Purchasing a home is a daunting experience for most, as it is not a common occurrence and likely involves your most valuable asset. Our aim, when representing a buyer, is to prepare you to submit a winning offer and succeed in acquiring the asset on your behalf. The nature of our highly competitive market oftentimes compels us to employ creative strategies to achieve that goal.
OBLIGATIONS TO OUR BUYER CLIENTS:
1. Determine your Purchasing Power
We will arrange a lender review of your pre-approval paperwork to ensure it is still valid (and not simply a prequalification) and/or a lender conversation with your banker. Once confirmed, we will enter into a Buyer Representation Agreement with you and work as your exclusive agent.
2. Keep you In-the-Know
Through active participation in Buy-Sell meetings and our strong relationships with a vast network of brokers, realtors, colleagues, business associates, friends and clients we are aware of properties currently being prepared for market but not yet active on the MLS.
3. Conduct a Comparative Market Analysis
We will analyze the physical and economic features of comparable properties, as well as other market variables, to enable you to make an informed, realistic and smart offer.
4. Recommend/Attend a Home Inspection
We will identify any significant defects (structural, mechanical, safety) which may need to be negotiated with the Seller.
Will a pre-emptive offer be sufficient to close or will it be used as leverage; are you aware of the pros and cons of including an escalation clause in your offer?
6. Ensure Compliance with Contingency Deadlines
We keep you on course so you don't forfeit your earnest money deposit.
7. Review Bids and Negotiate Repairs for corrective work.
8. Review Disclosures
Including the 1) (TDS) which reveals material facts of the Seller’s knowledge regarding the subject property (defects inherent to the property, remodeling projects undertaken, appliances included in the sale and their condition, etc.); and 2) the which discloses whether the property is located within a natural hazards zone (seismic, flood, fire) and how that may affect the value/desirability of the property.
9. Renegotiate changed circumstances revealed upon further inspection.
10. Ensure an equitable allocation of closing costs
11. Have the difficult conversations
The ones you would rather not have; acting as a buffer between you and the Seller allows you to say what you really want to say (without having to actually say it).
Agent commission is paid by the Seller. It is negotiated between the Seller and his/her listing agent at the time the listing agreement is executed. The Listing Agent is obliged to share that commission with the Selling Agent who brings the buyer to the table.
Both principals in the transaction are entitled to have agent representation to protect their interests in one of the most costly transactions they will every make. By foregoing representation, a buyer will forfeit his agent's share of the commission to the listing agent who will then collect a full commission while working to achieve the best outcome for the Seller to whom he/she owes a fiduciary duty. There is no money being "saved" but most likely buyer money being lost immediately and in the near future.
1. What is the difference between being pre-qualified vs. preapproved?
Being “pre-qualified” simply means your lender has done a cursory screen of your verbal financial information and prepared a rough estimate of what you might be able to afford. It does not count for much in the Marin/San Francisco market and will not help you to purchase a home.
A mortgage “pre-approval” takes this preliminary loan process a step further. Additional financial information is gathered including a credit report. You might be asked to provide many of the same documents that will be required to complete the actual loan process, including tax returns, bank statements and employment verification.
With a pre-approval letter from your lender, real estate agents and sellers know you are a serious buyer. This pre-approval letter will be shown to sellers when bidding on a property and proves you have the backing and ability to go through with the sale, making you a much more attractive buyer to the seller.
2. What is the difference between an “earnest money deposit” and a down payment?
Think of your earnest money deposit as a promise to the home seller and your down payment as a promise to the lender.
An earnest money deposit is roughly 3% of the purchase price and is submitted with your offer, or within three days of acceptance, as a show of good faith to the seller. These funds must be liquid and available (i.e., transfer funds, sell stock before making your offer). We prefer to wire transfer this within 48 hours to the title company of your choosing. Your earnest money deposit shows the seller you are serious and committed to closing the deal.
This deposit is held in an escrow account and is usually applied to your down payment or closing costs. If you are paying all-cash, you will still need to submit an earnest money deposit, supported with a proof of funds letter (a bank statement or certified financial statement). Make sure you understand what happens to these funds should the deal not go through. Depending upon the circumstances, the earnest money deposit could be forfeited to the seller partially or in totality.
The down payment is the amount of money required by the lender to approve the loan on the home purchase (usually 20% in Marin and San Francisco).
3. How much of a down payment do I need to put down?
If, like most buyers, you are getting a mortgage, you will bring 20% down payment to the table. The chosen mortgage bank will fund the remaining 80% at close of escrow (COE). Your mortgage lender will keep you apprised of the numerous latest products and options available to you.
4. When am I required to come up with the full down payment?
The remainder of the down payment is due at close of escrow (COE), typically 30 days from offer acceptance; however, remitting sooner than that is a more competitive advantage.
5. How can I determine what my monthly payment will be?
Your mortgage lender will provide you with a breakdown and details on your monthly mortgage payment. The main components that determine your monthly mortgage payment are principal, interest, taxes and insurance (PITI). Other ongoing homeownership costs, such as homeowner’s insurance, HOA fees and property taxes can also be rolled into your monthly mortgage payment. Visit your county’s or city’s tax assessor website to learn more about property taxes.
6. What is “escrow”?
In California, an escrow state, an escrow acts as a neutral third party between the Buyer and the Seller, holding items of value (cash, deeds, bonds, etc.) in the transaction until certain conditions are met. Your earnest money deposit, for example, does not go directly to the Seller, but rather to the escrow company until conditions of the transaction are met (per the “escrow instructions”).
7. What are property disclosures?
By law, the Seller is required to disclose everything he/she knows about a property that may affect its value (structural damage, leaking roof, etc.). We will obtain these Seller disclosures from the listing agent for review, once we have located a property on which you wish to make an offer. Isabelle recommends her Buyers order their own inspections to protect them from any unwanted surprises.
8. What is a contingency?
A contingency is a condition that must be met within a specified timeframe in order for a transaction to go through. The most common types of contingencies are financial and inspection. If the contingency is not met and formally removed, either party may walk away from the deal.
In a highly competitive market where most properties receive multiple offers, it is not uncommon for Buyers to waive all contingencies. These Buyers are in a position to make an all-cash offer, can purchase the property even if their loan doesn’t come through, or, can make up the difference in cash if the property does not appraise for the purchase price.
A “non-contingent offer” means the Buyer accepts the house in its present condition, irrespective of needed repairs. It is crucial to read the Seller disclosures and inspection reports when making a non-contingent offer.