Seller’s Generally Pay:

• Real estate commission
• Document transfer tax ($1.10 per $1,000 of sales price)
• Notary fees
• Property tax proration (to date of acquisition)
• Special delivery/courier fees, if required
• Document preparation fees
• Document recording charges
• Homeowner’s association statement fee and prorata dues
• Home warranty (according to contract)
• Work/repairs required (according to contract)
• Matters of record against the property or seller (loans, tax liens, judgments, etc.) and fees required to clear them (statement fees, reconveyance/trustee fees and prepayment penalties)
• Bonds and assessments (according to contract)

Buyer’s Generally Pay:

• Title insurance policy premiums (lender’s and buyer’s)
• Escrow fees
• Notary fees
• Property tax proration (from acquisition date)
• Special delivery/courier fees, if required
• Document preparation fees
• Document recording charges
• Homeowner’s association transfer fee and prorata dues
• City costs
• Home warranty (according to contract)
• Inspection fees (according to contract)
• Matters of record against the buyer including tax liens, judgments and fees required to clear them
• Fire insurance premium for the first year
• Assumption/change of records fees if the buyer is taking over an existing loan
• Lender’s new loan charges
• Interest on new loan from date of funding to 30 days prior to the first payment
• Other prorations (rents, insurance etc.) if applicable

Lead Paint
Sellers of properties built prior to 1978 have the following obligations:

• Provide buyers with a HUD pamphlet entitled “Protect Your Family From Lead in Your Home”
• Disclose all known lead-based paint and related hazards and provide any available reports
• Include a standardized warning as an attachment to the contract
• Complete and sign statements verifying that requirements have been met
• Retain the signed acknowledgement for 3 years
• In addition, you must provide the buyers with a 10-day opportunity to test for lead

Natural Hazards
California law requires sellers to disclose, via a “Natural Hazard Disclosure Statement” or NHD, if properties are located in one of six predetermined “natural hazard” zones. (If the property is not within one of these zones, you, of course, have no such obligation.)

The six zones are:

• A flood hazard zone as designated by the Federal Emergency Management Agency (FEMA)
• An area of potential flooding after a dam failure (also known as an inundation area)
• A very high fire hazard zone
• A wildland fire area, also known as a state fire responsibility area
• An earthquake fault zone
• A seismic hazard zone

If an NHD is delivered to the buyer after both parties have signed the Purchase Agreement, the buyer will have three days to rescind the agreement. However, if the buyer received the NHD before they signed the Purchase Agreement, then they cannot use the NHD to rescind.

Mello-Roos Districts
Especially (but not exclusively) if you are selling a home in a newer area, you may be within a Mello-Roos tax district, and you must provide to the buyer a “Notice of Special Tax.” If this notice is delivered to the buyer in person, they have three days to rescind their offer. If it’s delivered via U.S. mail, they have five days to decide.

Basically, a “Mello-Roos Community Facilities District” is formed by a local government, district, or agency to finance public services and facilities including police and fire departments, ambulance and paramedic services, parks, schools, libraries, museums and cultural facilities.

Condominiums etc.
If you’re selling a condominium, townhouse or other planned development (for purposes of this discussion, we will call them all “condominiums”), there are the buyer needs to know about common areas (such as greenbelts and recreational rooms) and the homeowner’s association.

The buyer will be required to make monthly payments, known as regular assessments, to maintain common areas, as well as special assessments to replace a roof or repair the plumbing, as determined by the homeowner’s association (HOA.)

Condominiums also may have regulations regarding architectural requirements, limitations on pets, and age restrictions (i.e., senior housing). These must be formally disclosed to the buyer during escrow. You may provide this information via the following documents, to the extent that they exist and are available:

• Declaration of Restrictions: Commonly known as “CC&Rs”, or Conditions, Covenants and Restrictions
• Articles of Incorporation or Articles of Association Bylaws
• All current financial information and related statements, including operating budget, estimated revenue and expenses, HOA reserves, estimated remaining life of major components (including roofs, plumbing etc.), and regular and special assessments
• A statement describing the HOA’s policies and practices in enforcing lien rights or other legal remedies for default in payment of its assessments
• A summary of the HOA’s property, general liability, and earthquake and flood insurance policies
• On existing HOA’s, a statement describing any restrictions on the basis of age, such as authorized senior citizen housing

Many smaller HOAs will not have all of these documents, but must provide what they do have.

If a home is overpriced, buyers will stay away. But, if the price is competitive with similar homes in the area and “shows” better than the competition, it will have a better chance of being sold quickly.

The secret is perfecting a technique that’s as American as apple pie: comparative shopping.

Although comparing houses with different styles, square-footages and locations is challenging, real estate professionals still feel it’s one of the best methods to use when determining a home’s market value.

