If ever there was a home buyer's market, it's today. Houses are plentiful and interest rates have plummeted. Before buying, however, make sure that you're practical as you pursue the American dream. Use purchase agreements, inspections and disclosures to protect yourself. California law outlines what buyers and sellers are obligated to do as part of a transaction. Before you begin your home search in the Golden State, become familiar with the process.
While some people can handle the entire transaction on their own, others would rather work with a Realtor or broker. A trained agent can calculate what you can afford, help with negotiations, and make sure the proper documents are completed. There are many benefits of using a real estate agent, for example:
Your real estate agent should be able to help you every step of the way, from drafting a written offer and negotiating with the seller on price and other terms, to coordinating the escrow process and the closing. Your real estate agent can also help you locate other knowledgeable professionals who can assist you in the home buying process, including mortgage brokers and home inspectors.
Here's the good news - working with a professional real estate agent won't cost you any money. The seller usually pays the entire commission which is generally 5% to 6% of the house sale price, split between the seller's agent and the buyer's agent.
You should be sure to choose a real estate agent that has experience representing buyers, has good references and has the qualifications to meet your home buying needs in terms of your ideal location, type of property and your budget.
Your real estate agent should also help you locate other professionals to assist you in the home purchase process, including mortgage brokers and home inspectors.
Sellers are legally required to tell buyers about problems with the property. It's against the law to hide major defects such as structural damage. California sellers must go even further, detailing everything from deaths on the property to a neighbor's annoying dog.
The form requires the seller to list various features and equipment contained in the home and to state whether any known defects exist.
Buyers should not rely solely on the seller's disclosure, however, but should hire an independent home inspector to verify the information from the seller's disclosure. Many buyers make their offer contingent upon a satisfactory inspection report.
An inspection shields the seller by proving that the home is safe. It also protects buyers by revealing problems. Typical inspections look at structural soundness, heating and cooling, bathroom and kitchen fixtures, floors and ceilings.
A real estate contract must be in writing and signed by the parties (buyers and sellers) to the contract. It must contain an offer to sell or purchase, an acceptance of the offer, the sale price, and an adequate description of the property. California real estate agents must use a real estate contract form approved by the California Association of Realtors.
Buyers should always have a title search from a title company before buying a home. The title company searches all public records databases as well as other sources for any liens, easements (for example, utility company's right to access part of the property), or other encumbrances or title restrictions that could affect the property. If the title search finds any issues or problems, the buyer should have the seller fix those problems as a condition to closing.
You should also consider buying title insurance to protect the title of the property against any adverse claims by third parties or any clouds that the title company may have missed during the title search. Lenders require you to buy title insurance that protects them if a problem surfaces later, but these policies cover only them. You can make sure you're covered as well by purchasing a policy for the amount of your loan.
California does not require buyers to hire an attorney during the house buying transaction. Although it is not a requirement, you may decide to hire an attorney at some point during the process. Some situations where you could consider an attorneys' help for example if you are purchasing in a planned unit development that has extensive CC&R's or if you are buying a house jointly with others and need help structuring your co-buyer agreement.