside/San Bernardino counties area, it can vary from approximately $1,000 to an amount that is 3% of the purchase price. In the present market, I am seeing $2,000 to $5,000 as the most common initial earnest money deposits. A Seller may ask for an increased deposit when contingencies are removed.

I will discuss escrow processing next week.

Home Buying Process - Step 3

April 25, 2007

You have been "prequalified" or "preapproved" by your lender, you have found an agent to show you properties, and you have found a property that needs your needs and some of your wants. Now is when you will look to your agent for guidance.

It is often wise to ask your agent to provide you comparable sales for your selected property. This will aid you in your decision to write an offer. You will then have an idea as to what other buyers have paid for similar properties.,

After a discussion with your agent, the agent will guide you through the purchase agreement form. The agent will ask the price to offer, when you wish to close the sale, the amount of your down payment and the terms of your loan. Also, you will discuss with your agent the various contingencies that you wish to have and when those contingencies will be removed.

The agent will go over the more than 28 clauses in a California Purchase Agreement and will present your completed offer to purchase to the Seller. The Seller can accept it as written, counter some of the terms or reject it entirely. Your agent will continue to discuss with you as to how to proceed following your response from the Seller.

Always ask questions of your agent if you are not clear about any of the terms of the offer you are making.

Home Buying Process - Step 2

April 24, 2007

You are serious about purchasing a new home. You followed Step 1 and met with a loan officer to be either "pre-qualified" or "pre-approved". Ever since you made the decision to buy a home, you have been searching the web for listings, reading the ads in the newspaper and in the Homes and Land Magazine and you have bravely visited some open houses. You even have made a decision as to the location that is of most interest to you. Now what?

Step 2 is selecting the real esate agent who will guide you through the buying process. If you have friends who have purchased homes, ask them about the agent that they used. If you have called on ads or visited open houses, perhaps an agent is calling you or e mailing you with properties that might be of interest. Agents have a variety of styles and strengths. You are the consumer and you need to find an agent you believe will do the best job for you.

There are agents who have been in the business a long time. There are agents who are brand new. I believe that the best choice for a buyer is the agent with whom they feel the most comfortable. If, as a buyer, you want a "tutorial" then a seasonsed agent may be your pick. If you like the willingness and the attention that a new licensee will give to you, then that could be a good agent to select. The bottom line is that a relationship of trust is there. The buying process is complex and particularly if you are a first time buyer you will want to trust that your agent will make the process clear and smooth.

I woul love to hear from readers with their description of how they chose a real estate agent. Click on "comment" and type in your comments.

Home Buying Process

April 23, 2007

More and more, potential home buyers begin their home buying process by searching online or by touring open houses. Certainly these two actions will allow a potential buyer to become somewhat familiar with the real estate market in the area in which they would like to purchase a home. However, there is ultimately a weakness in this strategy. Many of the web based real estate databases are not 100 percent current. I have checked our market area and find properties still listed as available when in fact they were sold several months ago. Going to open houses does allow a buyer to check out what amenities can be had in a particular price range and also to look over the real estate agents who host these open houses. The weakness in this strategy is that only a percentage of the total properties available can be viewed at open houses. The prime properties are shown by agents and, even in a slower market, they sell before an open house is scheduled and potential buyers never have the opportunity to preview them.

The recommended first step is for the buyer to get "pre-qualified" or "pre-approved" for a home loan. This allows a buyer to know how much the monthly payment wil be and how much the down payment and costs will be. "Pre-qualified" generally means that a buyer has spoken to a loan officer and based on the fiancial information given, the loan officer estimates the amount of loan the buyer could qualify for. "Pre-approved" generally means that the buyer has filed a loan application, credit and employment verifications have been obtained, and the buyer is approved for a specific dollar amount of loan and monthly payment. In the "pre-approved" scenario, typically everything has been done but an appraisal of the property. For a seller, the "pre-approved" buyer is looked at very favorably.

Buyers are anxious to look a homes, but in today's world, knowing your borrowing potential is the very best place to begin the home buying process.

Home Buying Guides

April 20, 2007

Yesterday, I mentioned some books for sellers to read to know what they might do to make there property more saleable. In the interest of giving buyers equal resources, here are some books that might prove helpful.

Buying a home today has become a relatively complex project. Maybe that is a reason that many potential buyers have been reluctant to decide to make offers on a property. The following are recommended reading from the Home Buyer's Information Center.

"Home Buying for Dummies". There is a "for Dummies" for just about every activity that people might want to learn about. I have read several and they are generally easy and fun reading as well as informative.

Perhaps not quite as easy to read, "10 Steps to Home Ownership Simple, concise step by step guide" is also a straightforward and anylytical guide to the buying process.