A responsible real estate agent will effectively evaluate a home’s worth through a process known as Comparative Market Analysis (CMA). Taking a look at assets, such as a swimming pool, bigger than normal living spaces, a fantastic view, adjacent city parks and other attractions, the agent will begin to compare your home with similar properties, called “comparables,” that have sold in the area within the last six months. Typically, it is a realistic price range that will ensure you top dollar and a reasonably quick sale.

However, factors such as the amount of time needed to sell your home can affect the agent’s price recommendation dramatically.

I can determine the typical duration that listings are on the market and can explain that the marketing “norms” vary with prices and properties. Based on this criteria, we will be able to sell your house for a price that both you and the buyer will be happy with. However, if you’re under time constraints because of unexpected job changes or moving agreements you’ve made on another property, this will narrow your chances of selling the home for top dollar in the market.

Assuming you have sufficient time to market the home, here are a few small steps you and your agent can take to finding the right price for your property.

The best comparisons can be made with similar homes that have been sold within the last 45 days as opposed to the standard six months. Any longer, and other factors, such as the economy, could cloud your view of how much your home is really worth.

Another good benchmark is to review the selling prices of homes that have just been sold and are pending closes. Most MLS services provide information on deals pending that most real estate agents should be able to share with you.

A good rule of thumb before setting a price is to make 20 comparisons of comparable properties within a one-mile radius of your house. Once completed you can feel comfortable that the price you’ve picked is a good gauge of the home’s worth and won’t discourage qualified buyers.

Being open and honest about what you see as the home’s greatest strengths and biggest weaknesses will also help your agent get a better feel for how to best evaluate (or assess) and market your home. Think of your home as if you were the buyer. If your home is listed at the right price, you’re well on your way to a speedy and fruitful sale.

Without a Realtor®, SELLERS do all the work and take all the risks.

Time and expense
You pay for costly ads that may prove ineffective and you pay for legal fees. You must stay constantly at home “on duty” seven days a week, or miss possible contact with potential buyers.

Screening
Your “For Sale” sign and advertising may attract unqualified, curious people seeking entry into your home. Identifying a real prospect is often difficult. Without an agent, you could spend all your time with unqualified buyers. Furthermore, an agent will use their valuable contacts to find the right buyer.

Negotiation
For sellers without a Realtor®, negotiations lead to the most difficulties. A skillful third-party negotiator is usually necessary to secure a beneficial final agreement between the buyer and the seller and to provide a greater net return on your investment.

Financing Arrangements
Realtors® can save you hours of research by sharing their knowledge about where money is available and who has the most competitive rates.

Is It Worth It? 
The commission “saved” may prove inadequate to meet the total costs of your own time and marketing efforts. Who wins if you sell through a Realtor®..? You do!

• Educate you through the entire process
• Listen to your needs to understand your real estate objectives
• Help you understand all of the paperwork
• Handle any problems that arise during the transaction
• Properly prepare forms, contracts and disclosures, which are required by law, and make sure that they are legally correct
• Provide comparable sales data to assure that you are setting the proper price for your home
• Guide you regarding the repairs that should be made
• Show you homes in an effective and professional manner
• Guide you in your selection of escrow/closing and title people
• Oversee the closing process
• Help you spot buyers who are attempting to take advantage of you
• Help you understand the use and limitations of good faith deposits
• Advise you as to when you should seek the advice of an attorney
• Make sure the appraisal process is handled properly
• Help you to understand the complete escrow/closing and title process
• Advise you as to any inspections such as septic, well or soil, which might be applicable to your property
• Guide you as to how the escrow/closing instructions should be prepared
• Properly handle the walk-through process with you prior to the final closing
• See that any repairs or requirements are met prior to the closing
• Advise you as to what course of action should be taken if the buyer refuses to close the transaction
• Negotiate and deal effectively on your behalf with the buyers, other agents, escrow/closing, title people and attorneys
• See that each and every facet of the buying process is effectively and professionally handled in your best interest

The smaller the down payment, the greater the requirements are on a buyer’s financial condition. The reason a lender is willing to lend up to 95% of the value of the house is that history has shown real estate to be such an excellent investment. Lenders expect that the home will be worth more in the future than it is today – so their investment in your home is considered very safe.

That’s also why the interest rate you can obtain on a home loan is one of the best around. Consider that America’s largest and strongest corporations borrow at what is called the “prime rate,” and that today you can borrow a home loan – fixed at the same rate for many years – at substantially less than the prime rate. Lenders have found that home loans tend to be excellent investments, and you benefit every month when you make your loan payment.

What if I don’t have enough for the down payment?

