Information for Buyers
Buying Property on the Coast
The Mendocino-Sonoma Coast is a very special place to live and play. It is a celebration of rustic beauty–of clean air, clean ocean and clean beaches. The beautiful scenery, unparalleled peace and a myriad of outdoor pursuits are just a few of the reasons to purchase property and live in one of our small coastal villages.
Purchasing property on this beautiful coast is one of the best investments you can make. We invite you to peruse our showcase of properties that we currently offer for sale. You’ll find luxury single-family homes, condominiums, acreage and residential lots. Our listings reach to many corners of the Mendocino-Sonoma Coast, from the most established rural villages to the hottest new areas.
If you are considering buying on our beautiful coast, we’d be honored to be your guide. With Kennedy & Associates, the highest standard of professionalism and personal service translates into results.
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[tabname]Ready to Take Action?[/tabname]
Buying a home can seem like an overwhelming task. From determining how much you can afford and securing financing to finding the right home and negotiating the transaction, the dream of homeownership can become extremely daunting if you don’t know where to begin and what to expect.
- Is your “financial house” in order?
Begin by taking a close look at your financial situation. Do you have a clear picture of your income versus expenses? If you’ve had past credit problems it doesn’t automatically mean you’ll be turned down for a home loan. Talk to a lender for advice. We would be happy to refer you to a lender who can help you sort through your questions confidentially.
- How much can you put down?
Now, many programs require as little as five percent, and in many markets you may also qualify for a first-time buyer program.
- Consider lining up your mortgage before you begin house hunting.
One of the best negotiating tools you can have in your pocket is to already have your financing lined up with a pre-approved home loan.
- What should you ask a potential lender before committing to a specific loan program?
Ask about the terms of the loan, the down payment required, whether the interest rates are fixed or variable or a combination of the two, whether there are pre-payment penalties, points and other terms or costs associated with the loan (such as appraisal, processing, mortgage insurance or other fees). Require a “Truth In Lending Statement” that outlines in writing the costs and fees that explain why that lender’s interest rate is lower and that can quickly meet or exceed what looks like a higher interest rate with another lender.
Once we’ve found a property that you want to buy, we will guide you through the negotiation process and terms of the sales agreement.
Considering a vacation home? If you’ve ever dreamed of owning your own vacation home, now may be the time to make that dream come true. Fueled by the roughly 80 million baby boomers now moving into middle and retirement ages, experts predict that the vacation-home market will boom well into the new millennium — with some predicting a strong second-home market through the year 2030.
Here are a few points to consider
- Yours exclusively or an investment property? Before shopping for your new vacation home, you’ll need to decide whether the home will be for your exclusive use or used as a rental on a part-time or full-time basis. Start by talking with your tax advisor to learn about the tax regulations and liabilities of a vacation versus an investment property.
- Easy access. The old real estate cliche “Location! Location! Location!” still holds true in the second-home market. Keep your lifestyle in mind. Think about what you and yours like to do on vacation.
- Keep your interests and lifestyle in mind when considering a second home purchase. If you enjoy tinkering in the workshop, a “fixer-upper” vacation home may be just for you. If not, be sure to take a close look at the current and future maintenance requirements of your prospective second home.
- Ask about community covenants.Find out what covenants or other restrictions may affect your property. Many waterfront communities, for example, have regulations on how close to the shore a home can be built or just what kinds of expansions can be done on a property. Planned communities often have homeowner associations to cover the costs of maintaining common areas and amenities, as well as overseeing architectural standards and standards of conduct. Review the restrictions (CC&R’s) for the area and make sure they suit you.
- Rent first.One way to ensure you will like your new second-home community is to rent a home before buying. This is a great way to “try on” the concept of a vacation home, particularly if you have not spent much time in a recreational community.[/tabcont]
[tabname]Assess Your Finances[/tabname]
Make a Game PlanBuying a home is a time of exciting possibilities and intense preparation. Doing some preliminary planning before you begin your home search will make the entire process more manageable and less overwhelming. As part of your initial game plan, you should:
- Fine-tune your credit rating
- Explore mortgage pre qualification and pre approval
- Become an educated buyer
- Create a wish list to help you learn what you need, and what you want – or don’t want – in a new home.
