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Congratulations!
You are on the road to buying your home!
Buying your home is probably the biggest financial
decision you will make. Many steps go into buying a home and
we are here to make those steps feel as effortless as possible.
The first step to home ownership begins with you. Are you
ready to become a home owner?
Benefits of
owning
- Greater control. True, governments
and homeowner's associations exert a lot of control over
what you can do with the home you buy. But it's nothing
compared to the control landlords have on their tenants.
Tenants can't remodel their apartments, or use the common
areas except as specified; the landlord can forbid them
from having pets, sublessors, or more than a specified
number of occupants in an apartment.
- It's an investment. Every dollar you
put into the home you buy gets you "equity"
-- that is, an increase in your net worth. As long as
you can sell your home for more than you paid for it,
you or your heirs will get that money back eventually.
And while it's a forced investment, the effective amount
you have to pay for housing decreases as time goes by.
You'll still be paying $2,500/month for your two-bedroom
condo in twenty years, while equivalent rents will probably
be much higher by then.
- Legal and tax advantages. There's
no two ways about it: Property taxes are a big expense
that renters don't have. But balancing them out is a passel
of income tax deductions only available to homeowners.
In addition, a certain amount of your home's equity is
protected against judgements, so you probably won't find
yourself broke if you lose a lawsuit.
- Security and pride. People who own
their home tend to take better care of it, because they
know it'll be theirs for a long time. Even with San Francisco's
strong tenant-protection laws, renters can be kicked out
of their apartment at any time, even if they didn't do
anything wrong. And the local market dictates whether
you'll find a suitable place, or how much you'll pay.
When you own, only political uprising or natural disaster
can force you out.
- Leverage. As you build equity, you
also build your ability to borrow on the value of your
home through a "home equity" loan. When you
meet someone who owns several buildings, it's often the
case that they don't "own" any of them outright,
but rather have been able to use partially owned properties
as security in the purchase of other properties. That's
how empires are built.
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The Cost of
Owning a Home
Other than your mortgage there are costs involved with owning
a home that renters do not have. One of the largest is property
taxes. Property taxes are re-assessed on the purchase price
of a property at approximately 1.144% (this rate can change,
please consult the Office of the Treasurer and Tax Collector).
The tax bill is separated into two payments; one due in December
and the other in April.
Other costs involved are hazard insurance (property insurance)
Water, Garbage, and other utilities. Condominiums typically
have Home Owner Dues which traditionally cover insurance,
water, and garbage. Homeowners also should consider keeping
a fund for maintenance. If the water heater or furnace breaks
you will not have a landlord to call.
We supply our Buyers’ with a comprehensive one year
Home Warranty to cover many of the homes systems.
Keep in mind that many of these costs can be used
as deductions on your taxes, lowering your tax liability.
Consult your tax advisor on how these costs can positively
affect your taxes.
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Selecting
an agent, does it make a difference?
In one word, YES! We are both REALTORS®.
Not all Agents are REALTORS®.
REALTOR® identifies
real estate professionals who are members of the National
Association of REALTORS®
and subscribe to its strict Code of Ethics. We both work full
time as Realtors and pride ourselves on accessibility.
Since we work as a team there will always be someone available
for your needs.
Between the two of us we have been owners and sellers of Condominiums,
Tenancy In Commons, and Single Family Homes. We know first
hand the emotions, questions, and concerns a buyer feels when
making the decision to purchase their new home. We will take
the time to answer your questions and listen to your concerns
so that you are able to make the best decision for yourself.
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What is the
benefit of working with a Realtor?
The San Francisco Real Estate Market is ever-changing and
unique. Some people feel that they will “go it alone”,
or that they can do the job better than an agent would, or
enlist the services of the “Listing Agent” giving
them the edge. Besides the fact that there is no fee for using
a Buyer’s Agent there are many other reasons to have
an Agent working solely on your behalf. Do you know what a
pre-emptive offer is and when to use it? Do you know how to
include contingencies in your offer and still be competitive?
What are rent backs? What are common practices concerning
rent backs? Do you have a lockbox key to gain entry to vacant
properties? If you answered NO to any of these find a qualified
Realtor.
We will guide you through the entire process helping you find
your new home. Once you are pre-approved for your financing
we will meet with you and discus your needs, including type
of property, amenities, and neighborhoods. We preview properties
twice a week for our clients and search the Multiple Listing
Service daily. We will email you detailed information on homes
that fit your needs, make necessary appointments, and accompany
you to view properties. Once you find the right home we will
guide you through all the disclosures and negotiate the price
and terms. Once an offer is accepted we will open Escrow and
guide you through any inspections on the property, and renegotiate
if needed. We will be in constant contact with mortgage brokers,
escrow companies, and listing agents to ensure a smooth transaction
and to be sure that your needs are being met. We will accompany
you to the signing, explain the closing process, and finally
hand you the keys to your new home!
