Digital For Sale By Owner Guide

For Sale by Owner Guide

The Decision to Sell Your Own Home

Selling your home yourself depends on your personal preferences and how much time and energy you’re willing to invest in your home sale.

Industry experts advise against owners selling their own homes, citing that an experienced real estate sales professional can find the right buyer, the best price and often prevents costly and time-consuming problems that may arise during the transaction.

Many sellers choose to market their homes themselves and pay a flat fee to have a professional handle the paperwork. Some services will negotiate counteroffers, handle paperwork, contracts and the correspondence between appraisers, lenders and insurance providers. Some real estate offices provide marketing assistance, writing up ad copy and pricing your property.

Home sellers need to be prepared to do a lot of the work, like holding their own open house. You will need to be outgoing and comfortable answering endless questions about your property. You will need to accept that strangers are going to look in your closets, under your sink and cabinets, etc.

Patience can also be important when holding out for the best possible offer. A good eye and a willingness to spend time staging your home are helpful, too. You can hire staging consultants to give advice on how to make your home look its best. Sometimes an objective set of eyes can see “curb appeal” that you may have overlooked.

MAKING THE COMMITMENT TO SELL YOUR OWN HOME

The first decision a home seller must make is whether, as a consumer, you should decide if the services of a real estate professional is worth the cost price. Once the decision is made, you must consider alternative marketing possibilities and develop a home selling marketing plan to succeed at selling your own home. Some homeowners who try to sell their own home fail.

THERE ARE A FEW COMMON REASONS FOR THESE FSBO FAILURES:

The single most common reason owners fail to sell their own home is the owner’s sheer lack of commitment to the FSBO strategy. Examining the most common reasons for FSBO failures is a useful starting place for home owners to begin evaluating what type of marketing plan they want to formulate to sell their real estate.

Sometimes, owners “give up” their efforts prematurely before their strategy has had time to work. Selling a house takes a good plan, a commitment to that plan, and the patience to let the plan work. Selling a house usually does not happen “right away”. If you go into the effort expecting to call an agent if you do not sell your home right away, why not just call the agent today and save yourself wasted time, money, and aggravation? If you are not committed to selling a home yourself, you probably should not try.

The second most common explanation for failure is a poor plan. Even the most committed FSBO seller will not achieve optimum results from a poor plan. Too many home sellers put an ad in the newspaper before they do anything else. This is a bad plan because you will need to determine the right selling price, and be prepared to show the property. These issues are not overwhelming, but must be focused on and dealt with in advance of inviting a buyer to come see your home.

COMMON MISTAKES FSBO SELLERS MAKE

Repairs or decorating that may need to be done prior to presenting your home for sale vs. repairs that are to be done after you find a buyer are important decisions and may affect your asking price for the home in addition to requiring contracting and scheduling the work, which takes time and planning.

Are you going to prepare the contract yourself or are you going to have an attorney prepare it for you? Either way, you need to have a copy ready for the buyer to sign on the dotted line at a moment’s notice.

Select a title or escrow company before putting your home on the market so that the company can take delivery of the contract and the buyer’s earnest money check. Too many FSBO sellers are simply not prepared to sell their home and more than a few seriously interested buyers have just gone on down the road while an unprepared FSBO seller was flipping through the yellow pages looking for a lawyer or a title company when they should have been handing a signed contract and check to the escrow agent.

What is a competitive price for a home? Are you informed enough or can you do research to obtain enough information to competently make this decision or do you need the assistance of a professional appraiser?

If you price your property too high, it could take forever to sell it. If you price the home too low, you lose money. You can obtain comparable prices for homes sold in your area recently from your local First American Title office. Also, many appraisers will sell you a competent and objective “paper appraisal”.

The real estate agents keep property in front of buyers all the time with their real estate agents Co-Op known as MLS: Multiple Listing Service. The MLS database is there for all real estate agents to work on when someone calls them after seeing the real estate agent’s phone number on a yard signs.