Today’s homebuyers have more loan options. A homebuyer may have excellent credit and the ability to make the monthly mortgage payment, but not have the cash for the down payment. For this situation a nontraditional loan program such as an 80-10-10 may be the best loan. Homebuyers should not despair and assume that a home is out of reach. There are many loan options available for many different financial situations.

First, you should write down why you’re looking for a home. For example, are you currently renting and would like to have a home where you can begin building equity? Maybe you have outgrown your existing home or changed jobs which required you to move to a new city. These factors will all have an impact on how you approach your home search.

It is important to identify what you envision your home to look like and what features it should have. Writing this down helps to avoid ambiguity later in the home search process. You should make at least two lists: one should describe everything you would ideally like and the other should list the features of the home that are an absolute must. It is most likely that you will blend the two lists into one as you progress through the homebuying process. This is a natural and evolutionary process that becomes clearer as you determine what you want and what is available.

A buyer’s agent represents you, the buyer, not the seller, and has full fiduciary duties, including loyalty to you. By definition, the buyer’s agent has your best interests in mind throughout the transaction. The percentage of homebuyers with buyer representation has grown significantly in the past decade. According to a recent National Association of Realtors® survey, nearly half (46%) of home buyers used the services of a buyer’s agent last year, and four out of every five buyer’s agent agreements were in writing.

The benefits of buyer representation is the dedication of a buyer’s agent to the home buyer. The buyer’s agent and homebuyer establish a mutual agreement, known as a buyer agency agreement, that will entitle the homebuyer to, but is not limited by:

Loyalty The real estate agent must act in the best interest of the buyer.

Disclosure All material facts such as relationships between agent and other parties, existence of other offers, status of earnest money, seller’s financial condition, property’s true worth, commission split with other brokers, and legal effect of important contract provisions.

Confidentiality Any discussions, facts, or information that should not be revealed to others but does not include responsibility of fairness and honesty in dealings with all parties.

Accounting in dealings Reporting of where any money placed in the hands of the broker is kept.

Reasonable Skill and Care Arriving at a reasonable purchase price and advising the buyer of such, affirmatively discovering material facts and disclosing them to the buyer, investigating the material facts related to the sale. With a buyer agency, the interests of the homebuyer will be represented in the purchase of the home. This scenario is different from a typical transaction where the buyer is not technically represented.

• Educate you through the entire process
• Listen to your needs to understand your real estate objectives
• Help you understand all of the paperwork
• Handle any problems that arise during the transaction
• Properly prepare forms, contracts and disclosures, which are required by law, and make sure that they are legally correct
• Provide comparable sales data to assure that you are paying the proper price for your home
• Help you find the right home in the right neighborhood
• Screen homes before your inspection to make sure the property meets your needs
• Guide you regarding the repairs that should be made
• Show you homes in an effective and professional manner
• Guide you in your selection of escrow/closing and title people
• Oversee the closing process
• See that the completion of the transaction is smooth, including obtaining keys and taking possession of the property
• Help you spot sellers who are attempting to take advantage of you
• Help you understand the use and limitations of good faith deposits
• Advise you as to when you should seek the advice of an attorney
• Make sure the appraisal process is handled properly
• Help you to understand the complete loan, escrow/closing and title process
• Advise you as to any inspections such as septic, well or soil, which might be applicable to the specific property in which you are interested
• Guide you as to how the escrow/closing instructions should be prepared
• Properly handle the walk-through process with you prior to the final closing
• See that any repairs or requirements are met prior to the closing
• Advise you as to what course of action should be taken if the seller refuses to close the transaction
• Negotiate and deal effectively on your behalf with the seller, other agents, escrow/closing, title people and attorneys
• See that each and every facet of the buying process is effectively and professionally handled in your best interest

Most liens are easy to remove but there are those that are more challenging.  IRS Tax and child support liens can halt a short sale.  However, escrows can still close but these challenging liens will need to be removed before closing.

Most sellers in default or in the foreclosure process do not have the money to pay off a lien at closing.  The seller’s lender will not entertain paying off the seller’s liens unless it is the standard liens and even then they might try to negotiate that the seller pay part or all of them.

If there is a child support lien against the property call the county child support division and ask what is the process for releasing the lien when the property is being sold as a short sale.  

On a equity sale there may be enough money to payoff the lien.  But on a short sale sellers will not get any proceeds from the sale, therefore there will be no money to pay off the lien. 

In this situation the county advised to write a letter explaining the situation and including it with the demand for a $0 balance that escrow sends out.

The title company submitted the letter stating the seller was current in their payments but since it was an out-of-state lien the county stated the seller would have to go to court to request the lien be removed so escrow could close.  Well, that’s now what the seller wanted to hear.  It was going to take money to hire and attorney and delay closing.

Escrow has not yet closed.  All parties in the transaction are working on coming up with a solution.  Any suggestions or ideas?  Your input is welcome.