The following articles were
written by Stephen Rosenbaum.
Copyright 2004. All rights reserved.
I
was recently
speaking with a
neighbor. They
were complaining
to me that when
they purchased
their home they
were told they
could have
horses on their
property even
though the
CC&R's at the
time for the
home did not
allow it. They
were told by the
agent and
developer that
it would not be
a problem.
Unfortunately,
they did not get
the approval in
writing nor did
they have the
CC&R's changed
before they
purchased the
home.
When buying or
selling a home,
remember, any
agreements MUST
be in writing
and agreed to by
both buyer and
seller. If only
one party agrees
there is no
agreement. No
verbal
agreements are
enforceable
either.
In the above
example, prior
to purchasing
the home, the
CC&R's should
have been
changed to
reflect that
horses were
allowed.
Effective
October, 2002
the California
Association of
Realtors
released a new
and improved
Residential
Purchase
Agreement and
Joint Escrow
Instructions -
the contract
between buyer
and seller to
purchase a home.
With this new
contract the
investigation
periods are
longer. The
buyer is
protected even
more. The final
decision date is
all at the same
time. In effect,
here are the
"boilerplate"
new time frames
when purchasing
a home. Of
course, the
number of days
can be changed
by mutual
written
agreement
between the
Seller and
Buyer.
-
The Seller
has 7 days
after
acceptance
of the offer
to deliver
to the Buyer
all reports,
disclosures
and
information
for which
the seller
is
responsible.
-
The Buyer
has 17 days
after
acceptance
to complete
all of their
investigations,
approve all
disclosures,
reports and
other
applicable
information,
which Buyer
receives
from Seller;
and approve
all matters
affecting
the
Property.
-
Within the
17 days the
Buyer may
request the
Seller make
repairs or
take any
other action
regarding
the
Property.
The Seller
has no
obligation
to agree to
or to
respond to
the Buyer's
requests.
-
At the 17th
day,
assuming the
Seller has
followed all
time frames,
the Buyer
shall in
writing,
remove all
contingencies
or cancel
the
Agreement.
This
cancellation
does not
have to have
a reason.
-
Upon
cancellation
within the
17 day time
period, all
deposit
monies are
returned to
the Buyer.
In summary, a
Buyer now has a
17 day period,
after acceptance
of an offer to
purchase a home,
to perform their
"due diligence"
investigation
based on
disclosures from
the Seller as
well as the
buyers own
investigations
with their
experts.
If for any
reason or no
reason within
the 17-day
period, the
Buyer does not
want to purchase
the home, they
may cancel and
get their
deposit money
back.
When making an
offer on a home
be sure the
contract date
indicated in the
lower left
corner of the
contract says
"Revised 10/02
Print Date BDC
Mar 04"
or later.
California
law
provides
a one
time
property
tax
relief
for
seniors
55 years
of age
or older
(you or
your
spouse).
It
allows
you to
transfer
your
current
Proposition
13
base-year
value to
a newly
acquired
residence
if you
sell
your
existing
home and
buy
another
of equal
or
lesser
value
(see the
definition
below of
"value")
within
the same
county
or
within
another
county,
which
has
passed
an
ordinance
authorizing
such
transfers.
Those
counties
were
mentioned
last
week.
The
original
dwelling
must be
sold
within 2
years
before
or 2
years
after
the
purchase
of the
replacement.
Construction
of the
replacement
dwelling
must be
completed
within 2
years of
the date
the
original
property
sold. In
addition,
the
application
must be
filed
within 3
years of
the date
the
replacement
property
was
purchased
or new
construction
was
completed.
"Equal
or
Lesser
Value"
of a
replacement
dwelling
is
defined
as; 100%
of
market
value of
the
original
property
as of
its date
of sale
if a
replacement
dwelling
is
purchased
or newly
constructed
before
an
original
property
is sold;
105% of
market
value of
original
property
as of
its date
of sale
if a
replacement
dwelling
is
purchased
or newly
constructed
within 1
year
after
the sale
of the
original
property;110%
of
market
value of
the
original
property
as of
its date
of sale
if a
replacement
dwelling
is
purchased
or newly
constructed
within
the 2nd
year
after
the sale
of the
original
property.
Both of
the
dwellings
must be
eligible
for the
Homeowners
Exemption.
To get a
copy of
the
Reappraisal
Exclusion
for
Seniors
Claim
form go
to
the
Assessors
web site
and
click on
Forms
then
Property
Tax
Exemption
then
Reappraisal
Exclusion
for
Seniors.
This
information
is
reliable
but not
guaranteed
as of
the date
of this
writing.
Recently friends
of mine were
buying a home in
Carlsbad. During
the escrow
period they were
having a
difficult time
getting
homeowners
insurance.
Finally, an
insurance agent
told them that
the home they
were about to
purchase had 3
large water
damage insurance
claims made
during the
previous 5
years.
Although the
homeowners
should have
disclosed all
insurance claims
made during the
previous 5
years, they did
not. Upon
learning of the
claims, my
friends
immediately
cancelled the
purchase of the
home. The owners
did not disclose
the water damage
claims. What
hidden condition
in the home were
they hiding?