Reasons to Use a Real Estate Professional

It pays to use a real estate professional because real estate has become a very complicated business, and selling (or buying) a home will be one of the most important financial transactions of your life. From the moment you consider selling you will benefit from choosing a professional to list your home, and the combined efforts will ensure a smooth and pleasant experience for everyone involved. Your home may be listed in the Multiple Listing Service, providing you with incomparable exposure and ensuring you have as many real estate professionals as possible helping to find a buyer. Additionally, your agent knows how to specifically target advertising and use all the marketing tools available to sell your home expediently by conducting a variety of efforts on your behalf. Most importantly, when it comes to closing escrow, your real estate professional can be invaluable, leading you through the paperwork and familiarizing you with insurance, property disclosures, inspection procedures and so much more.

It’s always a good market in real estate - when you know what you’re doing - and no one knows as much as your real estate professional about today’s real estate market.

ASSEMBLING TEAM A SUPPORT

When selling your home “By Owner”, it is essential to assemble a support team.

TITLE SECURITY AGENCY

MORTGAGE LENDING

FIRST AMERICAN HOME WARRANTY

HOME INSPECTION

TERMITE COMPANY

ROOFING CONTRACTOR/INSPECTOR

Once you’ve chosen your team, get to know each of them. Let them know that you are selling your home and you will be amazed at how useful and ready they are to help you sell your home.

It’s important to choose professionals who are experts in their fields to help you with your real estate needs.

Helpful Hints for Selling Your Home

FINANCING OPTIONS FLYER

This will give potential buyers an idea of what income will be required by the lender, what the mortgage payments will be, including the taxes and insurance, what loan programs are available and the current interest rates.

FILLING OUT DOCUMENTS WHEN SHOWING YOUR PROPERTY

You do not know the people viewing your home in most cases, so beware of shady characters. Make sure your valuables are safe, in a safety deposit box or another location completely.

If you don’t understand completely, do not sign! Get a professional. Some real estate professionals will do it for you for a flat fee or you may want to work with a real estate attorney. Don’t forget, if you list with a real estate professional, this is no longer a concern.

MAKE A PROFESSIONAL LISTING FLYER

You may want to include photos, depending upon the curb appeal of your home.

A GUEST REGISTRY

Have every potential buyer sign a guest registry. Keep it handy so you can re-contact them at a later date if any of the terms change.

Recipe for a Sale

LOCATION

There are 5 main ingredients that make up the sale of your home.

We usually cannot move a home! To coin the favorite phrase of appraisers: “Location, Location, Location”. The pricing of your property must reflect its location.

CONDITION

The upkeep and presentation of your property is crucial to obtain the highest value for your home in any given market at any given time. The pricing of your property must reflect its condition.

PRICE Price is the number one factor in the sale of a home. A property is really only worth what one person is willing to pay another to gain ownership of it. Price must be direct relationship to the other four ingredients and it is the most important of all!

TERMS

The more terms available on your property the more potential purchasers you reach. The pricing of your property must reflect the kinds of terms available to purchase it.

THE MARKET Interest rates, competition, and the economy all make up and influence the state of the market when you sell your home. The pricing of your property must reflect the current status of the market.

When all of the above ingredients are in agreement…then we have a sale! If just one of them is out of line, it will take a longer time to sell, and … the more ingredients there are out of line … the longer it will take before you can begin packing and moving to your new home.

Planning to Sell

A homeowner’s checklist to prepare your home.

So you’re planning to sell your home. You have decided on a price, based on current market values, but your home may sell faster and bring a higher price if it shows well. Potential buyers will get the best impression if your home is clean, neat, uncluttered, in good repair, light, airy, fragrant, and quiet. This checklist will help you get your home ready to show. Here are a few general guidelines:

CLEAN EVERYTHING. Cleanliness signals to a buyer that the home has been well cared for and is most likely in good repair. A messy or dirty home will cause prospective buyers to notice every flaw.

UNCLUTTER YOUR HOME BEFORE YOU SHOW IT. Have a garage sale. Empty closets. Throw away what you can’t sell. The less “stuff” in and around a home, the roomier it will seem.

LET THE LIGHT IN. Raise the shades. Open the blinds. Pull back the curtains. Put brighter bulbs in all the lamps (but not bright enough to cause a glare). Bright, open rooms feel larger and more inviting. Dark rooms feel small and gloomy.

