Marin County California
Home Buyer Questions & Answers

Regardless if you are a first time home buyer or a seasoned investor looking to buy real estate in the Marin and surrounding Marin County area, my real estate broker expertise of the real estate market will be of assistance to you. My years of experience combined with my knowledge of various home buyer programs will help to ensure you accomplish your dream of buying your first Marin home or locating that perfect investment property! Listed below are common questions I am asked by first time home buyers as well as investment property owners when buying real estate, I hope you find the information useful.

How Do Real Estate Agents Work in California?

In California anyone who offers to buy, sell, or lease real property for compensation must be licensed. Real Estate Brokers and Salespersons are licensed by the State of California. Individuals who wish to become a real estate agent must first take certain specified courses, and pass an examination. Those licensed as Real Estate Salespersons may then sell real estate under the supervision of a Broker. To become a Real Estate Broker, an individual must take additional courses and pass a more rigorous examination. A Broker can either work independently, or can work for a firm managed by another Broker. Salespersons and Brokers are collectively referred to as real estate agents.

What is a Disclosure Statement?

Part of the process of listing a property includes the seller completing a full disclosure of any defects in the house of which he is aware. The seller is required by law to truthfully disclose any significant fact pertaining to his property.

How Do I Go About Selecting an Agent?

Selecting your agent for either buying or selling is an important first step, and should not be taken lightly. You are the client, and you must be satisfied. The ideal agent is experienced, is knowledgeable about the locality in which you are interested, is ethical, and is a good negotiator. If you do not know any agents, ask a friend or associate who has recently purchased a home what they think about their agent. (Experienced agents meet many of their clients through "word-of-mouth" referrals.) Another way to meet agents on an informal basis is to visit open houses, or to answer ads, and have an agent show you one property. It is very important that you "feel comfortable" with your agent; if you have any reservations, look for a new agent. Remember, as the client, you get to choose your agent.

How Does an Agent Work With a Buyer?

Shifting now to the buying side of the transaction, a potential buyer will describe to his agent his preferences as to location, type of home, price range, number of bedrooms and baths, and any special features he likes or dislikes. The agent uses her experience, plus the information on current listings provided by the MLS data base, to construct a list of prospective homes. The agent makes appointments to see the homes which are of interest to the buyer, and personally accompanies the buyer on the tour of these homes. As the process continues, the focus narrows, until a home is selected as the buyer's number one choice. At this point the buyer's agent may research the prices at which similar homes have sold in the neighborhood, as a guideline in setting the offer price.

How Do I Go About Making an Offer?

The agent will assist the buyer in preparing a written offer on a deposit receipt form. All the details of the offer are entered on the form, including the description of the property, the price offered, the amount of the deposit paid (usually 3% of the purchase price), financing terms, duration of the offer, rights of the buyer to inspect the property, which party will pay which fees, etc.

What is a Counter Offer?

The buyer may offer less than the asking price. In addition, there may be other terms of the offer which are not acceptable to the seller. The seller will usually make a written "counter-offer," which says in effect, "I agree with your offer except as follows: ...(enumerate the changes the seller requests)." The buyer can respond with a written "counter-counter-offer," and the offers can go back and forth (like a ping-pong game) until finally there is agreement, or until one of the parties will no longer respond.

What Is Escrow?

The purpose of an escrow is to enable a buyer and seller to deal with each other without risk. Before title to the property can be transferred to the new buyer, the seller must be paid, the seller's old mortgage paid off, a new loan must be obtained by the buyer, and any other liens on the property must be paid off. All responsibility for handling funds and documents is delegated to the escrow holder, a neutral third party, which is usually a title insurance company or escrow company. Your title insurance officer can answer many of the frequently asked questions about title insurance and preliminary reports. In a simple transaction, the buyer delivers the agreed upon funds to the escrow holder. The buyer also instructs the escrow holder to deliver to the seller the stated sum only after all conditions have been met, and title is vested in the buyer. Concurrently, the seller deposits his deed and other documents with the escrow holder, authorizing their delivery when the buyer has deposited the agreed purchase price. The contracting parties deposit funds or documents with the escrow holder, for delivery to the respective parties upon performance of all conditions of the agreement.

What About Inspections?

Most contracts provide that the buyer may, at his own expense, have the house inspected by professionals of his choice. Typical inspections include pest (termite) inspection, contractor inspection (includes electrical, plumbing, heating systems), roof inspection, swimming pool inspection, and soil inspection. These inspections may reveal defects which were not evident to the buyer, and which were not disclosed in the seller's disclosure statement. Depending upon the terms of the Deposit Receipt, the buyer may request the seller to either fix the defect, or provide funds so that the buyer can correct the defect after close of escrow.

Who Is Responsible to Search the Title of the Property?

In California the title of the property is searched by a title company and a preliminary report is issued on the condition of the title, for the buyer's approval. The report would include such information as present ownership, legal description of the property, any existing liens or unpaid taxes, any easements, and other covenants, conditions, or restrictions. A policy of title insurance will usually be issued at close of escrow. A title insurance policy insures the buyer's interest in his purchase, and the priority and validity of any loan. It is a contract to indemnify against loss through defects in the title.