Check your credit rating
Even if you’re sure you have excellent credit, it’s wise to double-check at the outset. Straightening out any errors or disputed items now will avoid troublesome hold-ups down the road when you’re waiting for mortgage approval. You may see disputable items, in addition to errors caused by a faulty social security number, a name similar to yours, or a court ordered judgment you paid off that hasn’t been cleared from the public records. If such items appear, write a letter to the appropriate credit bureau. Credit bureaus are required to help you straighten things out in a reasonable time (usually 30 days).
TIP: Make sure that any outdated derogatory entries are deleted from your credit file. Adverse credit information is not supposed to be reported or included on your credit report after seven years (except bankruptcy information, which can be reported up to ten years).
TIP: Officially cancel inactive credit cards. If you have an inactive credit card with a $5,000 limit, even though you owe nothing on it, some mortgage lenders will consider that a potential future debt. Too many inactive credit cards with significant credit limits could keep you from obtaining a mortgage loan. Don’t just cut up your extra cards; officially cancel them, and do it now so there will be time for the news to reach the credit bureaus.
TIP: Hold off on making any major credit card or car purchases while you’re waiting to apply for a mortgage. Monthly payments you’re obligated to pay will be counted against you, and reduce the amount of the mortgage loan you’ll be offered. Even if you’ve been pre approved for a mortgage, that approval is subject to last minute evaluation of your financial situation, and a spending spree for appliances, furniture and other goodies intended for your new home may wreck your chances of buying it.
Pre qualification and pre approval on a mortgage
Your agent at Kennedy & Associates can help “pre qualify” you for a mortgage before you start house hunting. This process includes analyzing your income, assets and present debt to estimate what you may be able to afford on a house purchase. Mortgage brokers, or lenders’ own mortgage counselors can also calculate the same sort of informal estimate for you.
Obtaining mortgage “pre approval” is another thing entirely. It means that you have in hand a lender’s written commitment to put together a loan for you (subject only to the particular house you want to buy passing the lender’s appraisal). Pre approval makes you a strong buyer, welcomed by sellers. With most other purchasers, sellers must tie the house up on a contract while waiting to see if the would-be buyer can really obtain financing. The down side is that you must pay application fees to cover the lender’s paperwork in verifying your employment, income, assets, debts and credit rating. If you later decide not to use that particular lender, you’d have to start all over again elsewhere – with no rebate. Pre approval will also speed up the entire mortgage procedure once you’ve found the house you want. The only remaining question will be whether the house will “appraise” for enough to warrant the loan.
Your wish list
Making sure you end up with the right home involves figuring out exactly what features you need, want and don’t want in a home. Before starting your search, you should make a “wish list” to decide which features are absolutely essential, which are nice “extras” if you happen to find them, and which are completely undesirable. The more specific you can be about what you’re looking for from the outset, the more effective your home search will be. Also keep in mind, that in the end, every home purchase is a compromise.
We offer a wide variety of homes and lots from ocean bluffs and meadows to coastal ridges and forest. Call Kennedy & Associates at (707) 884-9000 or email, email@example.com for a current list of available properties.
[tabname]Qualifying for a Mortgage — How Do You Score? [/tabname]
Qualifying for a home mortgage may seem like gazing into a crystal ball to many homebuyers. In reality, lenders use a straightforward process for determining whether or not a buyer qualifies for a home mortgage. Today, thanks to a method called “credit scoring,” the chances of qualifying for a mortgage have even been enhanced.
Credit scoring, long used in the consumer lending and credit card arenas, is now part of the process used by the lending community to evaluate applicants for mortgage loans. Based on the data available in the borrower’s credit report, the score indicates the risk a potential borrower represents to the lender. Items considered in credit scoring include past delinquencies, payment history, current level of indebtedness, length of credit history and type of credit used. A borrower with a high credit score may be “rewarded” with a mortgage at a lower rate or more favorable terms.