LET FRESH AIR IN. Get rid of odors that may be unfamiliar or unpleasant. People are most often offended by odors from tobacco, pets, cooking, and musty or sour laundry. Fresh flowers and potpourri can be used to your advantage. Other smells that attract positive attention include fresh baked bread and cinnamon.

FIX ANYTHING THAT IS BROKEN. This includes plumbing, electrical systems, switches, windows, TV antennas, screens, doors, and fences; if it can’t be fixed, replace it or get rid of it (no window screens are better than broken ones).

A buyer may make a much lower offer if your house is in disrepair and will probably still insist that everything be fixed before taking occupancy. You’re better off if you leave potential buyers no reason to offer less than you are asking.

SEND PETS AWAY or secure them away from the house when prospective buyers are coming. You never know if people will be annoyed or intimidated by your pets or even allergic to them. And you never want a prospective buyer to have to avoid animal droppings.

SEND THE KIDS TO GRANDMA’S or take them on a walk around the block. Children can be noisy and distracting to someone interested in looking at a home.

PAINT. There’s nothing that improves the value of a home for a lower cost than a fresh coat of paint. And it’s so often easier to paint a room than it is to scrub it. Stick with neutral colors - off-white is the safest. Be sure to avoid black, violet, and pink.

KEEP NOISE DOWN. Silence is a restful sound that offends no one. Turn off the TV and radio. Soft instrumental music is fine but avoid vocals. If necessary, close the windows to eliminate any street noise.

FIX SQUEAKY FLOORBOARDS. Don’t run any noisy equipment like a vacuum cleaner or table saw while people are looking at your home, and if possible, ask your neighbors to avoid irksome noises.

This checklist will help you get your home ready to show

P EXTERIOR

Clean around service areas/trash cans

Haul away rubbish

Straighten woodpile

Repair leaky faucets

Clean up pet droppings

Paint or varnish doors

Polish door hardware

Make sure doorbell/knocker works

Paint or replace street numbers on house

Make sure septic tank is odor free

Clean oil stains from driveway/street

Patch/reseal driveway if necessary

Replace, repair, and/or paint any damages:

Plaster

Wood siding

Trim

Rain gutters

Shutters

Doors

Window frames

Glazing

Screens

Hardware

Fences/gates

Outdoor lighting

Landscaping

Mow/edge lawn regularly

Aerate/feed lawn

Overseed bare spots in lawn

Water lawn regularly

Remove/replace dead plants

Prune overgrown/diseased/damaged shrubs

Prune or remove shrubs/trees blocking view from windows (unless view is undesirable)

Stake up any sagging trees/shrubs

Keep flower beds free of weeds

Trim around base of trees/walls/fences

Repair or remove any broken or damaged landscape accessories such as:

Fences

Walls/Gazebos

Fountains

Trellises

Planters Other

Replace any broken stepping stones

Adjust any sprinkler system; repair any broken/leaky heads

Install fences or shrubs to hide any unsightly views

P CLEAN/WASH

Siding Windows Screen Outdoor BBQ AC unit Pool/Spa

P PUT LIGHT BULBS IN:

Porch Lights

Carport Garage

P CLOSETS

Keep closets clean and free of clutter

Throw out or pack away non-essentials

Adjust/repair sliding doors

Lubricate sliding door hardware

Paint, if needed

P ALL ROOMS, Clean especially around:

Doors

Windows

Light switches

Baseboards Chair rails

Wash lace curtains and have draperies

cleaned if necessary

Remove or pull back dark curtains

Lubricate window slides (soap for wood

silicon or a candle stump for metal)

Make sure doors open smoothly

Clean ceiling light fixtures

Check for cobwebs in all corners

Fix any scratches in wooden floors

Replace worn/broken flooring

Remove or replace worn carpet

Use area rugs where needed

Empty wastebaskets

Make the beds

Fluff the pillows

P KITCHEN

Keep dishes and food out of sight

Clean appliances

Clean range hood, including light bulbs

Clean behind appliances

Keep floor clean

Clean light fixture

Make sure all electrical outlets work

Eliminate cooking odors

Deodorize garbage disposal, dishwasher, and refrigerator

Repair faucets

Put fresh shelf paper in cabinets

Organize cupboards

Clean out under sink

Replace garbage disposal gasket to reduce noise

P BATHROOMS, Keep them spotlessly clean:

