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Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
Purchasing A Property
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Purchasing A Property

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How to manage the escrow process when assisting a client in the purchase of a home. Or, to see how we do it from a home owners perspective.

How to manage the escrow process when assisting a client in the purchase of a home. Or, to see how we do it from a home owners perspective.

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  • 1. PURCHASING A PROPERTY For agents and their admin’s, as well as the do it yourselfer’s Darryll Whaley
  • 2. INTRODUCTION  The enclosed explanation describes the process for a purchase transaction and the documents that need to be filled out prior to and during te process of purchasing a property.  This four step process is designed to give you a system to follow as documents come in for various client files.  The entire escrow process as it relates to those who will be handling the documents for their agent is laid out within this binder and should be seen as a most nearly complete guide to handling a listing escrow.
  • 3. Purchase Procedure #1 The following Documents are deemed necessary in order to legally pursue making a purchase with a client on a piece of property. These forms are also located on the following page. 1. Disclosure regarding Agency Relationships Agency must be secured between the sellers and the listing agent so that the relationship has been made legal. Allows other realtors to see that there is a relationship there and allows for other realtors to have a point of contact for information 2. Buyers Advisory When a buyer wants to make an offer on a piece of property, they must be aware of the many possible problems that can arise in the process of purchasing as house, such as electrical problems that might be wrong, nuisance repair items, plumbing leaks and many other things. It is the agents responsibility to let the buyer know that they should inspect the property in order to assure the buyer that it is in fact a piece of property that would want to own. And that means having the home inspected by a licensed house inspector. 3. California Residential Purchase Agreement and Joint Escrow Instructions 8 page document outlining the terms in which the buying party wishes to purchase the said property.
  • 4. Purchase Procedure #1 cont. 4. Pre-qualification Letter (not included here) A Letter from a Lender having pre-qualified their the buyer for the funds needed to purchase the property. 5. Copy of a personal check to be deposited with the Title Company within three days after acceptance of offer. (not included here) Once these forms have been reviewed by the agent and the buyer, and have been signed and initialed by the buyer, they are then faxed over to, or hand delivered to the listing agent.  After having been signed and initialed by the other party, we have what is called initial acceptance. The buyers agent once having received all of these back will now open escrow.  Darryll Whaley uses a 6 CLASP BLUE ENVELOPE FOR BUYERS. Place the last name followed by the first name on it for easy locating later.  Using a customized Transaction Worksheet, place it in the front clasp of the binder and fill in what you can, such as the list and purchase prices, clients information, etc. You will be filling this in completely with all of the other agents information.
  • 5. Purchase Procedure #2 FOR TITLE 1. Get the (self-created) Transaction Worksheet and fill it out as completely as possible. 2. Make a copy of the California Residential Purchase Agreement and Joint Escrow Instructions 3. Make a copy of the personal check 4. Get the 6 CLASP BLUE ENVELOPE FOR BUYERS and label it with a label found in your agent’s office. 5. Place the buyers last name and then first name on it for ease of access. Make a copy of the transaction worksheet for the title company. 6. Take over items 1-3 to the Title company and ask to open escrow, Write the escrow number on your copy of the transaction worksheet or a stickie.
  • 6. Purchase Procedure #2 cont. FOR OFFICE ADMIN STAFF Deliver the following: 1. Copy of the Transaction Worksheet 2. Actual Deposit Check 3. California Residential Purchase Agreement and Joint Escrow Instructions 4. Transaction Worksheet 5. Buyers Advisory 6. Disclosure regarding Agency Relationships
  • 7. Purchase Procedure #2 cont. FOR THE LENDER OUR CLIENT IS USING 1. Fax over the California Residential Purchase Agreement and Joint Escrow Instructions. The lender needs this information to begin the process of actually getting approval for the loan and ordering up the appraisal on the property. Getting this over ASAP is crucial because we will only have 17 days to remove the loan and appraisal contingency. (explained below). When this has been completed, make a manila envelope with the buyers names on it and start to collect s copy of all documents for them, unless they specify that they want a copy ASAP. 1. Copies to the buyers 2. Originals to the agents file
  • 8. Purchase Procedure #2 cont. Now that you have the completed these procedures, unless your buyer has a home inspector they know, it will be our responsibility to order one up so we can get the report back and see what types of issues the subject property we are purchasing has. This step is important for your buyer because their might be an opportunity to get crucial credits towards closing costs or get major repairs taken care of prior to the close of escrow, ones that could quite possibly effect the desirability if not discovered before the close of escrow. Once you have the house inspection report back, make a copies for the following: 1. Buyer (place in manila envelope) 2. Seller (place off to the side making a stickie of who it is for) 2. Office Administration Staff 3. Your 6 CLASP BLUE ENVELOPE FOR BUYERS
  • 9. Purchase Procedure #2 cont. At this point, the selling party might have a pest inspection for you and your buyer to review, if not, quite often they will be ordering that up at the same time you are ordering up the home inspection. when you have the pest inspection in hand, make copies for the same members above minus the seller because they sent it to you.
  • 10. Purchase Procedure #3 The selling party will be sending over the following disclosures to you to have your buyer sign and initial where applicable. There will also be places where the agent needs to sign as well. These forms can also be found on the following page. 1. Real Estate Transfer Disclosure Statement This disclosure asks various questions about items that come with the property as well as potential known items that relate to the property that might distract from the desirability of the property that the buyer might want to be aware of. The best rule of thumb is to ALWAYS disclose. 2. Supplement to the Real Estate Transfer Disclosure Statement This Disclosure backs up the TDS and asks more in-depth questions that relate to the desirability of the property 3. Lead Based Paint Hazards Disclosure This Disclosure asks the sellers if they are aware of any lead based paint on the premises 4. Smoke Detector Statement of Compliance Properly functioning smoke detectors must be in all bedrooms and in the master hallway. The sellers must sign off on their functioning properly.
