Being either a first-time home buyer or a seasoned investor, these topics will help you get started and/or refresh your memory about the home purchasing process.


1.     I’m a first-time home buyer, where do I begin?


2.     How to choose a neighborhood?


3.     How to choose a home?


4.     What are the inspections?


5.     What is the home purchase process?


6.     What is involved in making an offer?


7.     Who pays for what?




Actually you’ve already started the process. Fact-finding and reading articles is a great way to become a smart consumer. Things to focus on before you begin searching for specific homes would be to:


* Familiarize yourself with your personal finances. This includes carefully reviewing your budget and eliminating as much debt as possible.


* Have a down payment and earnest money ready when the time comes to make an offer.


* Speak with a lender to find out how much can you qualify for if you are planning to obtain a loan.


* Contact me. As your home buying specialist, I will get you up to speed on the Marin real estate market, locate neighborhoods and homes that will work for you in your given budget, and manage the details of the transaction to your complete satisfaction.   


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We will start to try to narrow your home search by identifying neighborhoods that are right for you. This will help to keep your search focused and efficient.


When evaluating a neighborhood you should investigate local conditions. Depending on your own particular needs and tastes, some of the following factors may be more important considerations than others:


* Quality of schools


* Property values


* Traffic


* Crime rate


* Future construction


* Walk Score - Proximity to schools, employment, hospitals, shops, public transportation, prisons, freeways, airports, beaches, parks, stadiums and cultural centers such as museums and theaters


Neighborhood Search Strategies for Limited Budgets


If you’re a first time-buyer with limited financial resources, it's wise to buy a home that meets your primary needs in the best neighborhood that fits within your price range. You can maximize your home purchase location by incorporating some of the following strategies into your neighborhood search:


* Upcoming neighborhoods: Look for communities that are likely to become "hot neighborhoods" in the coming years. They can often be discovered on the periphery of the most continuously desirable areas. 
Check for planned future development such as additional transit; new community services such as pools and theatres; and chain stores planning to move in. Look for a home in a good neighborhood that is a bit farther out of the city. If commuting is a concern, purchase a home that is close to public transportation.


* Neighborhood demand: Look at the neighborhood demand by


Determining whether multiple offers are being made, whether the gap between the list price and sale price is decreasing and whether there is active community involvement. You can also drive around neighborhoods and see how many "sale pending" and "sold" signs there are in a particular area.


* Co-ownership: Look into purchasing a condominium or co-op, rather than a house, in a desirable neighborhood. This way you still may be able to purchase in a prime area that you otherwise could not afford.


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Once you've settled on a couple of preferred neighborhoods for your home search, it's time to pick out a few homes to view. Having a house features “wish list” keeps you focused on which features are most important to you. Come up with a 'top five' list and if there are two of you, come up with this list seperately at first and then compare the two lists to see what you have as your 'top five' together.


When narrowing down your home search, consider the following:


* Types of home you want to buy


* Age and condition of the house you want to buy



* Resale potential


* Prioritized features wish list to keep focused


* Home search comparison chart to keep organized


* Prepare to act decisively when you find the right home


Types of Home You Want to Buy


Single-family homes: One home per lot.


Multiple-family homes: Some buyers, particularly first-timers, start with multiple-family dwellings, so they'll have rental income to help with their costs. Many mortgage plans, including VA and FHA loans, can be used for buildings with up to four units, if the buyer intends to occupy one of them.


Condominiums: With a condo, you own "from the plaster in." You also own a certain percentage of the "common elements" - staircases, sidewalks, roofs, etc. Monthly charges pay your share of taxes and insurance on those elements, as well as repairs and maintenance. A homeowner’s association administers the development.


Co-ops: In some cities, cooperative apartments are common. With co-ops, you purchase shares in a corporation that owns the whole building, and you receive a lease to your own unit. A board of directors, comprised of owners and elected by owners, supervises the building management. Monthly charges include your share of an overall mortgage on the building.