Shine mirrors

Keep wastebaskets empty and clean

Clean out cabinets and remove non-essentials

Keep fresh, clean towels on towel racks

Clean shower door – if sliding door, keep track well lubricated

Remove soap residue, mildew and mold from sink/tub/shower

Remove stains from porcelain sink/tub/toilet

Replace torn/moldy shower curtain

Clean tile grout

Make sure toilet flushes properly – replace mechanism if necessary

Clean exhaust fan/heater – replace if broken or noisy

P GARAGE/CARPORT/SHED

Install 100-watt light bulb

Keep area clean/uncluttered

Hang up/put away tools

Clear away any cobwebs

Remove oil/paint stains from floor

Adjust tension rod to eliminate sag from overhead garage door

Lubricate/adjust/repair garage door opener

Paint if needed

P LAUNDRY AREA

Clean out area behind washer/dryer

Eliminate any mildew odors

P BASEMENT

Eliminate any signs of dampness

Check for and eliminate cracks

P HEATING/AIR CONDITIONING UNIT

Vacuum

Replace filter

Clean intake vent

Remove any stored items

P Make sure the temperature in your home is comfortable – keep it cooler in the summer and warmer in the winter. It it’s cooler outside and you have a fireplace, a nice fire will make your home seem cozy and inviting.

P Provide an exhaustive written list of the features of your home.

P Know the distance to schools and shopping centers.

FSBO Advertising

WHEN ADVERTISING YOUR HOME, YOU WILL WANT TO CONSIDER THE FOLLOWING:

Internet - The majority of buyers start their home search online

Local newspapers and home magazines

Open House signs around the neighborhood

Cable television channels

“For Sale By Owner” sign in your front yard

Flyers showing your home features

Local real estate magazine

BE SURE TO INCLUDE THE FOLLOWING IN YOUR AD:

For Sale By Owner

Number of bedrooms and bathrooms

Lot size and the square footage of the home

Type of structure/style

Neighborhood details i.e. schools, parks

Special features like a pool, spa, fruit trees, RV parking

Sales price and terms

Your phone number or email address for additional information or to schedule a showing

Congratulations, You Found a Buyer and Signed a Contract

Now it’s time to open escrow. You need to provide the title and escrow company with a copy of the fully signed purchase contract.

Please be aware that the escrow company cannot prepare or advise you on the contract or addendums. The escrow company also cannot negotiate any terms between buyer, seller or lender in the transaction.

Understanding the Escrow Process

An escrow is a process wherein the buyer and seller deposit written instructions, documents, and funds with a neutral third party until certain conditions are fulfilled. It enables the parties to the escrow to deal with each other without risk, provides an accounting of all the funds deposited in the escrow, and provides the buyer and the seller with a settlement statement. In a real estate transaction, the buyer does not pay the seller directly for the property. The buyer deposits the funds to an escrow holder. The escrow holder, acting as a neutral third party, verifies that a

title insurance policy can be issued pursuant to the terms of the contract. Then, the escrow holder arranges for the documents transferring title to the property to the buyer to be recorded, for the issuance of the title policy, pays any liens and all the costs associated with the sale that are chargeable to the buyer and seller, and disburses the sales proceeds to the seller. If the buyer gets a new loan, then the lender’s money is deposited into the escrow and the lender’s security documents are recorded at the same time as the deed.

Working with Lenders

PRE-QUALIFICATION OF ALL PROSPECTIVE BUYERS

A lender should pre-qualify each potential buyer.

EFFICIENT FOLLOW-UP AND TEAMWORK

Once the transaction has been negotiated, the lender will work hand-in-hand with the other real estate professionals in order to make sure the loan is approved and funded in a timely manner. Experience and knowledge are critical to getting the job done right.

QUALIFICATION

What is involved in the qualification process? The lender will begin the process by completing an estimate statement of fees and costs to determine th e loan amount and by verifying the information provided on the application concerning credit history, employment status and financial situation. The borrower will be requested to provide copies of recent financial information and documents.

