ellisposner.com

BUYING A HOME

TRUSTED. EXPERIENCED. LOCAL. 

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You Can’t Do It On Your Own

I get it. Really. You can view every available listing online without an agent. You can look up recent comps and even use AVMs to get an estimate of what a property might sell for. And there’s always open houses to go to.

But whether you realize it or not, you can’t actually buy real estate without the help of an agent. And even if you could, why would you? In CA, all commissions are paid by the seller. So basically, I work for buyers for free.

You need someone who knows the process, the paperwork, how to negotiate for the best terms and price and who will protect your interests.

Experience Counts

The average person might buy 2 or 3 homes in their life. I often sell that many properties in a month. It is what I do every day.

What that means is that I am often involved in a few hundred real estate negotiations a year.

And I have access to all the resources you will need before, after, and during the escrow period.

I will be with you every step of the way explaining the process and handling everything that comes up during the escrow for you.

There’s a reason I have over 100 reviews and testimonials online.

 

 BUYER FREQUENTLY ASKED QUESTIONS

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These are the most frequently asked Real Estate questions from buyers. Or, if not these questions exactly, a pretty close variation. So, in no particular order, here goes.

  • Why are they selling?

  • Will the seller take less?

  • Can I lose my deposit?

  • What if my loan isn't approved?

  • When can I get the keys?

  • How do I make an offer

And here's what you need to know.

WHY ARE THEY SELLING?

While there are many things Sellers have to disclose, why they are selling is not one of them (in most instances). Sometimes we have an indication based on the type of sale: foreclosure, short sale, probate or trust sale, relocation, new construction, etc. Other very common reasons might be downsizing, divorce, illness, or other changes in the seller's personal or financial circumstances such as the birth of a new child (need a larger home) or an increase in their income affording them the opportunity to buy a larger move up home.

What might be a better question to focus on is what terms are the sellers looking for, ie long or short escrow, leaseback after the close of escrow, seller contingency on finding a replacement property.

Often by pursuing those questions, I can get a better understanding of what's going on behind the scenes. But, truthfully, in most cases it doesn't really matter. If the seller has gone through the trouble of listing their home for sale in the MLS, they want to sell and that's all you really need to know (at least at the beginning).

WILL THE SELLER TAKE LESS?

That's going to depend on whether we are in a Buyer's or Seller's Market. A Buyer's Market is generally defined as more than 6 months of inventory on hand and a Seller's market by less than 3. If there is between 3-6 month's of housing inventory listed, the market is considered "balanced". The second determining factor will be how long has the home been on the market. Lastly, you will need to know if the seller can afford to accept less and we also have to factor in what kind of sale it is and who are the decision makers.

Better questions to focus on are whether the Seller has multiple offers and when the offers are being reviewed. If it is a new listing and they already have offers in the first week to 10 days or so, it pretty much will sell above the asking price unless someone has some extraordinary terms they can offer (such as all cash and closing in 7 days with no contingencies).

If the listing has been on the market for a while, is not moving, has not had any price reductions, and activity is low, then yes the seller may very well accept an offer below the MLS list price.

As I also mentioned above, whether the property will sell for less or not is often also a function of who the decision maker is. In a short sale or REO, the loss mitigator or asset manager may only have authority up to a certain limit to discount the home. On the other hand, if the seller is someone who inherited a property owned free and clear they very well might accept less than the asking price if the property has been on the market for a while.

HOW DO I MAKE AN OFFER

In most instances we are going to use what agents refer to as the “RPA” or more formally the Residential Purchase Agreement.

To the pre-formatted boilerplate, the agent adds the specific price and terms. That’s it. Put it into DocuSign or wet sign it in person and we’re ready to go.

In some instances, probate sales or if you are buying a property from a large builder like KB homes, a different form may be used.

WHAT IS A “COUNTER OFFER”?

A seller can accept, reject or counter your offer. Over the last few years many listings have received multiple offers at once and sellers can respond to all of them, what we call SMCO, Seller Multiple Counter Offer. With a multiple counter, a seller is allowed to accept whichever offer they deem to be the most attractive based on price and terms. When only responding to one offer at a time, the seller has to accept if the buyer agrees to the terms and conditions.