  • 11. Purchase Procedure #3 cont. 5. Water Heater Statement of Compliance All Water Heaters must be double strapped for earthquake durability, must be 18 inches off the ground, and must be outfitted with a pressure relief valve in the event of overheating. The sellers must sign off on this being correct. 6. Natural Hazards Booklet This booklet is standard and talks about natural hazards that occur in our area. Within the booklet, there is a questionnaire that asks the seller some questions as to their knowledge of any natural hazards that might have occurred in their area. Sellers are required to fill this out and answer honestly and sign that they have been handed the booklet. Buyer must sign receipt of this as well. Additionally, the buying party will receive a booklet as well from their agent. They need to sign only that they have received a booklet. 7. Disclosure Regarding Real Estate Agency Relationships - sellers agency with agent The sellers agent must disclose to the buyers agent that he has proper representation, so he will be sending over an agency disclosure which proves this. 8. Disclosure Regarding Real Estate Agency Relationships - to Sellers from buyers agent This form is needed when a buyers agent is making an offer for his clients. The buyers agent must prove he is not a party with the sellers and therefore has the sellers sign one of these disclosure with his name on it as well. (You will always see three of these agency disclosures in any transaction)
  • 12. Purchase Procedure #3 cont. 9. Any other State Mandated Forms required. Is a short sale, make sure you have te documents tha the bank requires. If doing a condominium, please add the following form: PUD - Planned Unit Development Disclosure These forms now having the sellers signatures, buyers signatures and each of the agents signatures where requested, should first be completely copied for our use and placed in the 6 CLASP BLUE ENVELOPE FOR BUYERS , or the triplicates torn off and kept in the same place for our records and for copying for our parties. Then the originals must be couriered back over to the listing agent. To get courier service, call the Title Company and ask for a courier from our office to the other agents office, give the escrow number, place the documents and any other pertinent documents to the transaction in to be sent over in a manila envelope with the address to which it is being sent along with the escrow number written out on the cover of it, and drop it off at the front reception desk. They will take care of the rest from there. Make copies of all of these documents for the following: 1. Buyers 2. Office Administration Staff
  • 13. Purchase Procedure #4 How I have my office handle this aspect: To help our team in keeping accountable to the items needed in completing a transaction, our office administration team places a “what’s still needed” checklist in our in box, letting us know what we still need in order for the transaction to be complete. It is important that you stay on top of this so you can get paid on time or close the deal. If working for a Broker, your office administration team is responsible for sending the demand letter to the title company being used for your transaction and if documents are not satisfied, you will not get paid. At this point in the transaction, the following items will need to be in your office from the entities who created them. Copies will need to be made, if not already done (as explained above):
  • 14. Purchase Procedure #4 cont. 1. Home Inspection Report (not included here) ordered by us, copies made for the following:  Sellers (Have couriered over or if in pdf, e-mail to other agent.  Buyers  Office Administration Staff 2. Pest Inspection Report (not included here) delivered to us by the seller, copies made for the following:  Buyers  Office Administration Staff 3. Natural Hazards Report (not included here) delivered to us by the seller, copies made for the following:  Buyers  Office Administration Staff AS A NOTE: the natural hazards report allows the sellers to be as up front and honest in conveying all pertinent information about the property. It is developed by professional engineers for the purposes of providing information to all interested parties. It will either be from JCP Geologists, or Property ID. Perhaps even another company, but these are the two most commonly used engineering firms.
  • 15. Purchase Procedure #4 cont. 4. Preliminary Title Report is delivered to agent by the Title Company, copies made for the following:  Buyers  Office Administration Staff AS A NOTE: During the escrow process, a PRELIMINARY TITLE REPORT will be sent to both parties offices for review. This report is furnished in part through public records from the City of Martinez as it relates to the property and the plot is lies on. Quite often, this is nothing more than boilerplate information, but is deemed necessary in the disclosing of all information Once these reports have been read, and initialed on the front cover, stating that each party has received and read them, we are normally pretty close to the 17th day when we as the buyers will be releasing the two contingencies:
  • 16. Purchase Procedure #4 cont. 1. Physical Inspection Contingency Which states that after reviewing all reports and disclosures, the buyer accepts the property in its present condition. This could of course be assuming that there was a certain amount of repairs that were agreed to or a certain amount of money given in the form of a credit to the buyers towards closing costs. 2. Loan and Appraisal Contingency Which states that the loan has been fully approved and the property has appraised at the agreed to purchase price.
  • 17. Purchase Procedure #4 cont.  Note: An addendums can allow for information to be added to a purchase contract conveying additional terms, items to be included or excluded, or it can be a simple sentence stating that the buyers hereby remove all contingencies standing in their way of this purchase and are now 100% sure they want this piece of property.  Please know that as an escrow coordinator, you have a lot of power in dealing with other agencies. It is your duty in representing your clients to be in receipt of what ever documents are a party to this transaction and in doing so there will be times where you will need to pursue getting one of these forms signed off on by having to track down the other agent.  At the end of the escrow process, whether it is 30 days or more, the title company will have the buyers and sellers in to sign the closing documents and will send a copy of the closing report to the agents office. When this has been received, the file is considered closed and all documents that are in the 6 CLASP BLUE ENVELOPE FOR BUYERS are to be placed into a larger white envelope provided by your agent and placed in a file cabinet for future reference.
  • 18. END Congratulations, now you should be more familiar with escrow coordination from a realtors perspective when helping buyers purchase a home.

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