Having established preliminary qualification, the lender orders a title search, property appraisal and credit report. Usually, the borrower pays for the credit report and property appraisal, which is used to determine the value of the property and, ultimately, the amount a lender is willing to lend. The lender will require title insurance to assure the priority of the new loan. Lenders insurance is provided by the title company after the title search is completed and is generally paid for by the borrower as a part of the final closing costs.

WHY DO YOU NEED A TITLE SEARCH?

The title search will disclose the current condition of the title, according to public records. The lender will be interested in how and in whom title is vested, any special conditions or restrictions affecting the use of the property and existence of voluntary liens (existing loans) and/or involuntary liens (liens and judgments). The search will also show the current status of taxes and assessments and the conditions under which title insurance will be issued.

With the title search, financial and personal qualification and property appraisal completed, the lender will prepare loan documents to be executed by the borrower upon loan approval.

WHAT ARE LOAN DOCUMENTS?

Loan documents will include the formalization of the terms and conditions of the loan, a promissory note and deed of trust and various state and federal disclosure documents. They also provide a breakdown of the financial accounting of the loan, including fees and charges.

The Appraisal

The appraisal process consists of several steps. The following are the major steps in the sequence normally followed by appraisers:

Research the subject property as to size, bedrooms, baths, year built, lot size and square footage.

Gather data of recent sales in the subject’s neighborhood. The appraiser needs to locate at least 3, preferably more, similar-sized homes that have sold and closed escrow in the neighborhood. The homes should be within one mile of the subject property and sold within the past 6 months. These homes are considered the “Comparable Properties”, or “Comps” for short.

Field inspection consists of two parts: First, the inspection of the subject property; and second, the exterior inspection of the comparable properties that have been selected to estimate the value of the subject property.

The subject inspection consists of taking photos of the street scene, front and rear of the home that may include portions of the yard. The appraiser will make an interior inspection for condition noting any items that would detract from or add to the value of the home. He will also draw a floor plan of the home while doing the inspection. The inspection of the comparable properties is limited to an exterior inspection.

For features that cannot be seen from the street, the appraiser has reports from Multiple Listing Services (MLS), county public records and appraisal files along with other sources to help determine the condition and amenities of the comparable.

After the field inspection has been completed, the appraiser must determine which comparable properties most resemble the subject, making slight adjustments in value for any differences between them. After making the required adjustments, the appraiser will go through the reconciliation process with three comparable properties to determine a final estimated value.

An appraiser will call in advance to set up an appointment. At that time, offer to supply any information about the home’s size, number of bedrooms, bathrooms, pool, enclosed patio, etc. The more that is known about the property prior to the inspection, the better the appraiser can focus on researching the most similar comparable. “Doing your homework” will maximize your chances of having a good appraisal.

While your home is being inspected, do not follow the appraiser from room-to-room causing distraction. Instead, allow the inspection to go smoothly. In the event the appraiser has any questions, be close by to answer them. The time to mention the things you think are important is either before or following the inspection.

Your Escrow Professional May:

Open escrow and deposit good faith funds into an escrow account

Conduct a title search to determine the ownership and title status of the real property

Review the preliminary report and begin the process of working with you and the title officer to eliminate the title exceptions the buyer and the buyer’s new lender are not willing to take subject to. This includes ordering a payoff demand from your existing lender.

Coordinate with the buyer’s lender on the preparation of the Closing Disclosure (CD)

Prorate fees, such as real property taxes, per the contract and prepare the settlement statement

Set separate appointments allowing the buyer and seller to sign documents and deposit funds

Review documents and ensure all conditions are fulfilled and certain legal requirements are met

Request funds from buyer and buyer’s new lender

When all funds are deposited and conditions met, record documents with the County Recorder to transfer the real property to the buyer

After recording is confirmed, close escrow and disburse funds, including proceeds, loan payoffs, tax payments, and more

Prepare and send final documents to all parties

THE CLOSING OR SIGNING APPOINTMENT

Title Security Agency will contact you to schedule a closing or signing appointment. You will have a chance to review the settlement statement and supporting documentation. This is your chance to ask questions and clarify terms. You should review the settlement statement carefully and report discrepancies to the escrow officer. This includes any payments that may have been missed. You are responsible for all charges incurred, even if overlooked by the escrow holder. It’s better to bring any issues to his or her attention before the closing has been completed.