Decide What Age and Condition of Home You Want to Purchase


Weigh your needs, budget and personal tastes in deciding whether you want to buy a newly constructed home, an older home or a "fixer-upper" that requires some work.


Consider Resale Potential


As you look at homes, you may want to keep in mind these resale considerations.


* One-bedroom condos are more difficult to resell than two-bedroom condos.


* Two-bedroom/one-bath single houses generally have less appeal than houses with three or more bedrooms, and therefore have less appreciation potential.


* Homes with "curb appeal," i.e., well-maintained, attractive and with a charming appearance from the street, are the easiest to resell.


* The most expensive houses on the street, or ones with anything unusual or unique are not suited for resale. The best investment potential is traditionally found in a less expensive, more moderately sized home.


Use a Features Wish List to Keep Your Search Focused


Make a features wish list to clarify which features are most and least important to you when looking for a home. Using this features wish list will keep your house hunt focused and effective.


Use a Home Comparison Chart to Keep Your Observations Organized


While house hunting, it's a good idea to make notes about what you see because viewing several houses at a time can be confusing. Use a home comparison chart to help you keep track of your search, organize your thoughts and record your impressions.


Act Decisively When You Find the Right Home


Before you begin the home buying process, resolve to act promptly when you do find the right house. Every REALTOR® has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then said, "We always promised my Dad we'd sleep on it, so we'll make an offer tomorrow." Many times the story had a sad ending - someone else came in that evening with an offer that was accepted.


Resolve that you will act decisively when you find the house that’s clearly right for you. This is particularly important after a long search or if the house is newly listed and/or underpriced.


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Home inspections prior to purchase are highly recommended and are the best way to avoid unpleasant surprises later.


A good home inspection is an objective, top-to-bottom examination of a home and everything that comes with it. The standard inspection report includes a review of the home's heating and air-conditioning systems; plumbing and wiring; roof, attic, walls, ceilings, floors, windows, doors, foundation and basement.


Getting a professional inspection is crucial for older homes because age often takes its toll on the roof and other hard-to-reach areas. Problems can also be the result of neglect or hazardous repair work, such as a past owner's failed attempt to install lights and an outlet in a linen closet.


A home inspection is also a wise investment when buying a new home. In fact, new homes frequently have defects, whether caused by an oversight during construction or simply human error.


Getting an Inspector


Real estate agents can usually recommend an experienced home inspector. Make sure to get an unbiased inspector. You can find one through word-of-mouth referrals, or look in the Yellow Pages or online under "Building Inspection" or "Home Inspection."


Home inspections cost about a few hundred dollars, depending on the size of the house and location. Inspection fees tend to be higher in urban areas than in rural areas. You may find the cost of inspection high, but it is money well spent. Think of it as an investment in your investment – your future home.


Some builders may try to dissuade you from getting a home inspection on a home they've built. They may not necessarily be trying to hide anything because most builders guarantee their work and will fix any problems in your new home before you move in. Some builders, in fact, will offer to do their own inspections. But it’s best to have an objective professional appraisal - insist on a third-party inspector.


An Inspection Will Educate You about Your House


Education is another good reason for getting an inspection. Most buyers want to learn as much as they can about their purchase so they can protect their investment. An examination by an impartial home inspector helps in this learning process.


Ask if you can follow the home inspector on his or her rounds. Most inspectors are glad to share their knowledge, and you'll be able to ask plenty of questions.


Inspection Timing and Results


Homebuyers usually arrange for an inspection after signing a contract or purchase agreement with the seller. The results may be available immediately or within a few days. The home inspector will review his or her findings with you and alert you to any costly or potentially hazardous conditions. In some cases, you may be advised not to buy the home unless such problems are remedied.


