This article is specifically written for buyers in California where we use escrow companies, as opposed to attorneys, to complete the transaction. But lots of this information may still apply, and it’s worthwhile to consider the overall concept – thinking ahead about your CLOSING COSTS.
Folks who have bought before will have some idea of this already, but first time buyers are often surprised at the fees they have to pay, on top of the mortgage, during their purchase. A savvy agent can, and should, share information with you about the fees you can expect, some of which depend on the price of the home.
If you aren’t being told, or the topic has not yet come up, ASK. You don’t want any big surprises.
The other thing to keep in mind is that in the case of SHORT SALES and REOs (foreclosures) the fees may be higher because the bank will not approve paying some of the normal seller-paid fees.
READ MORE: Some Home Buying Costs You ay Not Think About (Part 2 of 3) – Escrow and Closing Costs
Visit my Real Estate Consumer Blog at Carlsbad Real Estate News for lots of information about the general area
All content copyright © 2010 Jeff Dowler “The California Relocation Dude”
Communication these days is pretty complex, given all the options.
I wrote this article for buyers and sellers who are interested in getting in touch me with me, for whatever reason, about the different ways we can communicate. Some of this is pretty obvious, but hopefully it will be useful to you if the need is there.
All content copyright © 2010 Jeff Dowler “The California Relocation Dude”
A good portion of my real estate business is working with first time buyers. And as someone new to the complex process of buying a home, particularly in this market, having all the information about what to do and not to do, having a good sense of what you are looking for (AND can afford to buy), and other matters is incredibly important.
I try to sit down with all new buyers before getting started in order to get to know each other, but more importantly to answer all the questions and set some expectations about the market. And a part of that “getting to know each other” is to decide if working together makes sense.
Since short sales and REOs (a.k.a. foreclosures and bank sales) are a big part of the market, especially at the lower price points (here in San Diego, under $500K), it is essential to know about buying a short sale (much of what you will read in that article applies to REOs, too). [Note that the reader comments on the short sale article have been disabled for the time being by ActiveRain due to the volume – too bad, there are some helpful stories shared by buyers]
Here’s an overview of the information I like to cover with buyers (first timers and not).
READ – First Time Buyer Counseling
You can download some helpful forms on my website, too:
I also have an extensive Buyer’s Handbook I will share with you (via Google Docs, or hard copy if you prefer) if we start working together.
If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your home search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
If I can provide more information about Carlsbad real estate and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2010 Jeff Dowler “The California Relocation Dude” Carlsbad Homes and Real Estate Tidbits
I have done a lot work with first time buyers, both back in Boston and out here in Southern California.
There is so much for new buyers to learn and often they do not even know the right questions. Working with a REALTOR who takes the time to explain the process, answer questions, and truly help buyers become as prepared and educated as possible is so important.
I finally completed my first time home buyers handbook, which I will begin sharing with new clients. however, if you would like to download a summary of my first time buyers handbook feel free to do so. The real thing is, of course, much more detailed, but the summary will get you started.
And of course if we decide to work together to find you a home in the Carlsbad area (including Oceanside, San Marcos, Vista, Encinitas, Cardiff, Solana Beach, Del Mar, Rancho Santa Fe, La Jolla) you will get the entire handbook to help you.
I would love to know what you think. Are there other important things to include (of course you are not seeing the entire thing but let me know what stuff is important to you)? Are there particular questions that you have? Please let me know.
If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by phone or text at (760) 840-1360 or email me at JDowler@remax.net.
All content copyright © 2008 Jeff Dowler Carlsbad Homes and Real Estate Tidbits
After you complete the offer paperwork it will be forwarded to the listing agent and seller for their consideration. Hopefully you will have made an offer that the seller will respond to, which begins the negotiations.
Read Part 1 on How to Make an Offer
The negotiations will take place between buyer and seller, with their respective agents acting as intermediaries. Since the agents are neutral parties, this generally allows negotiations to proceed in a less emotional manner.
The seller will respond to your offer, hopefully within a reasonable period (that may vary depending on how much time was given, whether the seller is local or not, and other factors). Here in California the seller will respond in writing using a Counter Offer form (other practices may occur in other states, including counter offers in verbal form). This form, signed by the seller, will lay out the seller’s response to your offer, i.e., a revised purchase price, different closing date, and any other factors the seller wishes to propose as a new offer.
The Counter Offer Form (numbered consecutively beginning at #1) may give you a deadline date to respond, or may revert to the default which is 3 days in California.
You may accept the counter offer (which incorporates items from the original offer plus the revisions from the seller, thus creating a new offer), or you may accept it AND submit a counter offer of your own, with other revised terms (e.g., price). You can also choose to not respond at all and discontinue the process.
The negotiations go back and forth until the parties agree on the terms and conditions, or negotiations break down and one or the other parties will not negotiate further. Once agreement is reached, the paperwork is signed to acknowledge this, and al parties receive a copy.
Thus begins the critical due diligence period.
Once you have identified the home you would like to purchase, it’s time to make an offer. This aspect of the buying process probably causes more anxiety than anything else.
The right offer will allow you to play in the negotiatin game, the wrong one will result in you being struck out.
Here’s what you need to do:
Decide on the offering price – this is perhaps the most important thing you need to do, and you must do this in a thoughtful way. Consider what you can afford (based on being approved) but also look at the value of the property as compared to other homes that have sold. Your agent can help you examine this information, but the choice of offer is YOURS. No one wants to overpay for a home, and in a buyer’s market you have more negotiating room, but don’t assume you can waltz in with a low ball offer and walk away with the deal of the century. Ideally you want to make an offer that the seller will respond to, not one that is so ridiculous that the seller ignores you, refuses to respond, or counters at full price.