Title Security Agency is obligated by law to have the designated amount of money before releasing any funds. If you have questions or foresee a problem, let your escrow officer know immediately. Don’t forget your identification. You will need valid identification with your photo I.D. on it when you sign documents that need to be notarized (such as a deed). A driver’s license is preferred. You will also be asked to provide your social security number for tax reporting purposes, along with a forwarding address.

WHAT HAPPENS NEXT?

If the buyer is obtaining a new loan, the buyer’s signed loan documents will be returned to the lender for review. The escrow holder will ensure that all contract conditions have been met and will ask the lender to “fund the loan.” If the buyer’s loan documents are satisfactory, the lender will send the funds directly to the escrow holder. When the loan funds are received, the escrow holder will verify that all necessary funds are in. Escrow funds will be disbursed to you and other appropriate payees. The sellers will then turn the keys over to the buyers.

The Life Of An Escrow

THE BUYER

Chooses

a

Real Estate Agent

Gets pre-approval letter from Lender and provides to Real Estate Agent.

Makes offer to purchase. Upon acceptance, opens escrow and deposits earnest money.

Finalizes loan application with Lender. Receives a Loan Estimate from Lender.

Completes and returns opening package from Title Security Agency.

Schedules inspections and evaluates findings. Reviews title commitment/ preliminary report.

Provides all requested paperwork to Lender (bank statements, tax returns, etc.) All invoices and final approvals should be to the lender no later than 10 days prior to loan consummation.

Lender (or Escrow Officer) prepares CD and delivers to Buyer at least 3 days prior to loan consummation.

Escrow officer or real estate agent contacts the buyer to schedule signing appointment.

Buyer consummates loan, executes settlement documents, & deposits funds via wire transfer.

Documents are recorded and the keys are delivered!

THE SELLER

Chooses a Real Estate Agent

Accepts Buyer’s offer to purchase.

Completes and returns opening package from Title Security Agency, including information such as forwarding address, payoff lender contact information and loan numbers.

Orders any work for inspections and/or repairs to be done as required by the purchase agreement.

Escrow officer or real estate agent contacts the seller to schedule signing appointment.

Documents are recorded and all proceeds from sale are received.

Delivers keys to Buyer (If the Seller is not using a real estate agent)

THE ESCROW OFFICER

Upon receipt of order and earnest money deposit, orders title examination.

Requests necessary information from buyers and sellers via opening packages.

Reviews title commitment / preliminary report.

Upon receipt of opening packages, orders demands for payoffs. Contacts buyer or seller when additional information is required for the title commitment/ preliminary report.

All demands, invoices, and fees must be collected and sent to lender at least 10 days prior to loan consummation.

Coordinates with lender on the preparation of the CD.

Reviews all documents, demands, and instructions and prepares settlement statements and any other required documents.

Schedules signing appointment and informs buyer of funds due at settlement.

Once loan is consummated, sends funding package to lender for review.

Prepares recording instructions and submits docs for recording.

Documents are recorded and funds are disbursed. Issues final settlement statement.

THE LENDER

Accepts Buyer’s application and begins the qualification process. Provides Buyer with Loan Estimate.

Orders and reviews title commitment / preliminary report, property appraisal, credit report, employment and funds verification.

Collects information such as title commitment / preliminary report, appraisal, credit report, employment and funds verification. Reviews and requests additional information for final loan approval.

Underwriting reviews loan package for approval.

Coordinates with Escrow Officer on the preparation of the Closing Disclosure, which is delivered to Buyer at least 3 days prior to loan consummation.

Delivers loan documents to escrow.

Upon review of signed loan documents, authorizes loan funding.

Understanding Title Insurance

Prior to the development of the title industry in the late 1800s, a home-buyer received a grantor’s warranty, attorney’s title opinion, or abstractor’s certificate as assurance of home ownership. The buyer relied on the financial integrity of the grantor, attorney, or abstractor for protection. Today, home-buyers look primarily to title insurance to provide this protection. Title insurance companies are regulated by state statute. They are required to post financial guarantees to ensure that any claims will be paid in a timely fashion. They also must maintain their own “title plants” which house duplicates of recorded deeds, mortgages, plats, and other pertinent county property records.