You could include a clause in your purchase agreement that makes your purchase contingent upon satisfactory inspection results. If major problems are found, you can back out of the deal. If costly repairs are warranted, the seller may be willing to adjust the home's price or the contract's terms. But when only minor repairs are needed, the buyer and seller can usually work out an agreement that won't affect the sale price.


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1.     Select a Realtor and establish a relationship. I am a full-time, professional Realtor with extensive market knowledge. We will work closely together to find the right home for you.


2.     Evaluate your needs and resources with your realtor. Once we establish your needs, I will provide guidance to financial institutions where you can obtain information in order to get the best financing available. We will meet to discuss your needs and analyze your resources.


3.     Identify properties in which you are interested. I will show you homes based on the criteria that we establish. The more precise and direct you are with me, the more successful our search will be.


4.     Determine the seller’s motivation Once we have found the home you wish to purchase, I will do all the necessary research to help you structure an effective offer.


5.     Write an offer to purchase. I will draft the Purchase Agreement for you, advising you in protective contingencies, customary practices, and local regulations. At this time you will need to provide an “earnest money” deposit, usually from 1-3 percent of the purchase price. (This deposit is not placed in escrow until the Seller has accepted your offer.)


6.     Present the offer. I will present your offer to the Seller and the Seller’s Agent. The Seller has three options: they can accept your offer, reject your offer, or make a counter offer. My personal knowledge of your needs and qualifications will enable me to represent you in the best way possible.


7.     Evaluate the Seller’s response. I will review the Seller’s response with you. My negotiating skills and knowledge will benefit you in reaching a final agreement.


8.     Open the Escrow. When the Purchase Agreement is accepted and signed by all parties, I will open escrow for you. At this time your earnest money will be deposited. The escrow or title company will receive, hold, and disburse all funds associated with your transaction.


9.     Contingency Periods. This is the time allowed in your Purchase Agreement to obtain financing, perform inspections, and satisfy any other contingencies to which your purchase is subject. Typical contingencies include:


                  •           Approval of the Seller’s Transfer Disclosure Statement


                  •           Approval of the Preliminary Title Report


                  •           Loan approval, including an appraisal of the property


                  •           Physical inspections of the property


                  •           Pest inspection


 10.  Obtaining Homeowner’s Insurance. I will coordinate between your insurance agent and the Title Officer to make sure a policy is in effect at close of escrow.


11.  Down Payment Funds. You will need a cashier’s check or money transfer several days prior to the closing date of escrow


12.  Close of Escrow. When all of the conditions of the Purchase Agreement have been met, you will sign your loan documents and closing papers. You will deposit the balance of the purchase price. The Deed will be recorded at the County Recorder’s office, and you will take ownership of your home


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A written proposal is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. Therefore, you need to enter into a written contract, which starts with your written proposal. This proposal not only specifies price, but also all the terms and conditions of the purchase. For example, if the seller offered to help with $2,000 toward your closing costs, make sure that's included in your written offer and in the final completed contract, or you won't have grounds for collecting it later.


REALTORS® have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you.  Your REALTOR® will guide you through the offer, counteroffer, negotiating and closing processes. In many states certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.


If you are not working with a real estate agent, keep in mind that you must draw up a purchase offer or contract that conforms to state and local laws and that incorporates all of the key items. State laws vary, and certain provisions may be required in your area.


After the offer is drawn up and signed, it is usually presented to the seller by your real estate agent, by the seller's real estate agent, if that's a different agent, or often by the two together. In a few areas, sales contracts are drawn up by the parties' lawyers.


What is in an Offer?


The purchase offer you submit, if accepted as it stands, will become a binding sales contract (known in some areas as a purchase agreement, earnest money agreement or deposit receipt). So it's important that the purchase offer contains all the items that will serve as a "blueprint for the final sale." The purchase offer includes items such as:


* Address and the legal description of the property


* Sale price


* Terms: for example, all cash or subject to you obtaining a mortgage for a given amount


* Seller's promise to provide clear title (ownership)


* Target date for closing (the actual sale)


* Amount of earnest money deposit accompanying the offer, whether it's a check, cash or promissory note, and how it's to be returned to you if the offer is rejected - or potentially kept as damages if you back out after you've released all of your contingencies


* Method by which real estate taxes, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller


* Provisions about who will pay for title insurance, survey, termite inspections, etc.