Industry experts are finding that credit scoring may actually be helping buyers obtain financing for their homes. Surveys by the federal government’s Fannie Mae program, for example, have found that income level doesn’t necessarily correlate to a high credit score. In many cases, they found that buyers with low to moderate incomes frequently have much higher credit scores than those with high incomes. Moreover, they’ve found that those with a high credit score but who can afford only a small down payment, are less likely to default than those with a low credit score who make a high down payment.
Credit scoring is just one piece of the mortgage approval process, however. Lenders also consider length of home ownership, length of employment, monthly income, ability to save, loan-to-value ratios and length of occupancy in current home. These items are generally included in “mortgage scoring,” a process that lenders use to determine the risk involved in issuing a mortgage.
The higher your FICO® scores, the less you pay to buy on credit – no matter whether you’re getting a home loan, cell phone, a car loan, or signing up for credit cards.
A person with FICO scores of 760 or better will pay less per month for a mortgage than a person with FICO scores below 620. You can see that it pays – literally – to improve your FICO scores.
Now that you know what lenders are looking for in their mortgage loan applications, are there ways you can increase your “score”? You bet! Avoid making late payments on credit accounts. Try to keep your credit purchases low and, whenever possible, pay off the balance each month. If you have items on your credit report that could reflect negatively on your ability to secure a mortgage, be prepared to explain each matter in writing. Also consider putting off any major purchases until after you’ve moved into your new home.
We can help you determine how much home you can afford or learn about financing options. We can also work with you to obtain pre-approval status for a mortgage before you begin your home search. This not only prevents “surprises,” but it will give you a bargaining edge when a seller sees that you have already secured financing.
[tabname]Choosing a Realtor®[/tabname]
The terms agent, broker and REALTOR® are often used interchangeably, but have very different meanings. Not all agents (also called salespersons) or brokers are REALTOR®. Learn who is a REALTOR® and the reasons why you should use one.
As a prerequisite to selling real estate, a person must be licensed in the state in which they work, either as an agent/salesperson or as a broker. Before a license is issued, minimum standards for education, examinations and experience must be met. After receiving a real estate license, most agents go on to join their local board or Association of REALTOR® and the National Association of REALTOR®(NAR), the world’s largest professional trade association. They can then call themselves REALTOR®. The term “REALTOR®” is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTOR® and subscribes to its strict Code of Ethics (which in many cases goes beyond state law). In most areas, it is the REALTOR® who shares information on the homes they are marketing, through a Multiple Listing Service (MLS). Working with a REALTOR® who belongs to an MLS will give you access to the greatest number of homes.
Working for America’s property owners, the National Association of REALTOR® provides an arena for professional development, research and exchange of information among its members.
Using an Agent and the Obligations That are Owed to You
An agent is bound by certain legal obligations. Traditionally, these common-law obligations are to: Put the client’s interests above anyone else’s; keep the client’s information confidential; obey the client’s lawful instructions; report to the client anything that would be useful; and account to the client for any money involved. NOTE: A REALTOR® is held to an even higher standard of conduct under the NAR Code of Ethics. In recent years, state laws have been passed setting up various duties for different types of agents.
How to Evaluate an Agent
In making your decision to work with an agent, there are certain questions you should ask when evaluating a potential agent. The first question you should ask is whether the agent is a REALTOR®. You should then ask:
- Does the agent have an active real estate license in good standing? (to find this information, you can check with your state’s governing agency)
- Does the agent belong to the Multiple Listing Service (MLS) and/or a reliable online home buyer’s search service? (Multiple Listing Services are cooperative information networks of REALTOR® that provide descriptions of most of the houses for sale in a particular region.)
- Is real estate their full-time career? What real estate designations does the agent hold? Which party is he or she representing–you or the seller? The discussion is supposed to occur early on, at “first serious contact” with you. The agent should discuss your state’s particular definitions of agency, so you’ll know where you stand.
- In exchange for your commitment, how will the agent help you accomplish your goals? Will he or she show you homes that meet your requirements, and provide you with the list of the properties he or she is showing you?
[tabname]Real Estate Agency Relationships[/tabname]
[tabcont](As required by the Civil Code)
When you enter into a discussion with a real estate agent regarding a real estate transaction, you should from the outset understand what type of agency relationship or representation you wish to have with the agent in the transaction.