How much can I borrow?
Many variables go into finding the right loan. Credit Score,
Income, and Assets will determine what loan and amount you
qualify for. Start by speaking to your bank or credit union
and discus the options available to you, or we can refer you
to qualified Mortgage Broker who will be able to assist you
in what loan is right for you.
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Pre-Qualified/
Pre-Approved?
If a buyer is "pre-qualified" it has been determined,
with a loan officer, what price the buyer can afford based
on the down payment, debts and the amount the mortgage company
will approve for the mortgage. Being "pre-qualified"
is only a determination of probable credit. If "pre-approved",
credit, employment and funds have been approved by the lender.
In the current market it is crucial to be pre-approved.
An offer has little chance of being accepted without a “pre-approval”
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Choosing
a Neighborhood
When you buy a home, you buy more than a building. You also
buy neighbors, access to nearby shops and services, and the
"feeling" that makes each neighborhood unique. Everybody
has a different idea of what makes a neighborhood "good":
Your best bet is to spend a day or five driving around, sitting
in cafes, and talking with people throughout the city.
The good news is that just about everybody can find a San
Francisco neighborhood they like, and every neighborhood has
its fans. Here are some tips to help you find the best one
for you.
Important things to consider
- Transit. Whether you travel by car,
bike or public transit, an extra 15 minutes on your commute
time will add up -- as will the half hour you spend looking
for parking if you have a car but no garage in North Beach.
The San Francisco bus and light rail system "Muni"
covers the city well, but you may wait as long as 40 minutes
for a bus, especially in outlying areas. Parking varies
throughout the city, but generally gets better as you
get away from downtown.
- Population. Do you like peace and
quiet, or the excitement of city life? In San Francisco,
the two are often within blocks of each other. Nonetheless,
it's hard to escape the bustle in The Mission or North
Beach, while the residential quality of The Outer Sunset
encourages tranquility.
- Housing style. It's hard to find a
condo in some parts of the city, while in others that's
nearly all you can buy. For example, condos are popular
in the areas near Van Ness Avenue (on both sides), Victorian
and Edwardians reign in Hayes Valley, and more-modern
single-family homes fill the Outer Sunset.
- Weather. With its hills and valleys,
San Francisco is a city of "microclimates" that
make temperatures vary as much as twenty degrees Fahrenheit
within a few blocks. But what you'll notice most is the
difference in moisture. Neighborhoods near the ocean (The
Richmond) and high on some hills (Twin Peaks) get more
fog than most, while those on the eastern side (Potrero
Hill, Noe Valley, The Mission) are perennially sunny.
- Price. Prices for the same building
vary wildly from location to location within San Francisco,
and there are no truly "cheap" areas anymore.
In general, homes cost less as you move south, low, and
away from downtown: District 10 neighborhoods Bayview,
Hunter's Point, The Excelsior are comparatively affordable,
as is District 2's Outer Sunset. Prices generally increase
as you move north, climb the hills, and move toward downtown:
Telegraph Hill, The Marina and Pacific Heights are famously
pricey.
- Familiarity. Many buyers tend to look
in the area they currently live in. We encourage buyers
to “venture” out and experience different
areas. Many are surprised at what previously discounted
neighborhoods have to offer.
No amount of demographic detail can take
the place of a stroll through San Francisco's many neighborhoods,
or the opinions of people who live there. The more you experience
will only help you make your final decision.
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Types
of property
Part of the search will include identifying what type of property
fits your needs and budget. In San Francisco you will find
several types of property for sale. Common types of residential
property are:
1. Single Family Home:
A home that sits on its own deeded land. This option is
appealing to many due to the privacy of not sharing floors
or ceilings with other dwellings. One thing to consider
is that, unlike condominiums, owners are fully responsible
for the maintenance of the property. Perspective buyers
of Single family homes should consider a fund for the homes
systems and unforeseen events.
2.Condominiums: Individually owned units
within a building. Condominiums typically remain more affordable
than single family homes (by area and size) Condominiums
usually have monthly assessments called HOA’s ( Home
Owner Association Dues) These typically cover common expenses
of the building such as maintenance, reserves, garbage collection,
water, and insurance. The HOA dues vary greatly by building
and amenities. Condominiums typically have Covenants, Conditions,
and Restrictions commonly referred to as CC&R’s.