The Title Industry & Title Insurance in Brief

WHAT IS TITLE INSURANCE?

Title insurance provides coverage for certain losses due to defects in the title that, for the most part, occurred prior to your ownership. Title insurance protects against defects such as prior fraud or forgery that might go undetected until after closing and possibly jeopardize your ownership and investment.

WHY IS TITLE INSURANCE NEEDED?

Title insurance insures buyers against the risk that they did not acquire marketable title from the seller. It is primarily designed to reduce risk or loss caused by defects in title from the past. A loan policy of title insurance protects the interest of the mortgage lender, while an owner’s policy protects the equity of you, the buyer, for as long as you or your heirs (in certain policies) own the real property.

WHEN IS THE PREMIUM DUE?

The owner’s policy is paid for only once, at the close of escrow. Who pays for the owner’s policy and loan policy varies depending on local customs.

Eagle Policy® for Owners

The Benefits of First American Title Insurance Company's Eagle Policy® for Owners the Standard ALTA Owner's Policy

First American Title Insurance Company’s Eagle Policy® for Owners provides expanded title coverage for owners of one-to-four family residences, including condominiums. Coverages included in the Eagle Policy® for Owners offer the highest levels of protection available to our California homeowners.

Eagle Policy® for Owners benefits you won’t get with a Standard ALTA Owner’s Policy:

Post-policy Forgery

Post-policy Encroachments

Post-policy Adverse Possession

- Coverage extended to homeowner when someone claims to have the insureds title arising out of someone else’s continued use and occupancy

Post-Policy Easement by Prescription

- Coverage if another claims right to use a part of the insureds land as an easement because of continuous use over time

Building Permit and Zoning Violation

- Coverage for losses up to $25,000, after a small deductible, for building permit violations and forced remediation of zoning violations, and up to the full policy amount for forced removal of structures due to zoning violations

Expanded Access

- Expanded to include both vehicular and pedestrian access to and from land, based upon legal right

Encroachment of Improvements onto Easements and Set-backs

Subdivision Violation

- Homeowners are covered up to $10,000, after a small deductible, for protection against subdivision violations prior to purchase

Restrictive Covenant Violations

- Coverage provided for violations of restrictive covenants, occurring before homeowner acquired land if the homeowner is forced to correct or remove the violation or if the homeowner’s title is lost or taken because of the violation

Structural Damage for Mineral Abstraction or Easement Use

Living Trust Coverage

- Coverage includes not only the trustees of a trust, but the beneficiaries as well

Encroachment of Boundary Walls and Fences

- Protection of up to $5,000, after a small deductible, for encroachments onto a neighbor’s land, onto an easement, or over a building set-back line

Compare First American’s Eagle Policy® for Owners

Protection from:

1 Someone else owns an interest in your title

2 A document is not properly signed

3 Forgery, fraud, duress in the chain of title

4 Defective recording of any document

5 There are restrictive covenants

6 There is a lien on your title because there is:

a) a deed of trust

b) a judgement, tax, or special assessment

c) a charge by a homeowner’s association

7 Title is unmarketable

8 Mechanics lien

9 Forced removal of a structure because it:

a) extends on another property and/or easement

b) violates a restriction in Schedule B

c) violates an existing zoning law*

10 Cannot use the land for a Single-Family Residence because the use violates a restriction in Schedule B or a zoning ordinance

11 Unrecorded lien by a homeowners association

12 Unrecorded easements

13 Building permit violations*

14 Restrictive covenant violations

15 Post-policy forgery

Compare First American’s Eagle Policy® for Owners

21 Post-policy prescriptive easement

22 Covenant violation resulting in your title reverting to a previous owner

23 Violation of building setback regulations

24 Discriminatory covenants

Other benefits:

25 Pays rent for substitute land or facilities

26 Rights under unrecorded leases

27 Plain language statements of policy coverage and restrictions

28 Compliance with Subdivision Map Act

29 Coverage for boundary wall or fence encroachment*

30 Added ownership coverage leads to enhanced marketability

31 Insurance coverage for a lifetime

32 Policy adopted by the California Land Title Association (CLTA)

33 Post-policy inflation coverage with automatic increase in value up to 150% over five years

34 Post-policy Living Trust coverage

* Deductible and maximum limits apply. Not available to investors on 1- to 4-unit residential properties. Coverage may vary based on an individual policy.