What Happens After the Loan Is Approved?

The buyer is responsible for applying for his loan. When the buyer's loan is approved and documents are ready for signature, the lender delivers the documents to the escrow holder, usually a week or more before the closing date. The buyer signs all loan documents ahead of the closing date, and the seller signs the deed a few days before closing. One or two days before closing the buyer delivers the remainder of the down payment to the escrow holder. To avoid delaying the closing, the buyer should transfer his down payment funds to a local bank well ahead of close of escrow.

When Is The Escrow Considered Closed?

After both the buyer and seller have complied with all agreed-upon terms, the escrow is "closed," and the deed is recorded with the County Recorder. The escrow company notifies the real estate agents that the title is recorded and on that day the property belongs to the buyer. There is no need for a final meeting of the parties and their attorneys, since all documents had been signed prior to the close of escrow, and had been delivered to the escrow holder. Sometimes the seller needs to remain in the property after the close of escrow; this holding over is handled by a separate agreement between buyer and seller. After the close of escrow the parties will be given a final settlement statement, showing the charges and credits for each party.

Do Lawyers Usually Participate in the Sales Process?

The above description covers the customary steps in buying and selling a home in California. Most California residential transactions are completed without the assistance of an attorney. The information in this web site is provided for educational purposes. Buyers and sellers who have legal or tax questions are urged to obtain advice from their attorney or tax professional. While the above material is summarized from sources deemed reliable, it is not guaranteed to apply to all transactions, since other conditions may apply, and each real estate transaction has its own unique characteristics.

Why should I buy, instead of rent?

A home is an investment. When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes. This will save you a lot each year, because the interest you pay will make up most of your monthly payment for most of the years of your mortgage. You can also deduct the property taxes you pay as a homeowner. In addition, the value of your home may go up over the years. Finally, you'll enjoy having something that's all yours - a home where your own personal style will tell the world who you are.

What are "HUD homes," and are they a good deal?

HUD homes can be a very good deal. When someone with a HUD insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then we sell it at market value as quickly as possible. Read all about buying a HUD home. Check our listings of HUD homes and homes being sold by other federal agencies.

Can I become a homebuyer even if I have I've had bad credit, and don't have much for a down-payment?

You may be a good candidate for one of the federal mortgage programs. Start by contacting one of the HUD-funded housing counseling agencies that can help you sort through your options. Also, contact your local government to see if there are any local homebuying programs that might work for you. Look in the blue pages of your phone directory for your local office of housing and community development or, if you can't find it, contact your mayor's office or your county executive's office.

Are there special homeownership grants or programs for single parents?

There is help available. Start by becoming familiar with the homebuying process and pick a good real estate broker. Although as a single parent, you won't have the benefit of two incomes on which to qualify for a loan, consider getting pre-qualified, so that when you find a house you like in your price range you won't have the delay of trying to get qualified. Contact one of the HUD-funded housing counseling agencies in your area to talk through other options for help that might be available to you. Research buying a HUD home, as they can be very good deals. Also, contact your local government to see if there are any local homebuying programs that could help you. Look in the blue pages of your phone directory for your local office of housing and community development or, if you can't find it, contact your mayor's office or your county executive's office.

Should I use a real estate broker? How do I find one?

Using a real estate broker is a very good idea. All the details involved in home buying, particularly the financial ones, can be mind-boggling. A good real estate professional can guide you through the entire process and make the experience much easier. A real estate broker will be well-acquainted with all the important things you'll want to know about a neighborhood you may be considering...the quality of schools, the number of children in the area, the safety of the neighborhood, traffic volume, and more. He or she will help you figure the price range you can afford and search the classified ads and multiple listing services for homes you'll want to see. With immediate access to homes as soon as they're put on the market, the broker can save you hours of wasted driving-around time. When it's time to make an offer on a home, the broker can point out ways to structure your deal to save you money. He or she will explain the advantages and disadvantages of different types of mortgages, guide you through the paperwork, and be there to hold your hand and answer last-minute questions when you sign the final papers at closing. And you don't have to pay the broker anything! The payment comes from the home seller - not from the buyer. By the way, if you want to buy a HUD home, you will be required to use a real estate broker to submit your bid. To find a broker who sells HUD homes, check your local yellow pages or the classified section of your local newspaper.

How much money will I have to come up with to buy a home?

Well, that depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: earnest money - the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house; the down payment, a percentage of the cost of the home that you must pay when you go to settlement; and closing costs, the costs associated with processing the paperwork to buy a house. When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. If you buy a HUD home, for example, your deposit generally will range from $500 - $2,000.

How do I know if I can get a loan?

