Buyer's Guide

The lender will determine your purchasing power, which gives you a guideline as to what you can afford before you begin the process. They will show you a variety of different types of financing (fixed, adjustable, etc.), and will determine how much you qualify for with each type. Based on your desired payment level and type of financing with which you feel comfortable, we can determine your purchasing power.

You need to choose a home based on what funds you have available; the lender will design a loan that will work for your Individual situation.

Before picking a price range, you should make sure you are comfortable with your total monthly payment: Principle, Taxes, Interest, Insurance (and Mortgage Insurance, if necessary).

In today's market, buyers are not the only parties concerned about financing. Sellers are equally concerned. In cases where there are multiple offers for homes, the buyers must put themselves in the best possible position to have their offers accepted. Getting pre-approved also puts the buyer into a better negotiating position, as the Seller knows the buyer is ready, willing and able to buy, and that financing is not in question. Buyers who are not pre- approved have less chance of obtaining an accepted offer on the house they wish to buy. The buyers must put themselves in the best possible position to have their offer accepted.

Don't forget to ask your lender about closing cost on top of your down payment amount. Some lenders offer closing cost credits. Always worth asking for. If you do not already have a lender, we can refer one to you.

Lenders look carefully at your debt-to-income ratio. A large payment such as a car lease or purchase can greatly impact those ratios and prevent you from qualifying for a home loan.

These transfers show up as new deposits and complicate the application process, as you must then disclose and document the source of funds for each new account. The lender can verify each account as it currently exists. You can consolidate your accounts later if you need to.

A new job may involve a probation period, which must be satisfied before income from the new job can be considered for qualifying purposes.

If the new purchases increase the amount of debt you are responsible for, there is the possibility this may disqualify you from getting the loan, or cut down on the available funds you need to meet the closing costs.

This will show as an inquiry on your lender's credit report. Inquiries must be explained in writing.

before speaking with your lender. The lender can advise you if this needs to be done.

Important paperwork such as W-2 forms, divorce decrees, and tax returns should not be sent with your household goods. Duplicate copies take weeks to obtain, and could stall the closing date on your transaction.

It is important that credit has been established with a good payment history. Any derogatory credit must have a good explanation. Outstanding collection accounts, judgements, or liens must be paid through escrow. The credit report will also list a credit score - a mathematical calculation of your overall credit rating.

A consistent job history with the same company is ideal; however, if changes have been made for advancement, it is acceptable. Schooling completed in preparation for a specific vocation is considered to be a part of your job history.

Your gross monthly income (before taxes) is computed. Bonuses, overtime, part-time, or self-employment income is averaged over the last two years. The principal, interest, taxes, and insurance (PITI) on the new loan (plus mortgage insurance, if applicable) is divided by the gross monthly income to get the "top" ratio. P.I.T.I and all debts are divided by the income to get the "bottom" ratio. Ratios are ideally 33 over 38 for an 80% loan and lower for a 90%, 95% or 97% loan. If other components are strong, higher ratios may be permitted. (PITI / Gross Monthly income = Top Ratio) (Total Debt / Gross Monthly income = Bottom Ratio)

To be considered, your funds must have been verified as having been yours for 3 months. A 5% minimum down payment MUST be from your own funds; however, the remainder of the down payment, closing costs, and the 2 to 3 months of reserves may be gifted by a relative who provides a letter and bank statement showing the ability to give.

The property is the security for the loan. The lender will require an appraisal by a certified fee appraiser to assure that there is sufficient collateral. The underwriter will review the appraisal to verify the marketability, condition, and value of your home. The lender will also review the title report and require title insurance on the property for your protection as well as theirs.
*If you don't fall within these guidelines, don't panic! Lenders work with various investors that offer loan products to fit all situations.

A good offer depends on multiple factors: the market, the neighborhood, the seller needs and the list price. It is our job to provide you with the best information on these factors to help you decide. Is the list price low or high compared to the market? Is your offer the only one or are there several you are up against? Are properties in general selling above or below the asking price in the neighborhood?

Primarily by understanding the strategy and motivation of the sellers. It is important to know how many other offers have been placed, the state of the market, and the goals of the seller. An offer is more than a purchase price - a good offer is drafted carefully with overall terms that will appeal to the seller.

Absolutely. Sellers want to know who is buying their house. Whether you are buying from a developer or individual seller, a solid offer package with a personalized cover letter shows that you are a serious purchaser.

It is preferable to allow 24 hours for the seller to respond. In some cases, the seller requests more time, but usually no more than a couple days.

When you submit an offer, the seller has four choices:
1. They can ACCEPT it as written, and you are ratified meaning you are "in contract" to buy it.
2. They can REJECT it.
3. They can offer you a "BACK-UP position in the case that they have accepted another offer, this will put you in first position to ratify if the first offer cancels or falls through.
4. They can COUNTER your offer. They can counter you on the purchase price, the length of escrow, contingency periods, or any other terms. Once you receive their counter you can then 1) Accept 2) Reject or 3) Counter their counter. This can go back and forth several times until both sides come to an agreement. As soon as one party agrees to the other's counter, you are ratified.

If a seller receives more than one offer, they can counter all of them or a select few. In this scenario, the offer is not ratified when you respond to their counter. The seller has the final say; therefore, you are not ratified until the seller accepts your counter.

Escrow is the period between your offer being accepted and closing escrow. Escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event.

 Whether you are the buyer, seller, lender or borrower, you want assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with. The escrow officer is a neutral third party and does not represent any one party.

The principals to the escrow-buyer, seller, lender, agents-cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents. The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed." The duties of an escrow holder include: following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same: the Closing or Settlement Statement. The escrow officer can ONLY take instructions from all parties in agreement. No one party in the transaction can solely give instructions. The escrow officer does not represent any one party-they are a neutral 3rd party in the transaction.

This is determined on a case by case basis and will be written into the offer. Generally, 30 days is common. However, in some cases, you (or the seller) may need more time. In some cases, it is shorter, for example with an all cash deal.

In East Bay Area, it is usually the buyer's choice, as the buyer pays the escrow fees. The selection of the escrow holder is a choice, as the buyer pays the escrow fees. The selection of the escrow holder
is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend an escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees; this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.

Real Estate Transfer Disclosure Statement (called the RETDS) and Seller Property Questionnaire

These 2 disclosures are questionnaires about the property completed by the seller

Preliminary Title Report

Provided by the Title Company, this report gives you information about the sellers

Pest Inspection Report

Generally provided by the seller, this report looks specifically at structural damage to the property from wood

boring beetles, termites, dry rot, etc.)

Agent's Visual Inspection Disclosure

It is required that both agents do their own visual inspection

Natural Hazard Zone Disclosure (Property ID or JCP Report)

This report gives you all information about how the property might by affected by a natural hazard. Earthquake, Wildfire, Tsunami, Flood, etc. based on its specific location.

Other Specific County Disclosures

The East Bay Area has many other disclosures that pertain to specific cities and we as your Real Estate team will go over these thoroughly with you prior to signing.

Conditions, covenants and restrictions commonly referred to as CC&Rs

Home Owners Association (HOA) Meeting Minutes for the last 12 months.

HOA Budget and Budget Reserve Study (if it's a larger building)

Condominium Certification Form

House Rules / Misc. Communication