As with any insurance contract, the insuring provisions express the coverage afforded by the title insurance policy and there are exceptions, exclusions and conditions to coverage that limit or narrow the coverage afforded by the policy. Also, some coverage may not be available in a particular area or transaction due to legal, regulatory, or underwriting considerations. Please contact a First American representative for further information. The services described above are typical basic services. The services provided to you may be different due to the specifics of your transaction or the location of the real property involved.

Terms You Should Know

APPRAISAL

An estimate of value of property resulting from analysis of facts about the property; an opinion of value.

ANNUAL PERCENTAGE RATE (APR)

The borrower’s costs of the loan term expressed as a rate. This is not their interest rate.

BENEFICIARY

The recipient of benefits, often from a deed of trust; usually the lender.

CLOSING DISCLOSURE (CD)

Closing Disclosure form designed to provide disclosures that will be helpful to borrowers in understanding all of the costs of the transaction. This form will be given to the consumer three (3) business days before closing.

CLOSE OF ESCROW

Generally the date the buyer becomes the legal owner and title insurance becomes effective.

COMPARABLE SALES

Sales that have similar characteristics as the subject real property, used for analysis in the appraisal. Commonly called “comps.”

CONSUMMATION

Occurs when the borrower becomes contractually obligated to the creditor on the loan, not, for example, when the borrower becomes contractually obligated to a seller on a real estate transaction. The point in time when a borrower becomes contractually obligated to the creditor on the loan depends on applicable State law. Consummation is not the same as close of escrow or settlement.

DEED OF TRUST

An instrument used in many states in place of a mortgage.

DEED RESTRICTIONS

Limitations in the deed to a parcel of real property that dictate certain uses that may or may not be made of the real property.

DISBURSEMENT DATE

The date the amounts are to be disbursed to a buyer and seller in a purchase transaction or the date funds are to be paid to the borrower or a third party in a transaction that is not a purchase transaction.

EARNEST MONEY DEPOSIT

Down payment made by a purchaser of real property as evidence of good faith; a deposit or partial payment.

EASEMENT

A right, privilege or interest limited to a specific purpose that one party has in the land of another.

ENDORSEMENT

As to a title insurance policy, a rider or attachment forming a part of the insurance policy expanding or limiting coverage.

HAZARD INSURANCE

Real estate insurance protecting against fire, some natural causes, vandalism, etc., depending upon the policy. Buyer often adds liability insurance and extended coverage for personal property.

IMPOUNDS

A trust type of account established by lenders for the accumulation of borrower’s funds to meet periodic payments of taxes, mortgage insurance premiums and/or future insurance policy premiums, required to protect their security.

LEGAL DESCRIPTION

A description of land recognized by law, based on government surveys, spelling out the exact boundaries of the entire parcel of land. It should so thoroughly identify a parcel of land that it cannot be confused with any other.

LIEN

A form of encumbrance that usually makes a specific parcel of real property the security for the payment of a debt or discharge of an obligation. For example, judgments, taxes, mortgages, deeds of trust.

LOAN ESTIMATE (LE)

Form designed to provide disclosures that will be helpful to borrowers in understanding the key features, costs and risks of the mortgage loan for which they are applying. Initial disclosure to be given to the borrower three (3) business days after application.

MORTGAGE

The instrument by which real property is pledged as security for repayment of a loan.

PITI

A payment that includes Principal, Interest, Taxes, and Insurance.

POWER OF ATTORNEY

A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an “Attorney-in-Fact.”

RECORDING

Filing documents affecting real property with the appropriate government agency as a matter of public record.

SETTLEMENT STATEMENT

Provides a complete breakdown of costs involved in a real estate transaction.

TRID

TILA-RESPA Integrated Disclosures

Congratulations on Your Sale!

TITLE

SECURITY AGENCY is pleased to have been chosen to handle the escrow process for you as you prepare to sell your property.

Your escrow officer and the assistant will be more than happy to answer any of your questions or concerns about the escrow process during the transaction, so please feel free to call our office any time. We look forward to seeing you soon.

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