This story is
real and
probably happens
all the time. In
the past only
insurance agents
could obtain
prior claims
information.
However, now
thanks to a
company called
Choicepoint
(www.ChoiceTrust.com),
primary
residence owners
can request a
Property Claims
History Report,
known as a
C.L.U.E®
Personal
Property Report.
You can also see
what information
is being used to
determine your
overall risk.
The cost is $
9.95.
In my opinion,
as a real estate
professional, if
you submit an
offer to buy a
home, you should
include as part
of the offer, a
request for the
Seller to supply
you a C.L.U.E
report. While
this is a report
of personal
property losses,
if any past
claims were made
because of fire
or water damage,
you have
additional
information
about what has
occurred in the
home.
This report
would just be
another of the
many you would
review, while
you are
performing
inspections and
reviewing
reports during
the contingency
period.
Why You Need
Title Insurance
I have just
finished sitting
with some
sellers talking
about the costs
to list their
homes and the
closing costs
they may have to
pay for. The
conversation got
more involved
when we started
talking about
title insurance.
This week I
thought I would
take the time to
explain why you
need title
insurance and
why the sellers
usually pay for
it when a home
is sold.
If you have ever
purchased a used
car, common
sense tells you
to take the car
to a mechanic to
have it checked
to insure that
you are not
buying a lemon.
When buying a
home you should
be just as
cautious. You
are buying a
home from
persons you do
not know who are
making
disclosures to
you, as they
know them. Is
there fraud, any
forged deeds,
unknown heirs,
judgments or
liens against
the property,
unknown
easements, etc.
Title insurance
is your
insurance policy
that protects
buyers and
lenders against
"clouds" on
title, for
example, fraud,
forged deeds,
unknown heirs,
judgments and
liens, etc.
This information
is reliable but
not guaranteed
as of the date
of this writing.
I just completed a home
inspection with a client. After answering
their questions, I thought it would be a
good idea to discuss what a home inspection
is, and what you should expect from it.
After a homebuyer and
seller agree to price and terms, a buyer has
a 17-day, or other agreed upon period, after
the acceptance of the offer to perform a
"due diligence" investigation of the home.
There are many parts to that investigation.
A thorough home inspection should be
performed as an important part of that
investigation.
The
California Real
Estate Inspection Association (CREIA)
cautions homebuyers not to misunderstand the
purpose of a professional inspection report.
The inspector's role is not to create repair
lists for the home, nor is it the sellers
obligation to repair any problems discovered
by the home inspector.
Potential homebuyers
often view an inspection report as a
mandatory repair list for the seller. Except
where requirements are set forth by state
law, sellers are not required to make the
repairs, for example earthquake straps for
hot water heaters and smoke detectors in
specified locations.
With a home inspection,
most repairs are subject to negotiation
between the parties to the sale. After the
list is received from the home inspector,
buyers will request that the seller fix
various conditions before the close of
escrow. The sellers may or may not agree to
some of those requests. But with most
defects, sellers make repairs as a matter of
choice, not obligation to facilitate the
consummation of the sale.
Before making any
demands of the seller, try to evaluate the
inspection report with an eye toward
problems of greatest significance. Look for
conditions that compromise health and
safety, involve actual leakage or greatest
cost.
An inspection consists
of a thorough visual inspection of all
accessible areas of a home. It includes a
home's structural components including the
foundation and roofing systems. The
inspection tests the heating and cooling,
plumbing fixtures, appliances, electrical
outlets, doors and windows, etc. If the home
has a pool and spa, it will be inspected
The primary
purpose of a home inspection is not to
corner the seller with a repair list. The
primary objective is to know what you are
buying before you buy it. All previously
owned homes have defects. The inspection
gives you knowledge of defects before you
close escrow.
The following articles are reprinted from
Realtor Magazine Online by permission of the
National Association of Realtors. Copyright
2004. All rights reserved.
1.
Develop a family budget.
Instead of budgeting what you’d like
to spend, use receipts to create a
budget for what you actually spent
over the last six months. One
advantage of this approach is that
it factors in unexpected expenses,
such as car repairs, illnesses,
etc., as well as predictable costs
such as rent.
2.
Reduce your debt.
Generally speaking, lenders look for
a total debt load of no more than 36
percent of income. Since this figure
includes your mortgage, which
typically ranges between 25 percent
and 28 percent of income, you need
to get the rest of installment
debt—car loans, student loans,
revolving balances on credit
cards—down to between 8 percent and
10 percent of your total income.
3.
Get a handle on expenses.
You probably know how much you spend
on rent and utilities, but little
expenses add up. Try writing down
everything you spend for one
month. You’ll probably see some
great ways to save.
4.
Increase your income.
It may be necessary to take on a
second, part-time job to get your
income at a high-enough level to
qualify for the home you want.
5.
Save for a down payment.
