Real Estate Transaction Guidebook - FSBF

Page 1

REAL ESTATE TRANSACTION GUIDEBOOK

Cricket Forsey Licensed Broker in OR 503-515-1217 | cricket@forsalebyforsey.com

www.forsalebyforsey.com

Each office is independently owned and operated.


ABOUT FOR SALE BY FORSEY Thank you for the opportunity to meet with you! This booklet will provide some information about me and my team. My team and I appreciate your time and commitment to finding the most highly qualified real estate professional to help you purchase your home or investment property. We believe that FOR SALE BY FORSEY GROUP is the right team for the job. Our team is a full-service organization dedicated to helping you with all aspects of real estate – from buying your first home, subsequent purchase of your next primary residence, to building a property investment portfolio or helping a family member with their home purchase.

Cricket Forsey Licensed Broker in OR 503-515-1217 cricket@forsalebyforsey.com www.forsalebyforsey.com

We promise to provide you with the highest personalized customer service and will continually strive to stay on top of current real estate trends and the technology involved in the home buying process and make it as efficient and hassle-free as possible for our clients. More than anything, we love to help people realize their dreams and work tirelessly to get where you want to be.

Keller Williams Portland Premiere 7504 SW Bridgeport Road Portland, OR 97224 503-597-2444 Each office is independently owned and operated.

Page 1


THE REAL ESTATE EXPERIENCE This packet was created by For Sale by Forsey Group and Keller Williams Realty Portland Premiere to assist you in the home buying and selling process by providing step-by-step guidance through your transaction. This packet will help you stay organized: • Store and easily access notes along with house flyers as you tour properties and so much more • Clarify the roles of the necessary professionals involved when buying or selling a home • Walk through the steps of what a traditional transaction looks like • Define real estate related terms and answers frequently asked questions • Store the documentation associated with your purchase or sale (purchase or sale documents, inspection reports, loan documents, and more) To minimize the uncertainties associated with buying and selling a home, it is important that you are prepared, organized and work with true professionals. By working with Cricket Forsey, our goal is for your transaction to be as stress free as possible so you can enjoy the buying and selling process.

Congratulations! Page 2


THE PROFESSIONALS ON YOUR SIDE Selling and purchasing a home may feel like an overwhelming process. Familiarizing yourself with the process and knowing what to expect will relieve much of the anxiety and make the process far more enjoyable. Here are the professionals you’ll be working with in a traditional transaction and what they do for you:

1. YOUR REAL ESTATE AGENT • • • •

Matches your wants and needs with the appropriate properties Advises you on the market value of the home you’re buying or selling Looks for common pitfalls that need to be brought to your attention Protects your interests by negotiating price, repairs and other vital details on your behalf

2. YOUR MORTGAGE ADVISOR

• Analyzes your specific circumstances including credit, income and down payment • Secures the best loan package for which you qualify • Takes your application and distinguishes which program best fits you • Understands the loan program options in detail and will know what is required up front to secure the loan

3. YOUR TITLE AND ESCROW OFFICER

• Addresses all of the issues that have to do with the title of the property • Receives loan documents associated with the sale of the home • Ensures the signing by each party of accurate documentation for the lender • Supervises the distribution of proceeds from the property sale • Records the title change in public records Page 3


4. YOUR HOME INSPECTOR

• Looks for structural problems, defects or maintenance issues • Thoroughly inspects the home for the buyer to make informed decisions on their purchase

5. YOUR APPRAISER

• Conducts the bank required analysis of the property to determine its current value, making sure it’s worth the sale price

DID YOU KNOW? The most commonly requested documents for a mortgage are: • 2 Years of W-2s • 1 Month of Paystubs • 2 Years of Tax Returns • 2 Months of Bank Statements • Investment Statements

Page 4


STEPS TO A SUCCESSFUL TRANSACTION

Page 5


Page 6


THE STEPS EXPLAINED You will want to choose an agent you feel comfortable with. Once chosen, your agent may have you sign an agreement for their services. Your real estate agent will be your guide throughout the entire transaction.

You will want to determine if you qualify for financing and for how much. How much you qualify for with the lender, and how much of a payment you’re comfortable with, will help determine the price range of homes to focus on. Your lender may be able to offer tips to improve your credit score to help you achieve a better interest rate.

Buyer: Next is finding the property that best fulfills your wants and needs within the price range you have been pre-approved. Your real estate agent will be instrumental in helping you locate and view these prospective properties.

Seller: Your real estate agent will help you prepare to list your home and the details that come with it - photography, staging, and more. Once listed, the home will be marketed to the public and showings will begin.

Page 7


Buyer: Once you’ve located the property that best fits your needs and wants, your agent will assist you in writing a Purchase Sales Contract (Agreement). It will then be submitted to the agent representing the seller, who then presents the offer to the seller for their consideration. Seller: When you have received an offer, there are three courses of action: accept the offer outright, counter the offer with different terms, or reject it. When there are multiple offers be sure to compare all offers when deciding how to respond.