The CC&R’s will outline rules of the building.
3.Tenancy in Common/ TIC’s: This
is actually a form of ownership. You will typically see
these in multi unit buildings that are not condos. Buyers
are buying interest in a building. The goal of many of these
buildings is to eventually turn the units into condominiums.
Perspective buyers should be fully aware of current condo
conversion laws and seek the advice of a qualified real
estate attorney. We can refer you to an attorney if needed.
4.Cooperatives: Also called a stock cooperative
or co-op. A structure of two or more units in which the
right to occupy a unit is obtained by the purchase of stock
in the corporation which owns the building. Accordingly,
there is no individual ownership of a specific unit. Ownership
is represented by a stock certificate with a proprietary
lease which gives the holder of the stock the right to occupy
a particular apartment. Currently there are only a few lenders
that lend on Cooperatives. We can refer you to a qualified
lender.
5.Multi Units: This would include property
with 2 or more units. This would appeal to investors, buyers
doing a 1031 tax exchange, or owner occupiers wanting to
live in one unit and collect rents on the remaining units.
Many variable go into purchasing multi units including;
tenant status, expenses, and rents.
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The
“Search”
Now that you have your financing questions answered and you
have your Realtor the search begins. Decide what you want
in your new home. What neighborhoods are you interested in?
What amenities do you want in your new home? Is close proximity
to public transportation important? Do you need parking? How
much room do you need? If you’re searching for a condominium
do they have pet restrictions? Do you need outdoor space?
Do you need “move in ready” or do you like the
idea of a fixer?
These are all questions you will need to ask yourself when
your search begins. Many times your criteria will change once
the “house hunting” begins.
We will customize the process to meet your needs and personality.
Some home buyers prefer to preview properties themselves,
some like us to accompany them. We will send you daily updates
from the MLS (multiple listing service) with details of properties
you may be interested in.
Currently the market is very competitive and desirable properties
move quickly. Prospective buyers are encouraged to commit
themselves to the search and set time aside each week to view
properties and speak with your realtor.
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Writing the
offer!
Once you found the right property it is time to construct
an offer. In the current market many listings are seeing multiple
offers, with many above the asking price. Our job is to assist
you with completing a competitive offer. Many elements go
into writing an offer. Although price is one aspect, terms
are just as important. What are the motives of the Seller?
How quickly does the seller need to close? Does the seller
need a rent-back? What contingencies to include and for how
long? All of these will go into making a successful offer,
while protecting your interests.
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What
are contingencies?
Contingencies are conditions included in a contract to protect
the Buyers interest. Contingencies follow a timeline and allow
Buyers to obtain necessary information for the purchase of
property. There are several contingencies that are included
in a standard offer. The primary contingencies are Financing,
Appraisal, Contractor’s Inspection, and Pest Inspection.
There are more depending on the property. With each contingency,
depending on the information received, the Buyer will have
the option to move forward, re-negotiate, or back out of the
transaction. We will explain all contingencies and advise
on how to compile a competitive offer and still protect your
interests.
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What
is Escrow?
Once your offer is accepted the escrow process begins. Escrow
is period between having your offer accepted and the close
of the transaction. This is facilitated by Escrow companies.
Escrow companies are neutral third parties that are required
in the sale of Real Estate. They hold necessary deposits,
supply title reports and issue title insurance. Title insurance
protects the named insured against loss because of defects,
liens, encumbrances, adverse claims or other matters not shown
or disclosed to the new owner that attach before date of policy.
The escrow period is determined by the contract and is typically
30 days. This of course will vary depending on the needs of
both buyer and seller.
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The Inspection
Process
When you make an offer on a property, your Purchase Contract
will often contain provisions allowing you various inspections
of the property. The purpose of these inspections is to educate
the buyer on the physical condition of the property. Common
Inspections in San Francisco are:
- Structural Pest Inspection: This is
typically completed by the Seller before the property
is marketed. However, if not completed by the Seller the
Buyer can opt to have this inspection. It is often referred
to as a “termite report,” and would include
damage caused by termites, fungi (dry rot), word boring
beetles, and any type of wood destroying organisms, which
usually are the result of excessive moisture. The report
includes two sections.
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1. Section 1 Conditions:
Conditions were there is “active” or currently
causing damage to the property.
2. Section 2 Conditions: Those of which
are not currently causing damage but are likely to if
left unattended. A typical section 2 item is a plumbing
leak where moisture has not yet caused fungus decay.
