Real Estate Process- California
California's escrow timeline is typically 30 to 60 days. Hiring the right professionals during the buying process will ensure buyers are receiving the best deals and getting the best terms. The state of California allows for dual agents, representing both the buyer and seller.
- The California real estate market is highly competitive and making sure that financing is in place is the first step in buying a home.
- Real estate professionals suggest getting more than one mortgage pre-approval to get the best rate.
- A mortgage pre-approval shows a potential seller that the buyer is in a financial position to purchase the home and has met the creditors requirements.
- The minimum down payment is 3.5% for a FHA loan. An additional $15,000 will be needed for closing costs.
Real Estate Agent
- In California, buyers have the option of contacting a Realtor to act on their behalf, and search for available properties or contacting the Realtor on for sale signs of properties that interest them.
- California allows for dual agents. A dual agent acts on behalf of both the buyer and the seller, but must work in the best interest of both parties.
- If a dual agent is used a “Disclosure Regarding Real Estate Agency Relationships,” will need to be signed by both the buyers and sellers.
- A good real estate agent can find the right property based on a clients wish list and negotiate the best price.
- Buyers do not typically pay the Realtor fee. The seller will pay the buyer’s agent’s commission fee.
Making an Offer
- The first step to making an offer is to contact the sellers' agent to see if there are currently offers on the property, and if there are if they will accept anymore offers.
- When making an offer the deposit needs to be paid to an escrow agent and an offer letter needs to be drafted.
- The offer will include; the address of the home, the purchase price offered, how the purchase will be financed, how long the offer is valid for, and an outline of any conditions that would invalidate the offer.
- If the buyer accepts the offer letter the contract is then binding.
Residential Purchase Agreement and Joint Escrow Instructions
- The Residential Purchase Agreement and Joint Escrow Instructions acts as the sales contract and offer. Typically, the time to perform due diligence and get all financing in place is 21 days.
- If the seller accepts the offer they simply sign the Residential Purchase Agreement and Joint Escrow Instructions, they can also counteroffer using the same form.
- If the conditions are not met in 21 days, or in the negotiated timeline, the buyer forfeits their deposit to the seller.
Hiring an Attorney
- The state of California does not require buyers to hire an attorney, however it can be beneficial, especially in more complex transactions.
Inspections and Negotiations
- The buyer will normally be responsible for the home inspection fees. A home inspection will check the condition of all aspects of the home.
- If during the inspections any issues are discovered the buyer and seller can negotiate to determine who will cover the costs, or if the price of the home will be lowered to cover any repairs.
- Complexes and some new California communities are subject to homeowner's associations. The buyer is responsible for reviewing the homeowner association (HOA) documents.
Written Disclosures from the Seller
- California laws place responsibility on the seller to disclose any issues to the buyer. A written disclosure will document any physical issues, pest or environmental concerns or any material defects.
- Once all negotiations are complete closing can occur. At this time an appraisal, or third party valuation, is conducted of the home.
- A final walkthrough is conducted and the final paperwork is signed. Buyers and sellers are not required to meet face to face and all paperwork can be done through the real estate agents.
- The final document to sign is the Verification of Property.
- The closing can take place at the escrow or title company. Once the paperwork has been processed, the keys will be handed over to the buyer.