Use our simple mortgage calculators to see how much mortgage you could pay - that's a good start. If the amount you can afford is significantly less than the cost of homes that interest you, then you might want to wait awhile longer. But before you give up, why don't you contact a real estate broker or a HUD-funded housing counseling agency? They will help you evaluate your loan potential. A broker will know what kinds of mortgages the lenders are offering and can help you choose a lender with a program that might be right for you. Another good idea is to get pre-qualified for a loan. That means you go to a lender and apply for a mortgage before you actually start looking for a home. Then you'll know exactly how much you can afford to spend, and it will speed the process once you do find the home of your dreams.

How do I find a lender?

You can finance a home with a loan from a bank, a savings and loan, a credit union, a private mortgage company, or various state government lenders. Shopping for a loan is like shopping for any other large purchase: you can save money if you take some time to look around for the best prices. Different lenders can offer quite different interest rates and loan fees; and as you know, a lower interest rate can make a big difference in how much home you can afford. Talk with several lenders before you decide. Most lenders need 3-6 weeks for the whole loan approval process. Your real estate broker will be familiar with lenders in the area and what they're offering. Or you can look in your local newspaper's real estate section - most papers list interest rates being offered by local lenders. You can find FHA-approved lenders in the Yellow Pages of your phone book. HUD does not make loans directly - you must use a HUD-approved lender if you're interested in an FHA loan. In addition to the mortgage payment, what other costs do I need to consider? Well, of course you'll have your monthly utilities. If your utilities have been covered in your rent, this may be new for you. Your real estate broker will be able to help you get information from the seller on how much utilities normally cost. In addition, you might have homeowner association or condo association dues. You'll definitely have property taxes, and you also may have city or county taxes. Taxes normally are rolled into your mortgage payment. Again, your broker will be able to help you anticipate these costs.

So what will my mortgage cover?

Most loans have 4 parts: principal: the repayment of the amount you actually borrowed; interest: payment to the lender for the money you've borrowed; homeowners insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards required by most lenders; and property taxes: the annual city/county taxes assessed on your property, divided by the number of mortgage payments you make in a year. Most loans are for 30 years, although 15 year loans are available, too. During the life of the loan, you'll pay far more in interest than you will in principal - sometimes two or three times more! Because of the way loans are structured, in the first years you'll be paying mostly interest in your monthly payments. In the final years, you'll be paying mostly principal.

What do I need to take with me when I apply for a mortgage?

Good question! If you have everything with you when you visit your lender, you'll save a good deal of time. You should have: 1) social security numbers for both your and your spouse, if both of you are applying for the loan; 2) copies of your checking and savings account statements for the past 6 months; 3) evidence of any other assets like bonds or stocks; 4) a recent paycheck stub detailing your earnings; 5) a list of all credit card accounts and the approximate monthly amounts owed on each; 6) a list of account numbers and balances due on outstanding loans, such as car loans; 7) copies of your last 2 years' income tax statements; and 8) the name and address of someone who can verify your employment. Depending on your lender, you may be asked for other information.

I know there are lots of types of mortgages - how do I know which one is best for me?

You're right - there are many types of mortgages, and the more you know about them before you start, the better. Most people use a fixed-rate mortgage. In a fixed rate mortgage, your interest rate stays the same for the term of the mortgage, which normally is 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your mortgage payment will be, and you can plan for it. Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. There are several government mortgage programs,including the Veteran's Administration's programs and the Department of Agriculture's programs. Most people have heard of FHA mortgages. FHA doesn't actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan. Talk to your real estate broker about the various kinds of loans, before you begin shopping for a mortgage.

When I find the home I want, how much should I offer?

Again, your real estate broker can help you here. But there are several things you should consider: 1) is the asking price in line with prices of similar homes in the area? 2) Is the home in good condition or will you have to spend a substantial amount of money making it the way you want it? You probably want to get a professional home inspection before you make your offer. Your real estate broker can help you arrange one. 3) How long has the home been on the market? If it's been for sale for awhile, the seller may be more eager to accept a lower offer. 4) How much mortgage will be required? Make sure you really can afford whatever offer you make. 5) How much do you really want the home? The closer you are to the asking price, the more likely your offer will be accepted. In some cases, you may even want to offer more than the asking price, if you know you are competing with others for the house.

What if my offer is rejected?

They often are! But don't let that stop you. Now you begin negotiating. Your broker will help you. You may have to offer more money, but you may ask the seller to cover some or all of your closing costs or to make repairs that wouldn't normally be expected. Often, negotiations on a price go back and forth several times before a deal is made. Just remember - don't get so caught up in negotiations that you lose sight of what you really want and can afford!

So what will happen at closing?

Basically, you'll sit at a table with your agent, and an escrow officer. The closing agent will have a stack of papers to sign. While he or she will give you a basic explanation of each paper, you may want to take the time to read each one and/or consult with your agent to make sure you know exactly what you're signing. After all, this is a large amount of money you're committing to pay for a lot of years! Before you go to closing, your lender is required to give you a booklet explaining the closing costs, a "good faith estimate" of how much cash you'll have to supply at closing, and a list of documents you'll need at closing. If you don't get those items, be sure to call your lender BEFORE you go to closing. Do not be afraid to ask questions. It is best if you can review most of these documents before you go to the title company and make a list of your questions.