Sometimes buyers ask how we know if the seller really has multiple offers. Short of seeing the other offers there is no way to verify this and there is probably some misrepresentation going on by if the listing agent is working for a reputable brokerage, chances are they are playing it straight.

WHAT HAPPENS AFTER AN OFFER IS ACCEPTED?

After an offer is accepted, the buyer has 3 business days to get their earnest money deposit (EMD) to escrow. The EMD is most often 3% of the final purchase price. Usually this is done by wire but some escrow companies accept checks.

The next step is typically to do buyer inspections and investigations. These can include a general home inspection, a termite inspection and a sewer line video. Depending on what is discovered during these inspections there may be further inspections.

After the inspections are completed, the buyer can make a request for repair which can include actually doing the repairs, giving the buyer a credit for the repairs or lowering the price.

WHAT ABOUT DISCLOSURES

During the buyer inspection period, the seller will provide the buyer with a number of disclosures many of which are “boilerplate” and not specific to the subject property.

The most important disclosure document by far is the Transfer Disclosure Statement (TDS) closely followed by the Seller Property Questionnaire (SPQ). These forms give the seller the opportunity to disclose what they know about the property.

CAN I LOSE MY DEPOSIT?

Yes, but it is not likely to happen if you have a good agent who explains the process to you and a reliable lender.

In the standard CA purchase contract (CA-RPA), you can only lose your deposit if you remove ALL of your contingencies and then do not close escrow. And, the amount you can lose in most instances is limited to no more than 3% of the purchase price or the actual amount of your earnest Money Deposit (EMD). There are some variations to this specifically in some REO contracts, builder's contracts and Probate Sales. But sticking to the most common standard transactions, if you have removed all of your contingencies in writing and then do not perform, that EMD may be forfeited.

Now that I have your attention, let me add that it has never happened to any of my Buyer clients and if I am representing you, you won't be the first.

One of the most common ways Buyers lose their EMD is necause their lenders can not perform. So, let me continue on that theme as I answer the next question

WHAT IF MY LOAN ISN'T APPROVED?

To finish up on the previous question, assuming that you have done all of your inspections and there is nothing wrong with the house (or the Seller repairs or otherwise compenates you), and that you aren't a total flake who at the last minute decides that rather than buy that cool Craftsman fixer at the Beach you really want to move to Australia, or that you don't lose your job the day before your loan is supposed to fund, the most common reason that Buyer's default is because their Lender can not perform and you aren't notified until you are beyond the point of no return (contingencies removed).

Unfortunately, there are some lenders that say they will fund your loan and then do not perform meaning the loan documents never show up and they start giving you excuses at the 11th hour when it is too late to get out of the deal. This most typically may happen when you are dealing with a "mortgage broker". That is someome who can not diectly fund the loan but is only taking your file to someone who can fund your loan.

Under normal circumstances, if for some reason you can not get the loan and you have not removed contingencies you can cancel the contract. Many sellers or their agents may ask for the actual document from the lender showing you were in fcat turned down. But if you acted in good faith, you can get out of most contracts.

WHEN CAN I GET THE KEYS?

I think what you are really asking here is when can I move in? In the CA Residential Purchase Agreement (RPA), the standard time of possession is 5 PM the day of Close of Escrow (COE).

That measn the day that the Title Company records the deed at the County office. In LA County where I do almost all of my sales (Redondo Beach, Hermosa Beach, Torrance, Long Beach, Rancho Palos Verdes are all LA County), in most instances recording is the day after the loan funds.

What usually happens is that when the Escrow Company has "confirmation" from the Title Company they call or email the agents to notify them that the escrow has closed.

Equally important to when you get your keys is how you get your keys. Sometimes, the listing agent will leave them in the lockbox (if there is one) and other times they will be turned over directly. It’s also important to make sure that in addition to the keys you also get any garage door openers (clickers), mailbox keys or if it is a condo or gated community, those keys as well. And please have your locks changed or re-keyed as soon as you can after your own the home.