Both are written for buyers in the USA, which leaves them more generic than specific to particular practices in California. I would say that either book is a good starting place to inform oneself about the buying process, but a professioan;l real estate would be a great follow up to respond to the questions which you might still have.

Good Reading for the Home Seller

April 19, 2007

Many newspapers carry articles by Robert J. Bruss. He has a sydicated column in which he responds to questions from readers regarding real estate issues. I subscribe to an online newsletter and Robert J. Bruss is a frequent contributer. He recently commented on two new publications which have suggestions for profitable improvements to your home.

"Property Ladder Buying for Profit" by Kirsten Kemp is really about how improvements can add market value to homes. "Property Ladder" refers to a TV show on the Learning channel and the first chapter contains four case studies from episodes of this TV show. There are four major chapters in the book :"Case Studies"; "All Around the House"; "Makeover Magic"; and "Project Price Guide". Robert J Bruss rates this as a 10 on a scale of 1-10. It can be purchased at local book stores or from www.Amazon.com.

The second book is Michael Corbett's "Ready, Set, Sold!". Corbett is the host of "Extra's Mansions and Millionaires". This book is about how to transform an ordinary house into one which a buyer absolutely must buy. This book should also be available at local bookstores and from www.Amazon.com.

These are good resources for potential sellers and are fun and easy reading with great practical suggestions.

How to Trust Your Lender

April 18, 2007

There are many news articles about "predatory lenders". I believe that the U.S. Congress is also holding hearings about lending practices. How does a buyer, especially a first-time buyer, know whether the lender that they are using is not taking advantage of their lack of knowledge about lending fees, the ins and outs of the various loan types and the loan process?

Here might be one way. Financial 2000, the mortage division of Lois Lauer, Inc. has a program to encourage comparaison shopping for your loan.

Bring your Good Faith estimate to us at 1998 Orange tree Lane in Redlands, CA. (Every lender, by law, is required to give a potential borrower a "Good Faith Estimate".) If Financial 2000 cannot meet it or beat it, they will pay you $100.00 at close of escrow. Why, "at close of escrow"? It has been our experience that costs can change substantially during the processing of the loan application. In reality, barring information that was not given to the loan agent at the time of application, that good faith estimate should be close to the actual costs at close of escrow.
For our $100 giveaway, fees and interest rate must math the good faith estimate.

There are many web based lenders and many mortgage companies who seek borrowers. Financial 2000 is not any different. However, we at Lois Lauer,Inc. believe that we can provide good to great loan programs and good to great service.

Accept our challenge!

Your taxes and home ownership

April 17, 2007

By 11:59 P.M. today Americans will have filed their 2006 Income Tax Forms. Since California is an Income Tax state, there are IRS Forms and California State Franchise Forms. For both resident homeowners and investor homeowners, both the state and federal governments encourage homeownership by allowing certain deductions for expenses incurred because of your home ownership.

When you finance a home with a loan, the interest you pay on the loan is tax deductible. The amount of your deduction is also likely to take you above the minimum itemized deductible threshold, which enables you to write off many other items as well.

What does this mean? The government is essentially subsidizing the purchase of your home.

Suppose you take out a $300,000 loan with an interest rate of 6%. Assuming your first payment is on January 1st, you will pay approximately $18,000 in interest on that loan in the first year. Your taxable income would be lowered by $18,000. Depending on your tax bracket,
you could save up to $6,000 that first year. Since you live in California and since California recognizes the home loan interest rate deduction, you will save even more.

In addition, your property tax payments are deductible on your Federal income tax return (not on your state return).

These are part of the yearly tax advantages of owning a home versus renting.

If you do not yet own a home and you had a huge tax liability this year, it is time to consider
contacting a professional real estate agent anad start your search for the home of your dreams. Perhaps not your "forever" home, but one that meets your presents needs and lifestyle.

How do Buyers choose a real estate agent?

April 16, 2007

If you are a reader of the various syndicated real estate columnists, you may have noticed that they rather frequently address the question "How do I select a real estate agent?" Almost all of the time, their answers are directed towards sellers finding an agent to market their property. Rarely do the answers address how a buyer might select a real estate agent.

I did some reflecting on the source of my buyers. In the course of my 31 years as a agent, I have been fortunate to have a high percentage of my buyers come from being acquaintances or from referrals from acquaintances. These folks already knew something about me and chose to work with me from this prior knowledge. However, the next highest percentage came from call-ins, walk-ins or visitors to open houses. It is no surprise that brokers and real estate trainers spend a good deal of time teaching agents how to build a relationship with strangers. From an agent's side, finding the prospect's needs and working to fulfill those needs and desires is how agents develop a clientele.