In addition to price, make decisions – about offer contingencies, desired closing date, the time frame for the seller to review the offer and get you a response, how much to put down as a deposit, items you wish included in the sale (if any), date to complete the due diligence period (this may vary based on standard practice in your state/region, your personal situation, etc.), the timing of the home inspection (this is essential)
Review all required paperwork (this will vary by state, but in California the primary form is the RPA or Residential Purchase Agreement and Joint Escrow Instructions) and complete all required items. This should be done with your Agent, who can help you make the right decisions.
Sign, initial and date all pages as required.
Complete other required paperwork (varies by state) – in California you will sign an agency disclosure (form AD – Disclosure Regarding Real Estate Relationships), the Buyer’s Inspection Advisory (Form BIA) and the Disclousure and Consent for Representation of More Than One Buyer or Seller (Form DA)
Provide a check for the deposit to accompany the offer – a copy will be submitted; the actual check is not given to the listing agent until the offer has been accepted.
Make sure you get copies of all the paperwork that you signed as well as a copy of the deposit check.
Go home, celebrate your first offer, and try not to get too anxious
The next phase is the Presentation of the Offer and Negotiations (counter-offers, if applicable).
Do you like to be told what to do? Or to make your own decisions?
This is something to think about in your real estate transaction.
As a new buyers there is lots to learn and you will need a fair amount of direction. And sometimes that means being told what to do vs. making your own decisions.
But often you have choices, and your agent should let you know what they are so YOU can make the best decision for your personal situation. The choice, in the majority of situations, should be YOURS and not your agent’s, unless there are requirements by state law or other circumstances that warrant being told…you must do this! And you should understand the implications of NOT doing things that are in your best interest.
One critical area, in my opinion, where this is important is the home search itself. Should YOUR AGENT decide what homes you should see, or should YOU? I feel strongly that it is primarily YOUR choice, not mine. Perhaps you do too.
I would be clear up front with whoever you work with as to how the home search should proceed to be most effective for YOU. After all, YOU are the one who has to live with the decision.
I prefer for clients to do their research and decide what things they want to see, or not. BUT there are times when I encourage them to see, or not see, certain properties one I know what they are really looking for. This way I can save them time and trouble, or direct them to properties that really can work well for them that they may have overlooked. And since I know the market well, I can often help them be more effective in their searching.
In cases where someone is brand new to the area and has no clue (a relocation, for example), I will provide them with a variety of homes in different areas to give them an overview so they are better able to make decisions going forward about areas they like, types of homes, and so on. But it really depends on what is best for them.
Think about it. What works best for you?
A few words to the wise, for those of you who are buying your first home (or even those who are more experienced).
When you find that home that really excites you, it’s hard to not talk about it…what you like about the home, where you would put your furniture, etc. You SHOULD be that excited. Just make sure you are not talking about your feelings in front of the SELLER or the LISTING AGENT. And presumably you have an agent who is representing YOU so it’s OK to talk with him/her.
Silence is golden, when it comes to this situation, and making an offer. As a first time buyer you want YOUR agent to represent YOUR best interests, so make sure you are not revealing things to the seller unintentionally that might jeopardize your ability to negotiate the best price and deal. Once the seller (or the seller’s agent) knows you LOVE the place they are going to expect that you will pay more to get it. Don’t let that happen. Let your agent do the talking with the seller and listing agent.
Make sure things that should be confidential stay confidential…with you and your agent. If there are things you don’t want revealed (like you will pay full price if you need to), make sure this is clear with your agent.
Start your CARLSBAD HOME SEARCH here (and other San Diego communities)
Download FREE BUYER AND SELLER REPORTS
As a buyer, you have lots of decision to make and many responsibilities. And some buyers decide to pursue purchasing a home without using an agent – making decisions without advice from a professional, making offers without really understanding the market and the value of the target property, and so on. And that’s a personal choice.
I guess I don’t understand why, when making the biggest purchase decision of your life as a consumer, you would not want to have the expert advice of someone who knows the real estate business and the market, to help you.
I’m sure you are asking, well, as my agent, what will you do for me?
There are a lot of things I can and will do as a licensed real estate professional and I have written several articles about this (read more here):
- A critical thing I will do is help you strategize about your offer – how much (making sure you know the value compared to similar properties that have sold), contingencies you should request, timing, financial terms, and more. And I will help you complete the 8 pages of the purchase agreement here in CA (plus multiple other documents).
- The other major issue is confidentiality. I will honor that, and keep all information confidential from the seller and listing agent unless your permission is granted to share it. Some things SHOULD be shared to help you in your negotiations, while others should not.
All in all my responsibility as YOUR AGENT is to look out for YOUR fiduciary interests, and to represent YOU in the real estate transaction and NOT the seller.
I’m sorry for being somewhat absent in the last week. Between a very heavy work schedule, several days away in the desert for a quick (and short) vacation), a business trip to San Francisco on blogging, and other personal stuff, it has been really busy.
I suppose those are not good excuses, but I feel badly nonetheless.
Anyhow, one of the issues that I have seen recently is the situation where buyers (new AND experienced) are using the services of multiple agents without commiting to any particular one.
As a consumer, and a REALTOR(R), I don’t understand this approach. Sure, you have the right to handle your search this way, but I don’t see what advantages you are gaining by doing so. I’m sure you must have your reasons.
If you perceive there are some good reasons to not commit to an agent and solicit assistance from multiple people, I would love to know – honestly, I would, ‘cos I just don’t understand. Perhaps there are things that we agents need to better understand.
I just wrote a longer blog about this and wanted to share it with you. I welcome your comments.