* Type of deed to be given


* Other requirements specific to your state, which might include a chance for an attorney to review the contract, disclosure of specific environmental hazards or other state-specific clauses


* A provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing


* A time limit (preferably short) after which the offer will expire


* Contingencies, which are an extremely important matter and that are discussed in detail below.


Contingencies - “Subject to” Clauses


If your offer states, "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. Here are two common contingencies contained in a purchase offer:


* The buyer obtaining specific financing from a lending institution: If the loan can't be found, the buyer won't be bound by the contract.


* A satisfactory report by a home inspector: for example, "within 10 days after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.


Negotiating Tips


You're in a strong bargaining position, that is, you look particularly welcome to a seller, if:


* You're an all-cash buyer


* You're already have a preapproved mortgage and you don't have a present house that has to be sold before you can afford to buy


* You’re able to close and take possession at a time that is especially convenient for the seller


In these circumstances, you may be able to negotiate some discount from the listed price.


On the other hand, in a "hot" seller's market, if the perfect house comes on the market, you may want to offer the list price (or more) to beat out other early offers.


It's very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:


* Every month a vacant house remains unsold represents considerable extra expense for the seller


* If the sellers are divorcing, they may want to sell quickly


* Estate sales often yield a bargain in return for a prompt deal


Earnest Money


This is a deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." A real estate agent or an attorney usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.


Buyers: the Seller's Response to Your Offer


You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that's that - the sellers could not later change their minds and hold you to it.


If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it, reject it or even make your own counteroffer. For example, "We accept the counteroffer with the higher price, except that we still insist on having the pool table."


Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.


Buyers: Withdrawing an Offer


Can you take back an offer? In most cases the answer is yes, right up until the moment it is accepted, or even in some cases, if you haven't yet been notified of acceptance. If you do want to revoke your offer, be sure to do so only after consulting a lawyer who is experienced in real estate matters. You don't want to lose your earnest money deposit or find yourself being sued for damages the seller may have suffered by relying on your actions.


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Closing costs are various charges made by the lender, the title company, real estate agents, and other service providers necessary to complete a transaction. Although the responsibilities are negotiable between the buyer and seller, the following sets forth the customary division in Marin County and the Bay Area:


The BUYER pays:


-       Title insurance premium for lender and buyer


-       Escrow fee


-       Notary fees


-       Contractor’s and pest inspection fees


-       All new loan charges (points, appraisal, document processing fees, etc.)


-       Interest on new loan from date of funding to 30 days prior to the 1st payment date


-       Home warranty (if specified in contract)


-       Homeowner’s insurance for 1st year


-       Earthquake insurance (optional)


-       Private mortgage insurance (if required by lender)


-       Private mortgage insurance impound account (if required by lender)


-       Property tax impound account (if required by lender)


-       Move-in fee (for condominiums)


-       HOA account transfer fee


The SELLER pays:


-       Real estate commission


-       Document preparation for deed


-       Documentary transfer tax


-       Payoff all loans against the property


-       Interest accrued on loans being paid off


-       Loan re-conveyance fees and prepayment  penalties


-       Home warranty (if specified in contract)


-       Any judgment or tax liens against seller


-       Property tax proration


-       Unpaid homeowner’s dues (for condominiums)


-       Bonds or assessments (if any)


-       Delinquent taxes


-       Move-out fees (for condominiums)


-       Notary fees and recordation fees


-       Third party Natural Hazard Disclosure Statement & California Tax Disclosure Report


-       Pre-sale pest inspection fee


-       Underground storage tank report


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