Brentwood Real Estate

There are obligations that the buyer and seller are obligated to and there aspects of the sale that are up to interpretation. The seller makes certain warranties as to the saleability of the property. They don't owe more than the selling price. This sounds peculiar but if owners have had legal problems, tax problems or financial problems there may be leins on the property that don't show up right away and some the owner may not know about. A title search will not only tell you what is owed against the property but the company that does the search warranties their work so if they are wrong THEY have to pay the difference!

Here is a general breakdown:
Seller

· The seller must provide the buyer with detailed disclosures that will reveal to the buyer any problems or adverse conditions that the seller is aware of. In addition, the seller must provide the buyer with a natural hazard disclosure report. This report is prepared by companies that check local records and maps to determine if the real estate is in an earthquake fault zone, a flood zone, an area of potential landslides, a high fire area, an area of potential liquefaction and other zones that might affect the desirability of the property. It is not uncommon for homes in the San Fernando Valley to be located in several zones.

· Making the home available for the buyer’s physical inspection, geological inspection and lenders appraiser is also required.

· The seller must have a licensed termite company inspect the property and the seller is generally responsible for insuring that any termites or wood destroying fungus or dry rot is taken care of prior to the close of escrow.

· The escrow company will have a number of documents to be filled out and sent back to escrow.

· The seller may be responsible for making repairs to items discovered in the buyer’s home inspection. The items to be repaired or replaced will be negotiated between the buyer and seller after the inspections are complete.

· The seller is responsible for maintaining the property in the same condition it was in when the buyer made the offer on it.

· Commissions to buying and selling agents for brokering the deal, usually 6% of the sales price.

Buyer

· The buyer must deposit their good faith deposit with the escrow holder within three business days of acceptance of their offer. Typically, this is a check for the amount of three percent of the purchase price.

· If the buyer is has not been pre-approved with a lender, the buyer must start the loan process by filling out all the loan application forms, and providing a check for the cost of the appraisal. In addition, the buyer can expect to provide the lender with tax returns, paycheck stubs, bank statements, and a source of funds for the down payment.

· Within the first two weeks the buyer is strongly encouraged to have the property inspected by professionals to determine its physical condition and any geological problems.

· The buyer must provide the seller with a list of items that come up in the inspection process and note which conditions they want the seller to remedy prior to the close of escrow. The buyer and seller generally go into a round of negotiating to determine what items the seller will fix.

· Within five days before the close of escrow, the buyer should go back to the home to determine that the seller has taken care of all the items they agreed to do, and confirm the property is in the same general condition it was in when the offer was made.

· Prior to the close of escrow, the buyer will go into the escrow office and sign all the loan documents that spell out the terms and conditions of the buyer’s new loan. The buyer generally brings in a cashiers check for the balance of their down payment at this time.

The first step in selling a home however is to locate a buyer. Frequently sellers will employ the services of a real estate broker to find a buyer. We recommend interviewing your agent because not everyone will represent you the same. If the services of a real estate broker are used, the agreement listing the home with the broker should be in writing and signed by the broker and the seller. Make sure you read the agreement carefully and negotiate points of your concern. If the home is sold through a broker, the seller will be required to pay the broker a commission as well as the broker that brings the seller.

A seller must be careful to avoid misleading potential buyers of the home. For example, a seller cannot make any false or misleading statements to the buyer about the condition of the home and may not take any steps to conceal any material defects in the home. If a buyer is misled by any actions of the seller, the seller may find himself paying substantial damages to the buyer or could even find that the sale transaction would be voided by a court. Also, a seller is required to complete and sign a special disclosure report form, called a "Residential Real Property Disclosure Report ." This form is designed to inform the buyer of any material defects of which the seller has actual knowledge.

Once a buyer has been located, the seller and buyer enter into a contract setting forth the terms of the sale. This contract must be in writing and signed by both the seller and the buyer. The contract is the most important document in a real estate sale because it controls the whole transaction and defines the seller's rights and obligations. Once signed, a real estate contract creates rights for the seller and subjects the seller to serious legal and financial obligations. Because the contract creates these rights and obligations, the seller should have the advice of an attorney before signing the contract. You, as seller, must be satisfied that you fully understand the contract before you sign it.

The contract will, of course, set out the agreed upon purchase price for the property and will usually provide for a deposit, called earnest money, by the buyer to show his good faith on the purchase. The contract may provide that there are conditions to the buyer's obligation to buy, such as, that the buyer be able to obtain a mortgage at a certain interest rate, that the buyer be able to sell his or her present residence or that the buyer have the home inspected by an architect or engineer and be satisfied with the results of such inspection. If the contract contains such conditions, the contract must be very specific as to the time limit for meeting these conditions and what will happen if the conditions are not met. The contract should also address numerous other issues important to the buyer and seller, such as when and where the closing will occur, when the seller will be required to give possession of the home to the buyer and what items of personal property, such as stove, refrigerator, draperies, and other items, are included in the sale.

Once the terms of the sale are established by the contract, the seller will be required to provide a number of documents to the buyer in order to complete the sale. The contract will specify exactly what documents are required. One very important document is proof that the seller truly is the owner of the property, has the power to sell it, and that the title to the property is free from any problems which might prevent the buyer from using and reselling it. The seller usually provides proof through a title insurance policy issued by a title insurance company and pays the costs of the title insurance policy. The title insurance policy may disclose problems with the title such as judgments or tax liens against the seller or matters arising out of the death of former owners of the property, all of which must be dealt with and resolved before a sale of the home can be completed.

Some of the other documents the seller may be required to provide include a survey of the property and evidence of the amount necessary to pay off any mortgage loans on the property. Typically, the deed and other closing documents will be prepared by the seller's attorney.

In the event the buyer without justification decides not to go ahead with the purchase, the seller has two general remedies. First, he may be entitled to damages which could include retaining the earnest money deposit. Second, in usual cases, the seller may also sue for what is called specific performance, which means that a court may order the buyer to complete the purchase as provided for in the contract. Legal fees incurred by a seller in seeking damages or specific performance are paid by the seller, unless the contract imposes this obligation on the buyer.

As is evident from this brief explanation, a real estate sales contract is quite complex and detailed. Because of the many issues and concerns connected with buying a home both the seller and buyer should each be represented by attorneys.

The seller is also obligated to disclose issues that greatly affect the value of the house like cracked slabs, faulty structural, etc. and must supply a one year warranty in the deal. The warranty comes from an insurance company so make sure it is a reputable one.

Sellers are obligated to show financial information to the seller so if the seller takes their offer they will be able to close the deal in a timely manner.

Getting approved is actually a deal maker when a buyer is competing for a property and a good way of showing a seller your ability to buy the property and maintain your financial privacy.