A Seller’s agent under a Listing Agreement with the Seller acts as the agent for the Seller only. A Seller’s agent or a subagent of that agent has the following affirmative obligations:
To the Seller:
A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.
- Diligent exercise of reasonable skill and care in performance of the agent’s duties.
- A duty of honest and fair dealing and good faith.
- A duty to disclose all facts known to the agent materially affecting the value or desirability of the Property that are not known to, or within the diligent attention and observation of the parties.
A selling agent can, with the Buyer’s consent, agree to act as agent for the buyer only. In these situations, the agent is not the Seller’s agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations:
To the Buyer:
- A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealing with the Buyer.
- Diligent exercise of reasonable skill and care in performance of the agent’s duties.
- A duty of honest and fair dealing and good faith.
- A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of the parties.
An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative duties set forth about.
AGENT REPRESENTING BOTH SELLER AND BUYER
A real estate agent, either acting directly or through one or more associate licensees, can legally be the agent of both the Seller and the Buyer in a transaction but only with the knowledge and consent of both the Seller and the Buyer.
In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer:
- A fiduciary duty of utmost care, integrity, honesty, and loyalty in the dealings with either the Seller or the Buyers.
- Other duties to the Seller and Buyer as stated above in their respective sections. In representing both Seller and Buyer, the agent may not, without the express permission to the respective party, disclose to the other party that the Seller will accept a price less than the listing price or that the buyer will pay a price greater than the price offered.
The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.
Throughout your real property transaction you may receive more than one disclosure form, depending upon the number of agents assisting in the transaction. The law requires each agent with whom you have more than a casual relationship to present you with disclosure form. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction.
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The dictionary defines escrow as the deposit of funds and written instruments with a neutral third party until certain conditions are fulfilled.
Basically, escrow is a means for enabling ownership transfers to occur fairly and squarely. Escrow involves an impartial third party brought into a transaction to see that the primary parties, the buyer and the seller, perform as they have agreed they would. Escrow enables a buyer and seller to do business with minimum risk because the responsibility for handling the funds and documents is placed in the hands of someone who is not affected by the outcome. The escrow holder is a disinterested go-between for the parties involved in the transaction, one whose legal obligation is to safeguard the interests of everyone who is affected by the outcome.
The escrow process can be more simply defined as the process in which a buyer and seller hire a trusted third person who will act as a stakeholder. In their simplest form those “stakes” are a deed (usually a grant deed) and money. This stakeholder, otherwise known as the escrow agent, will accept the deed from the seller and the purchase money from the buyer and hold it safely for a designated period of time, until he or she can help the principals complete the escrow transaction after all the conditions of escrow have been met.
[tabname]Why Opening an Escrow is Important[/tabname]
Buyers and sellers should open escrow in order to assure concurrent performance. Concurrent performance means that the grant deed is from escrow, that is, after all obligations, such as loans, inspection fees, monies for termite clearance, title fees and the like have been paid. Escrow guarantees that the money is taken care of properly and legally and that the real estate transaction will occur with concurrent performance.
Escrow also assures principals that their money and important papers are safely in the hands of a trusted third party who has the legal responsibility to protect them. In essence, escrow provides a clearinghouse for funds and documents and a means for seeing that all the conditions of the real estate transaction are met before the property changes hands. All parties to the escrow have legal protection during the period of escrow. The neutral escrow holder, thereby minimizing the possibility of fraud or violation of any terms of the agreement, manages everything.
[tabname]The Requirements of an Escrow[/tabname]
Escrow is said to exist when a buyer of real property agrees through a valid written contract to relinquish all control over his or her purchase money in exchange for the seller’s grant deed. This makes escrow a legal process, and the written contract that brings escrow into existence is usually the real estate purchase contract and receipt for deposit and later accompanied by the written escrow instructions. Either instrument, if properly written and signed by the principals in escrow (buyers, sellers, and often lenders, too), could be enforced by the courts as a binding contract. Escrows must therefore comply with contract law. Not only do the principals have to comply with the contracts they have signed, but also the escrow agent has to comply with the escrow instructions. Remember that the escrow instructions are actually drawn up by the escrow agent to help the principals accomplish their arm’s-length transaction, but they are written in such a way that the principals are actually instructing the escrow agent as to the principals’ wishes for the transfer of the title to the property in escrow.
