D'Adrea Davie

Although, purchasing a home can be a tedious process, the right Real Estate Agent can make it a relatively smooth one. Researching information on the homeownership process will also benefit you. Throughout this blog series...I have tried to walk the homebuyer through the process from selecting your Real Estate Agent to House Hunting to understanding negotiating your offer and now closing the escrow transaction.

Escrow closing signifies legal transfer of title from the seller to the buyer. Once all the conditions of the escrow have been satisfied your Escrow Officer will inform you or your Real Estate Agent of the date escrow will close and takes care of the technical and financial details.

Closing day is also the day to pay "closing" or settlement costs (accumulation of separate charges paid to different entitles for the professional services associated with the buying and selling of Real Property). Closing costs will vary; however, when buying your home and obtaining a new loan, an estimate of your closing costs will be provided to you due to the Real Estate Settlement Procedures Act after you submit your loan application. The Real Estate Settlement Act provides you with a good faith estimate of what your closing costs will be in the real estate process.

Upon closing, the title or escrow company will disburse monies to the different parties that have fulfilled their responsibilities, according to the escrow instructions, once funds are available.

So...what are you expected to pay for at closing? In California, "who pays" varies from county to county. This question is best answered by a matter of agreement between the buyer & seller. Usually this agreement is based on the customary practice in your county.

Here is a list of possible closing costs (buyer)

• Title Insurance Premiums
• Escrow Fee
• Document Preparation Fee
• Notary Fees
• Termite Inspection (according to contract)
• Recording charges for all documents in buyers name
• Interest on new loan from date of funding to 30 days prior to first payment
• Inspection Fees
• All new loan charges
• Tax proration
• Beneficiary statement fee for assumption of existing loan
• Homeowner's Association Transfer Fee
• Home Warranty
• Any city Transfer tax/Conveyance Tax
• Fire Insurance premium for first year
• Impounds (If applicable)

*Fees may be negotiable

At closing, all parties signing the documents must bring proper identification which may be a valid driver's license, identification card or current passport. The Title Company will schedule a time to meet a notary or attorney (depending on the state you live in) to witness the signatures and verify your identity. Remember, the notary is not a legal counsel and can not give you legal advice.

The signing can take place at the title or escrow company, your home, or even your place of work. It is always better to meet at the escrow or title company to have personnel available to review and explain your title policy and your closing statement. As your Mother and Daughter Realty Team, we make it a point to always be present at the closing to assure your questions and concerns are answered promptly and acurately. Allow 35 to 60 minutes for your signing appointment.

The title or escrow company will inform you the amount due at the time of closing. The amount due needs to be made in cashier's check, issued by a California institution, made payable to the title company or escrow office.

*If you have further questions that your title, escrow officer, Real Estate Agent or Loan Officer can not answer. Or if you need legal or tax advice, contact your attorney or accountant.

The day escrow closes is the day the deed records with the county and you become the owner of your home (it could take 6-10 weeks from that date for the county to mail you the original signed/recorded deed. After the close of escrow, your Real Estate agent will contact you regarding the disbursement of the keys.

As a homeowner, you can legally own a home and not be insured. However, most lenders require for a future homeowner to have insurance coverage. The owner of real property runs the risk of financial loss due to circumstances which are beyond their control. Lenders need to protect their investment in your home in case your house burns down or is badly damaged by a storm, tornado or other disasters. Other perils that can result in property damage are hail, windstorms, smoke damage, explosion, earthquake, riot, glass breakage, and building collapse. The area that you reside in will determine the type of coverage the lender will require you to obtain.

Insurance is a method of showing risks with a group. The basic property insurance is fire insurance. The principle of insurance provides for a large number of people (policyholders) to pay premiums into a fund, which is then used to pay for loss by fire, loss by lightning and loss resulting from the removal of personal property from endangered buildings. An insurer can obtain additional coverage by adding endoresements to the basic policy. Insurance companies have compiled homeowner package policies to include additional perils. Be sure to understand exactly what disasters your insurance covers and what it does not.

Insurance covers liability. It provides protection in case a visitor is injured in your home.If there is theft or damage to your personal property like furniture, clothes, and appliances...your insurance company provides coverage for it. The insured should carry enough insurance on the property so that if a loss occurs, the reimbursement from the insurance company will fully cover the loss.

TIPS ON SAVING MONEY WITH YOUR INSURANCE COMPANY

• Increase your deductible. The higher the deductible, the less expensive the insurance premium. However, in the event of a loss, you are responsible to pay the amount you agreed to. So make sure the amount is an affordable one!
• By purchasing your homeowners insurance with the same company as your auto insurance, you may be able to receive a discount.
• If you are over the age of 55, you may be able to get a discount.
• If you are a loyal customer to your current insurance company, you may have some rewards that could pay off for you!

Do your own research. Shop around and compare different services and prices.

Your home is one of your most valuable assets...... that's why you protect it with homeowner's insurance, title insurance, and get the inspections....but what about the items not covered by insurance? As your Mother and Daughter Realty Team, we offer to pay the home warranty for our seller/buyer. That's right a year of home warranty FREE to our clients! A Home Warranty is an insurance policy, it gives the same comfort as any insurance against unforeseeable events. The Home Warranty protects the buyer by paying for certain repairs and costs of major mechanical systems and major appliances in the home such as heating and air-conditioning. The Home Warranty can be ordered at the time of listing to protect the seller during the listing period, usually not exceeding six months, then assumed by the buyer at the time of sale can be purchased during the escrow process, and some Home Warranty companies allow the buyer to make the decision to have a plan after purchasing the home.