Pre-approval is just the first step. Once you’ve entered into contract on a home, you will need to submit a full loan application to your lender and supply them with the supporting financial documents they require. It’s important to get this information to your lender in a timely manner to avoid unforeseen delays. Earnest money is usually deposited with a chosen escrow company in the first few business days of an accepted offer.

Buyer: Your agent can help you arrange a professional inspection of the home you’re purchasing. The inspector will be looking for all defects to keep you aware of the condition of the property. The home inspection generally costs from $500-$800 and is paid for by the buyer. You may want to complete other optional inspections including radon levels and a sewer scope. Seller: Be sure your home is ready for the inspection before the inspector arrives. The inspector will need access to places such as the attic, crawlspace, electrical panel, garage and more.

Page 8


THE STEPS EXPLAINED CONTINUED Buyer: When items arise on the inspection, your agent will help you determine which are concerns you should ask the sellers to address. Though the inspection report is very thorough, not all the issues noted require attention. Your broker will create an addendum for requested repairs to send to the sellers. Seller: You will receive this repair addendum and decide how you will respond. Your agent will provide guidance in this matter on committing to completing the repairs or even suggesting a credit instead.

Your Mortgage Advisor or Lender will keep you informed of the status of your loan. Approval means your loan has passed the underwriting phase and can continue forward once the appraisal is complete.

An appraisal is a fair market valuation of the property that is almost always required by lenders. They want to be sure you’re paying/ borrowing the appropriate amount for the house. No one wants to pay more than something is worth. An independent appraiser uses recent market information, as well as the features and location of the home to determine it’s value.

Once final loan documents have been prepared outlining the specific figures and payment information, you will be asked to sign them in front of your escrow officer. Each document will be explained as you go. Once that process is finished, the documents are sent for recording with the local county or city. The final step is the loan funding!

Page 9


Once the loan funding is verified, the home is yours! Congratulations! It’s time to pick up your keys! Be sure to check the possession date on your contract, as the sellers may have until the end of the day to move out. If the sellers are staying in the home after closing for a set period of time your agent will arrange key pick-up times per the contract. Buyer: Don’t forget to transfer utilities to your name on the day you get possession of the home! Seller: Be sure to keep your home insured until you have received the proceeds from your sale.

MOVING TIP Keep immediate need items packed separately and easily accessible: • Cleaning Supplies • Toilet Tissues • Bedding • Toiletries • Immediate Change of Clothes • Pet Supplies and Food

Page 10


REAL ESTATE GLOSSARY ACCEPTANCE: the date when both parties, seller and buyer, have agreed to and completed signing and/or initialing the contract. AMORTIZED LOAN: a loan that is paid in equal installments during its term. APPRAISAL: an estimate of real estate value, usually issued to standard of FHA, VA and FHMA. Recent comparable sales in the neighborhood is the most important factor in determining value. APPRECIATION: an increase in the value of a property due to changes in market condition or other causes. The opposite of depreciation. ASSUMABLE MORTGAGE: purchaser takes ownership to real estate encumbered by an existing mortgage and assumes responsibility as the guarantor for the unpaid balance of the mortgage. BILL OF SALE: document used to transfer title (ownership) of PERSONAL property. CLOUD ON TITLE: any condition that affects the clear title to real property. DISCOUNT POINTS: a loan fee charged by a lender of FHA, VA or conventional loans when a lower interest rate is available to the buyer. One Point = 1% of the loan amount.

Page 11


EASEMENT: the right to use the land of another. ENCUMBRANCE: anything that burdens (limits) the title to property, such as a lien, easement or restriction of any kind. EQUITY: the value of real estate over and above the liens against it. It is obtained by subtracting the total liens from the value. ESCROW PAYMENT: the portion of a mortgagor's monthly payment held in trust by the lender to pay for taxes, hazard insurance and other items as they become due. FANNIE MAE: Nickname for Federal National Mortgage Corporation (FNMA), a tax-paying corporation created by congress to support the secondary mortgage insured by FHA or guaranteed by VA, as well as conventional loans. FEDERAL HOUSING ADMINISTRATION (FHA): an agency of the U.S. Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or plan or construct housing. FIXED RATE MORTGAGE: a loan that fixes the interest rate at a prescribed rate for the duration of the loan.