But how does a buyer decide to make an appointment, return a phone call or commit to a particular agent? Do they use the interview 3 agents rule that sellers are advised to do? Probably not. I would guess it is much more subjective. After meeting an agent, a buyer may or may not relate to that individual. Also, I do believe that buyers are a bit concerned that a really successful agent will pressure them into buying before they are ready. It is almost as if buyers do not want to choose and agent.

Buyers who are ready to purchase walk into a real estate office or call the office and make an appointment with the agent who is "up" for that day. That agent, if professional and well trained, then becomes the buyer's agent. This process has worked for the past 31 years that I have been an agent. In all probability, it will continue to work. If potential buyers are reading this blog, could you share with me how you chose or would like to choose your real estate agent?
Just click on "comments" and type in your answers or questions.

Professional Inspection prior to listing

April 13, 2007

In our real estate market area, the professional home inspection usually takes places after a purchase agreement has been negotiated and an offer accepted. The Buyer then hires the inspector. The buyer and the buyer's agent receive copies of the inspection report and a good inspector will also furnish copies of the report to the seller and the seller's agent.

At Century 21 Lois Lauer Realty, we suggest that a home owner considering listing a property, get a "pre-listing professional inspection. We are not suggesting that the buyer will not want to hire an inspector as well, but rather that the pre-listing inspection will alert the seller to any hidden problems. If a serious problem is detected and the seller cannot afford to repair or replace an item, by knowing of its existence prior to negotiating an offer, the cost can be taken into the bottom line consideration.

An example of why a seller's pre-listing professional inspection can be a good thing is the following:
A rental property was listed by a seller who had never occupied the property. The seller followed the agent's advice and had a professional property inspection done on the property.
The inspector found the furnace to be in good condition. However, the buyer's inspector said the furnace was dangerous and defective. (This inspector was a retired contractor not a member of a professional inspector's organisation such as referred to in yesterday's blog,)

To resolve the conflict between the two inspection reports, the seller arranged to have a furnace repairman and a representative of the local gas company inspect the furnace. The buyer, the seller and their respective agents attended the inspection. Both the repairman and the gas company employee agreed that there was nothing wrong with the furnace and the sale closed without further dispute.

This example is just one illustration of the benefit of a pre-listing inspection.

Buying and Selling "as is"

April 12, 2007

In California, if Buyers and Sellers are using licensed real estate agents who are members of the California Association of Realtors, all of the standard purchase agreement contracts have a paragraph which states "the property is sold in its PRESENT physical condition as of the date of Acceptance and subject to the Buyer's inspection rights..." The seller is required to disclose any and all information regarding the seller's knowledge of the property, but the seller is no longer contractually required to make repairs.

It becomes important for the buyer to hire a professional inspector and learn from a knowledgeable third party, what the "PRESENT physical condition" truly is. Buyers may be reluctant to spend the money (usually between $350 and $500), but this is the best protection against defects that the seller might not know are there, but will eventually surface and the buyer could have a major expense.

A buyer should look at the credentials of an experienced independent inspector who belongs to one of the professional home inspection organizations. Members of the American Society of Home Inspectors (ASHI) have had to pass rigorous membership requirements. Local ASHI members can be found at www.ashi.com or 1-800-743-ASHI.

As home inspections became more prevalent, a number of franchised companies were developed. I recommend that any buyer who hires an inspector, ask questions concerning the individual's training and background. It is also a good idea to request a sample copy of their report format. These can differ substantially in detail and as a buyer you may want to select a format that provides clear information as to the actual physical condition as it presently exists.

Price per Square Foot

April 11, 2007

Sometime in the late 1970s and early 1980s, "price per square foot" became a tool for agents preparing Competitve Market Analyses. It developed from just an interesting statistic into a definition of value. Professional appraisers rarely used it to determine value and many agents
misused it.

Price per square foot is arrived at by dividing the square footage in the listing or in the Assessor's records into the selling price of a property. While it is a guideline for knowing that $500 per square foot is overpriced in a $300 per square foot market area, it misses all the differences found in individual properties. An agent who uses price per square foot needs to know what amenities and qualities were in the sold homes. How are these homes really comparable to the subject property?

As someone who early in her career found it fun to check closed sales for the price per square foot, (In 1967 the average preice per square foot was $10, in 1977, the median price per square foot was $47, now it is more like $260. )I would look a home and determine if it was median in amenities or better and would throw out an off the cuff value. I knew, I would have to really examine sales, pendings and actives to do a professional CMA.

Price per square foot is interesting, but it can never take the place of a carefully considered and prepared CMA.

Real Estate Myths

April 10, 2007

Myth: Your home must be turned into a showplace before it is listed.