Your home systems and appliances will not last forever and a home warranty can save you much of the expense, time and frustration of dealing with unexpected covered repairs. Many homeowners claim that their warranties have more than paid for themselves. The advantage of offering a home warranty are:

1. To gain confidence of your potential buyers
2. Having fewer unexpected repair bills will add to the value of their investment.
3. Buyers increasingly expect Home Warranty protection and sellers can help protect themselves by providing it.
4. Home warranty protection helps reduce stress during home sale negotiations and concerns related to after-sale liabilities.

Now that your offer has been accepted there are a number of steps that will need to be taken care of until the closing process is complete. So, it is important to give the same amount of attention to the closing process as you did during hunting for your home.

The concept of an Escrow and Title Escrow Company is to operate as an uninterested third party in Real Estate Transactions. Title Companies act as an intermediary between buyers and sellers, or their agents, and ensure that everything in the transaction goes according to the sales contract. This offers protection to all parties involved.

TITLE INSURANCE

Title Insurers operate under the theory of risk elimination or loss caused by defects in title from the past. Title Companies spend a high percentage of their operating income each year collecting, storing, maintaining and analyzing official records for information that affects title to real property. Their technical experts are trained to identify the rights others may have in your property, such as liens, legal actions, disputed interests, rights of way or other encumbrances on your title. When a title search is complete, the title company issues a preliminary report. Before closing your transaction, the title company will proceed to "clear" those encumbrances which you do not wish to assume. Title insurance provides coverage only for title problems which were already in existence at the time the policy was issued.

PRELIMINARY REPORT

The preliminary report illustrates the extent of your ownership rights. This means you will want to review the ownership interest in the property you will be buying as well as any claims, restrictions or interests of other people involving the property.

INSPECTIONS

During the contingency period, your Mother and Daughter Realty Team will schedule any physical inspection specified in the purchase order. The seller has the responsibility to reveal the true condition of the propery on a disclosure statement. This may help you determine the type of inspection you and your Real Estate Agent deem necessary.

STRUCTIONAL PEST CONTROL INSPECTION (TERMITE REPORT)

In addition to actual termite damage, the pest report will indicate any type of wood destroying organisms that may be present including fungi. The termite report is prepared by a state certified inspector as evidence of the existence or absence of wood destroying organisms or pests which were visable and accessible on the date the inspection was made. The inspector looks for signs of activity from other wood destroying organisms such as:

• Dry wood termites
• Carpenter ants
• Carpenter bees
• Wood destroying fungus

Most termite reports classify conditions as Section I or Section II. Section I conditions are those currently causing damage to the property. These conditions generally need to be corrected before a lender will make a loan on a home. Section I repair work is usually paid for by the seller. Section II conditions are those not currently causing damage, but which are likely to, if left unattended.

GEOLOGICAL INSPECTION

A buyer can elect to have a geological inspection performed by a Geotechnical Engineer, who evaluates the soil conditions at the home. This inspection involves not only physically inspecting the property, but also researching past geological activity in the area. You may also elect to go to the city and research the property and its proximity to known fault lines.

HOME INSPECTION

A Home Inspector will go through the house and seek out any potential problems (roof, plumbing, electrical, heating, appliances, water heater, furnace, exterior siding and other visible features of the property. The Home Inspector will issue a detailed report that will have recommendations, often times to consult a specialist for further inspection.

HOME INSPECTION TIPS

• A Home Inspector can uncover problems before you purchase, potentially saving you thousands of dollars down the road. So skipping out on a Home Inspection can effect you in the long run. If your Home Inspector discovers some issues with the house this can be factored in and negotiated with the purchase price
• Schedule your Home Inspection around a time that you can be present. Good Inspectors are passionate about explaining what they see as they go along.
• Have questions ready when selecting a Home Inspector.
  • How much experience does your inspector have?
  • Does the Home Inspector have a license? It is wise to chose a home inspector with a license, so if a problem arises after the sale of your home that you were not aware of, you can argue that, and that the Inspector did not disclose it it you. If the Inspector is bonded and at fault, they may be responsible for paying costs associated with whatever problem came up.
  • Is your inspector a member of a professional Home Inspection Association?
  • How long with the Inspection take and cost?
  • What type of report is provided and how long will it take to receive it? Always insist on a written report from an Inspector. Verbal reports are meaningless in the event of a conflict with a buyer.

OTHER COMMON INSPECTION

• Water Conservation
• Well & Septic
• Seismic
• Hazardous Materials
• Zoning & Building permit compliance
• Contractors Home Inspection
• Chimney Inspection
• Heating & Air Conditioning
• Structural Engineering
• Energy Audit
• Geotechnical
• Roof Inspection
• Pool/Spa Inspection

The seller will want your inspections performed quickly, get approved and move forward with the purchase of the home. Once the buyer has received the inspection reports, it is their responsibility to review it, and approve it or not. If the buyer decides not to approve the inspection reports, it is best to sit down with your Real Estate Agent and negotiate with the sellers on which repairs to perform and who is responsible for paying for the repairs. If the seller and the buyer can not come to an agreement, the buyer can cancel the contract without penalty, as long as time was permitted within your contract. Once all of your inspections have been scheduled and reports reviewed and approved...contingencies are removed!