Although it’s possible to get a
mortgage with only 5 percent down—or
even less in some cases—you can
usually get a better rate and a
lower overall cost if you put down
more. Shoot for saving a 20 percent
down payment.
6.
Create a house fund.
Don’t just plan on saving whatever’s
left toward a down payment. Instead
decide on a certain amount a month
you want to save, then put it away
as you pay your monthly bills.
7.
Keep your job.
While you don’t need to be in the
same job forever to qualify, having
a job for less than two years may
mean you have to pay a higher
interest rate.
8.
Establish a good credit history.
Get a credit card and make payments
by the due date. Do the same for all
your other bills. Pay off the entire
balance promptly.
The
first step in getting yourself in
financial shape to buy a home is to
know what you make and what you
spend now. List your income and
expenses below.
Income
|
|
|
Take-Home Pay/All Family
Members |
|
|
Child Support/Alimony |
|
|
Pension/Social Security |
|
|
Disability/Other Insurance |
|
|
Interest/Dividends |
|
|
Other |
|
|
Total Income |
|
Expenses
|
|
|
Rent/Mortgage |
|
|
Life Insurance |
|
|
Health/Disability Insurance |
|
|
Vehicle Insurance |
|
|
Homeowners or Other
Insurance |
|
|
Car Payments |
|
|
Other Loan Payments |
|
|
Savings/Pension Contribution |
|
|
Utilities |
|
|
Credit Card Payments |
|
|
Car Upkeep |
|
|
Clothing |
|
|
Personal Care Products |
|
|
Groceries |
|
|
Food Prepared Outside the
Home |
|
|
Medical/Dental/Prescriptions |
|
|
Household Goods |
|
|
Recreation/Entertainment |
|
|
Child Care |
|
|
Education |
|
|
Charitable Donations |
|
|
Miscellaneous |
|
Total Expenses=
|
|
Remaining Income After
Expenses=
|
|
Credit scores, along with your
overall income and debt, are a big
factor in determining if you’ll
qualify for a loan and what loan
terms you’ll be able to qualify for.
1.
Check for and correct errors
in your credit report. Mistakes
happen, and you could be paying for
someone else’s poor financial
management.
3.
Don’t charge your credit
cards to the maximum limit.
4.
Wait 12 months after credit
difficulties to apply for a
mortgage. You’re penalized less for
problems after a year.
5.
Don’t purchase big-ticket
items for your new home on credit
cards until after the loan is
approved. The amounts will add to
your debt.
6.
Don’t open new credit card
accounts before applying for a
mortgage. Having too much available
credit can lower your score.
7.
Shop for mortgage rates all
at once. Too many credit
applications can lower your score,
but multiple inquiries from the same
type of lender are counted as one
inquiry if submitted over a short
period of time.
8.
Avoid finance companies. Even
if you pay the loan on time, the
interest is high and it will
probably be considered a sign of
poor credit management.
This information is copyrighted by
the Fannie Mae Foundation and is
used with permission of the Fannie
Mae Foundation. To obtain a complete
copy of the publication, “Knowing
and Understanding Your Credit,”
visit
http://www.homebuyingguide.org.
5 Factors That Decide Your Credit
Score
Credit scores range between 200 and
800. Scores above 620 are considered
desirable for obtaining a mortgage.
These factors will affect your
score.
1.
Your payment history. Whether
you paid credit card obligations on
time.
2.
How much you owe. Owing a
great deal of money on numerous
accounts can indicate that you are
overextended.
3.
The length of your credit
history. In general, the longer the
better.
4.
How much new credit you have.
New credit, either installment
payments or new credit cards, are
considered more risky, even if you
pay promptly.
5.
The types of credit you use.
Generally, it’s desirable to have
more than one type of
credit—installment loans, credit
cards, and a mortgage, for example.
For more on evaluating and
understanding your credit score, go
to
http://www.myfico.com/?lpid=NARI3.
Your
Property Wish List
While your opinions on the type of
home you want to own may change
during the home buying process, use
this easy checklist to help you
prioritize and make the shopping
process less time consuming.
§
How close do you need to be to:
(a) public transportation
_______
(b) schools _______
(c) airport _______
(d) expressway _______
(e) neighborhood shopping
_______
(f) other_______?
§
What neighborhoods would you prefer?
§
What school systems do you want to
be near?
§
What architectural style(s) of homes
do you prefer?
§
Do you want a one-story or two-story
house?
§
How old a home would you consider?
§
How much repair or renovation would
you be willing to do?
§
Do you have special facilities or
needs that your home must meet?
§
Do you require a fenced yard or
other amenities for your pets?
|
Prioritize each of these
options into
|
Must have |
Would prefer |
|
Yard (at least_________) |
|
|
|
Garage (size________)
|
|
|
|
Patio/Deck |
|
|
|
Pool |
|
|
|
Bedrooms (number_________) |
|
|
|
Bathrooms (number_________) |
|
|
|
Family room |
|
|
|
Formal living room |
|
|
|
Formal dining room |
|
|
|
Eat-in kitchen |
|
| | 