While it is true that homes in pristine condition generally sell faster and for more money than other less pristine listings, it is important for sellers to weigh cost versus improvement.
As the market has changed, experienced real estate agents can be helpful in recommending improvements that will draw attention to the assets of the home and minimize its shortcomings. Just because granite kitchen counters are the "in" thing does not mean that they are appropriate in every home. Carpet and paint may be far more important.

How then does one "stage" one's home? I like to suggest as a first step, to takae photos of each room. The homeowner can take the pictures or the agent can also be helpful. These pictures then let the homeowner see his home as a buyer might. The doll collection, the comfortable, but oversized furniture, the collection of family photos are all distractions to a buyer who needs to picture living in the home. A seller may have to store some furniture and pack up possessions in order to neutralize the home. It may not be possible to make it a showcase home, but crisp, clean and neat go a long way in creating that appealing atmosphere.

The seller and the agent should determine a budget for "staging" and then priortize a "to-do" list. Remeber, "There is no second chance at a first impression."

First Quarter 2007

April 9, 2007

Soon the media will be reporting on, commenting on, and predicting the future of the 2007 real estate market. From the few reports that have come out thus far, the statistic show some areas of price increases, some areas of price decreases and generally a decline in the number of units sold

USA Today, last Monday, April 2, 2007, interviewed Tom Kunz, CEO of Century 21. One question that Kunz was asked, "Would you sell your home in New Jersey in today's market?" Kunz's response,"Sure. ...I think that there is the perception that people wait for a good market to sell their homes. Most people buy or sell because of major events taking place in their lives; births, deaths, marriage, divorce. No matter what the local real estate market is doing, having a job change as I did three years ago, going from California to New Jersey, I had to buy a house and sell a house. I may not get as much for the house as a year ago, but when I have to buy something else, it's not going to cost as much as a year ago. It's a good move up market."

Skeptics will discount Kunz's optimism because real estate is his business, but if you pesently own a home, consider the reasons that motivated you. Were they some of those major events cited by Kunz? A house is the place of shelter, but also the place where your life is lived.

The investors and the flippers have pulled away from the real estate market which probably relates to the decrease in the number of transactions. For the rest of us, we will continue to search for our dream houses and when we find them, no matter what the state of the market,
we will purchase them by negotiating the best deal possible.

Condo Questions

April 6, 2007

Condos are great options for first time home buyers and empty nesters as they are generally less expensive than a similarly sized single family home. Condos also appeal to the buyers who do not want the responsibility of yard and exterior maintenance. It is very appealing to be able to have the security of a homeowner's association and, in some instances, a gated community.

Robert J. Bruss, a real estate news columnist, suggest that there are key questions that a potential condo buyer should ask.

1. What is the financial condition of the condo association?

2.How do the monthly fees compare with comparable nearby condo complexes and what is included in those fees?

3. Is the condo association professionally managed?

4. How good is the soundproofing?

5. What is the percentage of renters?

6. Ask current residents, "What do you like best and least living here?

Your real estate agent will help you in obtaining some of the answers with #6 being one you might want to ask the neighbors of the unit you might purchase.

Spring Garden Tour

April 5, 2007

April is the month when Horticultural societies and other organizations offer tours of spectacular gardens. Pack up your camera and visit both modest and palatial gardens. As someone who has "have a beautiful garden" as one of the items on her 101 things I want to do before I die list, I always enjoy viewing the creativeness of these garden owners.

Riverside Flower and Garden Tour
What: Tour of six private gardens, four workshops, vendor booths, door prizes
Where: Elks Lodge, 6166 Brockton Ave., Riverside
When: 1-6 p.m.. April 14, 10a.m. -4 p.m., April 15
Cost: $8 pre-sale, $10 at the door, free for children younger than 16 with a paying adult Information: (951)276-0058 www.riversideflowershow.org

Redlands 95th Annual Award Winning Flower Show - "Garden Harmony"
What: Tour of private gardens, sale of uncommon plants, collection of artful floral arrangements, African violet exhibitions
Where: ESRI Cafe, 380 New York Street, Redlands
When: April 28, 2-6 p.m. April 290 a.m. - 5 p. m.
Cost $8 for adults, free for children under 13 with an adult (available at Flower Show) Tickets are not required for the Sale of uncommon Plants at the carriage house in Prospect Park Information: (909) 792-4385 www.rhis.org

If you care to go farther a field, check out these shows:

Rancho Santa Ana Botanic Garden Walks - (909) 625-8767 www.rsabg.org

Creative Arts Group of Sierra Madre - (909) 626 355-8350 www.creativeartsgroup.org

Pasadena Showcase House of Design - www.pasadenashowcase.org

Theodore Payne Native Garden Tour - (818)768-1802 www.theodorepayne.org

Rio Hondo Symphony Guild - (562)693-6741