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Contractor Inspection:
This inspection typically covers items such as exterior
siding, paint, flooring, appliances, water heater, furnace,
electrical service, plumbing, basic roof, basic foundation,
and other visible features of the property. If needed
further inspections can be ordered including: structural
engineer, roofing, geological, soil, and mold or moisture.
A Contractor Inspection should be conducted by a licensed
inspector and costs approximately $400 depending on the
type of property and the size.
There are many other inspections buyers may
feel necessary to have including, but not limited to, mold,
roof, soil, lead, and structural engineer. These inspections
will vary depending on the property type. Buyers are always
encouraged to have any and all inspections to satisfy their
questions.
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Closing
Costs
Buying a home does come with costs, commonly called closing
costs. Closing costs will vary. Traditionally buyers in San
Francisco pay for Escrow fees including Title Insurance. There
may also be prorated fees such as Property Taxes, Interest
on new loan from the date of funding to the end of the month,
& HOA fees. Additionally the Buyer pays for their loan
fees which can vary depending if there are points or fees
associated with their loan. If there are “points”
(which equal 1% of the loan amount) the rough estimate is
approximately 1%-3% of the purchase price. Additionally Buyers
will pay for Contractor’s Inspection and Pest Inspections,
if included in the purchase agreement. These inspections cost
from $250-$500
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The final process
Once all the inspections have been completed we will contact
you to make an appointment to sign your escrow instructions
and final loan papers. The escrow officer will tell you the
amount of money you’ll need (in addition to your loan
funds) to complete the purchase. This amount will include
“closing costs” such as appraisal fees, loan fees,
escrow charges, advance payments on property taxes, homeowner’s
insurance, title insurance premium, inspection charges and
the like.
Before coming to sign escrow papers, make sure you have done
the following:
1. Identify all your lender’s requirements
and make sure you have satisfied them.
2. Obtain hazard/fire insurance. Call your escrow officer
with the insurance agent’s name and telephone number.
You must have your policy in place before the lender will
send your loan funds to title. Condominiums should have
insurance in place but Buyers are encouraged to obtain insurance
for their personal property.
3. Obtain and bring with you a cashier’s check or
certified check issued by a California institution made
payable to the title company in the amount indicated to
you by the escrow officer when you made the appointment
to sign your escrow instructions.
4. Bring either your valid driver’s license or passport
to your appointment.
5. Before your appointment, you must decide how you wish
to hold title to your new home. We suggest you consult a
lawyer, tax consultant, or other qualified professional.
After the Sign-Off
After you have signed your escrow instructions, the
escrow officer will give them to the lender for a final review.
The review usually occurswithin a few days, after which, the
lender advises the escrow officer that the lender is ready
to fund the loan. If all the conditions of the escrow have
been satisfied, the escrow officer will inform you of the
date the escrow will close and will take care of the technical
and financial details.
The Close of Escrow
This is when you will receive the keys to your new home! Close
of escrow signifies legal transfer of title and occurs when
the grant deed is recorded with the County Recorder. As well,
the lenders deed of trust on your home records concurrently
with the grant deed. Recording usually occurs within one working
day after loan funds are received in escrow. Several weeks
after closing, the County Recorder’s Office will mail
you the original grant deed.
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An
Overview of Buying and Selling a Home
Buyer:
1. Considers purchasing a home
2. Selects a real estate agent
3 .Determines needs and wants
4. Loan Application with Mortgage broker.
5 .Views & researches target homes
6. Makes an offer to buy
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Seller:
1. Decides to sell property
2 .Selects a real estate agent
3 .Determines needs
4 .Prepares home for marketing
5 Agent markets the home
6. Accepts, rejects or counters offer
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7. Offer Accepted
8. Loan Application
9. Inspections
10. Title Search
11. Appraisal
12. Loan Approval
13. Closing Papers Signed
14. Documents Recorded
15. Funds Available To Seller |
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17. Buyer Moves In |
16 .Seller Moves Out |
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Real Property Tax Dates To Plan
For
January 1st
Assessment Date
July 1st
Current Fiscal Tax Year Begins
November 1st
First Installment Due (First Installment - July 1 - December
31)
December 10th
First Installment Becomes Delinquent At 5 PM
January 1st
Calendar Year Begins
February 1st
Second Installment Due (Second Installment - Jan 1 - June
30)
April 10th
2nd Installment Becomes Delinquent at 5 PM
June 30th
Last Day To Pay Current Tax Installments Before Being Considered
in Default
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