Page 12


REAL ESTATE GLOSSARY FREDDIE MAC: a nickname for Federal Home Loan Mortgage Corporation (FHLMC), a federally controlled and operated corporation to support the secondary mortgage market. It purchases and sells residential conventional home mortgages. GRADUATED PAYMENT MORTGAGE: any loan where the borrower pays a portion of the interest due each month during the first few years of the loan. The payment increases gradually during the first few years to the amount necessary to fully amortize the loan during its life. LEASE PURCHASE AGREEMENT: buyer makes a deposit for future purchase of a property with the right to lease property in the interim. LEASE WITH OPTIONS: a contract which gives one the right to lease property at a certain sum with the option to purchase at a future date. LOAN TO VALUE RATIO (LTV): the ratio of the mortgage loan principal (amount borrowed) to the property's appraised value (selling price). Example - on a $100,000 home, with a mortgage loan principal of $800,000 the loan to value ratio is 80%. MORTGAGE: a legal document that pledges a property to the lender as a security for payment of a debt. MORTGAGE INSURANCE PREMIUM (MIP): the amount paid by a mortgagor for mortgage insurance. This insurance protects the investor from possible loss in the event of a borrower’s default on a loan.

Page 13


NOTE: a written promise to pay a certain amount of money. ORIGINATION FEE: a fee paid to a lender for services provided when granting a loan, usually a percentage of the face amount of the loan. PRIVATE MORTGAGE INSURANCE (PMI): see Mortgage Insurance Premium. SECOND MORTGAGE / SECOND DEED OF TRUST / JUNIOR MORTGAGE / JUNIOR LIEN: an additional loan imposed on a property with a first mortgage. Generally, a higher interest rate and shorter term than a "first" mortgage. SETTLEMENT STATEMENT (HUD-1): a financial statement rendered to the buyer and seller at the time of transfer of ownership, giving an account of all funds received of expended. SEVERALTY OWNERSHIP: ownership by one person only; sole ownership. TENANCY IN COMMON: ownership by two or more persons who hold an undivided interest without right of survivorship. (In event of the death of one owner, his/her share will pass to his/her heirs. ) TITLE INSURANCE: an insurance policy that protects the insured (buyer of lender) against loss arising from defects in the title.

Page 14


10 FINANCIAL GUIDELINES TO FOLLOW WHEN OBTAINING A PRE-APPROVAL AND MORTGAGE 1. Do not change jobs, become self-employed or

quit your job. 2. Do not buy a new car or truck. 3. Do not use credit cards excessively or let your

accounts fall behind. 4. Do not spend money you have set aside for

closing.

5. Do not omit debts or liabilities from your loan

application. 6. Do not buy or finance new furniture. 7. Do not originate any inquiries into your credit. 8. Do not make large deposits without first

checking with your loan officer. 9. Do not change bank accounts. 10. Do not co-sign a loan for anyone.

Page 15


TESTIMONIALS “Cricket Forsey was referred to me by my new neighbor who bought her dream condominium through Cricket in 3 days. I was naturally curious about her ability as a selling agent. I met Cricket and was immediately taken by her knowledge of the real estate market. She took the time to explain fully the aspects of selling my property and guided me through the timeline of the whole process. I received all the advice and help l needed shortly afterward to start the ball rolling. Cricket and her team of professionals were most efficient and accommodating through every step. My advice to you is to let Team Cricket do the driving. You just sit back and enjoy the ride. In no time at all, you will see the result of their good work. I sold my condominium in 7 days at a price better than the listed. Team Cricket has certainly earned my respect and trust. No wonder that Cricket is rated as the top 1% of the best real estate agents in Portland. You won’t go wrong with Team Cricket!” “Cricket & Janet were so easy and fun to work with! They are so knowledgeable and responsive. They had all the answers and made the entire process smooth and enjoyable! Thank you for all of your help!” “Cricket was five star and we could not be happier. She met us on a Sunday to show us the condo we bought. She helped every step of the way. I would hire her in a minute as a professional again.” “We had the pleasure of being able to use Cricket and Janet to sell our house. Cricket has such a warm, personable and kind personality. She met with us and listened to everything we had to say & then made some great suggestions on how to proceed. She checked in frequently and responded quickly when we had questions. Janet was always kind & so helpful. A positive experience for sure. True professionals from start to finish! Highly recommend this talented & knowledgeable team!”

Page 16


TESTIMONIALS CONTINUED “Cricket is extraordinary....and so is her team. Together they helped us find the new home we loved (with patience, expertise, quick response and again, patience) and sell the home we had lived in/loved for over 10 years. Experienced, skilled and kind, they supported our navigating the process of shopping, offering, and negotiating and then preparing, listing, countering and selling. They connected us to great providers essential for both buying and selling and Cricket’s entire team invited/answered our questions and guided us throughout. Ultimately, we were thrilled with both our buying and selling experiences. Can’t recommend highly enough!” “Cricket was wonderful to work with! She worked outside of regular working hours/ weekends to help us. Cricket really helped to make our buying experience wonderful!” “Cricket is amazing!! She is a seasoned expert and as first time home buyers, we were so glad to lean into Cricket’s fantastic knowledge and guidance. When we found our perfect home in a crazy sellers’ market, Cricket worked hard to make sure our offer came out on top (out of over a dozen!). We cannot thank Cricket enough!”

Page 17


NOTES:

Page 18


Each office is independently owned and operated.