A contract sufficient to involve an escrow must comply with the four basic requirements for a valid contract. These are competent parties, mutual consent, lawful nature and valid consideration. A fifth requirement, a proper writing, is necessary only in certain contracts.
[tabname]Ways to Hold Title[/tabname]
Click here to open a PDF with information on ways to hold title.
Some of the items associated with closing costs are:
Title Insurance Premium
Fee paid by an individual to insure he has a marketable title or-in the case of a lender-to insure their lien position. Fees vary depending on the company used.
If you are planning to resell within 1 year, with some title companies you can pay an additional 10% of the title fee at escrow’s close. With this “binder-policy” , if you then sell within 1 year 100% of the original fee that you paid will be credited. This is an attractive plan for investors and relocation buyers.
Most companies offer a refinance rate which is 70% of base rate. Short term rates (discounts) if a policy has been issued within 5 years. Rates and fees vary from company to company.
Real Estate Commission
Fee paid to a real estate broker for services rendered in listing, showing, selling and consummating the transfer of property.
Transfer and Assumption Charges
Fees charged by a lender to allow a new purchaser to assume an existing loan.
Fees assessed by a county recorder’s office for recording the document of a real estate transaction.
Fees charged by a lender in connection with the processing of a new loan. These may include points, origination fee and credit report.
Fees charged by a title and/or escrow company for services rendered in preparing documents necessary in the consummation of a real estate transaction.
Taxes, insurance impounds and interest prorations, termite inspection fees, tax prorations.
For an estimate of fees specific to your property transaction, call Kennedy at Kennedy & Associates at 707-884-9000 or email firstname.lastname@example.org.
[tabname]Checklist for Moving[/tabname]
Before You Leave
- Post Office: Leave forwarding address
- Charge accounts, credit cards
- Subscriptions: Notice requires several weeks
- Friends and relatives
- Transfer funds, arrange check-cashing in new city
- Arrange credit references
- Notify insurers of new location for Life, Health, Fire, and Auto coverages
- Notify gas, light, water, telephone, fuel
- Request refunds on any deposits made
- Stop or change laundry, newspaper, milk
Medical, Dental, Prescription Histories
- Ask doctor and dentist for referrals; transfer needed prescriptions for eyeglasses, X-rays. Obtain birth records, medical records, etc.
Church, Club, Civic Organizations
- Transfer memberships; get letters of introduction
- Ask about regulations for licenses, vaccinations, tags, etc.
- Empty freezer; plan use of food
- Defrost freezer and clean refrigerator
- Have appliances serviced for moving
- Remember arrangements for TV cable service. Return boxes from old location
- Clean rugs or clothing before moving; have them moving-wrapped
- Check with your moving counselor about insurance coverage, packing and unpacking labor, arrival day, various shipping papers, method and time of expected payment
- Plan for special care needs of infants
- Plan for a garage sale
On Moving Day:
- Carry enough cash or travelers checks to cover cost of moving services and expenses until you make banking connections in new city
- Carry jewelry and documents yourself, or use registered mail
- Plan for transporting pets; they are poor traveling companions if unhappy
- Carry travelers check for quick, available fun
- Let close friend or relative know route and schedule you will travel, including overnight stops
- Double check closets, drawers, shelves to be sure they are empty
- Make arrangement with Realtor to transfer keys
At Your New Address
- Obtain certified check or cashiers check necessary for closing real estate transaction
- Check service for telephone, gas, electricity, and water
- Check pilot light on stove, hot water heater, incinerator and furnace
- Have appliances checked
- Ask post office for mail they may be holding for your arrival
- Have new address recorded on driver’s license
- Visit city offices and register to vote
- Register car within five days after arrival to avoid possible penalties
- Obtain inspection sticker and transfer motor club membership
- Apply for state driver’s license
- Register family in your new place of worship
- Register children in school
- Arrange for medical and dental service