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Buyer’s Guide

Buying Your Home With the Expert Help of

STUART VINCENT


Contents Introduction

1

About Stuart

2

Community

3

Windermere

4

Financing

5

Good Faith Estimate

6

The Search Begins

7

Making an Offer

8

Crafting a Winning Offer

9

Contingencies

10

Numbers to Know

11

Inspections

12

Escrow

13

Title

14

Pending to Close

15

Closing & Possession

16

Closing Costs Defined

17

Stuart Vincent


Introduction Experience I have been bringing expert experience to Buyers and Sellers, serving their Real Estate needs since October 1st 1984. Commitment I care about helping people with what is often their single most valuable asset. I deliver the Nordstrom kind of service to my clients during the buying and selling process. Specialization I specializes in residential and condominium properties. Over 80% of my business comes from personal and repeat referrals. I am persistent in attention to detail and follow through to the great satisfaction of my clients. I am real, candid, and keep my clients informed. I listen. Achievements I enjoys the high regard of my peers who have elected me Realtor of the month, President-Seattle Council, Vice President, and to the Board of Directors for the Seattle King County Association of Realtors. I have earned my associate brokers, Graduate Realtor Institute and Certified Residential Specialist designations.

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About Stuart Open, Honest & Driven to Succeed Real Estate is challenging, exciting, and tests your limits of determination. I bring to my work ambitious aims to guide my clients successfully through this process. My work with my clients is always honest, intelligent, open and driven to succeed in meeting the needs and goals of those I work with. I am known for my professionalism, outstanding service, and attention to detail with endless energy.

Experience Counts I am a full time, licensed, professional, a Managing Broker with over a decade of experience. I am also a Realtor and a member of the Washington Association of Realtors and the Seattle/King County Association of Realtors. I sell and list everything from cottages to mansions, and rentals too. I am a full-service realtor that always has time. I am friendly, enthusiastic, and knowledgeable.

Knowledge & Negotiating Skills In today's market, you need someone who knows what they're doing and will work hard to get the job done. My knowledge of the real estate market, negotiating skills, and ability to listen to clients' needs and desires keep me ahead of my competition.

I Will Do Whatever It Takes Working hard and efficiently for my clients is important as they, like you, have busy lives. I strive to make the process as seamless as possible by working for your greatest gain with the least amount of inconvenience to you. I am confident that I will exceed all of your expectations of a knowledgeable professional who will provide courteous and competent service. Customer and client satisfaction is always first and foremost in my business.

I Am Your Resource I strive to continue to be a resource to my clients long after they have settled into their homes. I have strong relationships with business professionals in many different trades and professions. When you need anything from a dentist to a dog walker. I am here for you!

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Commitment Windermere & Community Windermere - Helping Homeless Families My commitment to serving our communities goes beyond providing the best in real estate services. Since the beginning, through our Windermere Foundation (founded in 1989), I’ve also reached out to help address one of America’s most pressing problems – homelessness.

Housing is Our Business Supporting programs that provide housing and related services to help homeless and lowincome families is a natural extension of our business. We assist homeless families by giving funds to a variety of nonprofit social service programs for emergency and transitional shelter projects, temporary rent assistance and daycare for families in need. Other activities include underwriting the cost of summer camp, and basic necessities such as new school shoes, socks and underwear. I believe that building a child’s self-esteem is an investment in the future of our communities.

Every Transaction Makes a Difference What makes the Windermere Foundation unique is the way that it is funded. Every time a Windermere agent sells a home, a portion of the commission goes to the Windermere Foundation. Salaried employees and managers, as well as the public, make contributions. Since its inception, the Foundation has contributed millions of dollars to non-profit organizations dedicated to fighting homelessness, with less than one percent going to administrative costs.

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Windermere The Best in Seattle The Best Tools Windermere’s structure allows offices to operate independently while retaining the benefits of being associated with respected brand benefits such as advertising buying power, agent benefits and powerful technology tools. At the same time, I am intimately familiar with my local communities, allowing me to provide knowledgeable and high-caliber real estate services tailored to your needs. As part of the Windermere network, I also take advantage of a variety of programs and innovative services including technology, marketing and education that I put to work in the local market. These innovative tools allow me to serve homebuyers and home sellers in a way that is unique to Windermere. “Windermere has always emphasized professionalism. Our associates are the primary component to our success and growth. We’ve worked very hard over the years to build our reputation as a company whose representatives are fair, honest, knowledgeable and genuinely care about their communities.” -Geoff Wood, Chief Executive Officer, Windermere Real Estate

Windermere.com At the touch of a button, you can view thousands of homes throughout the West via Windermere’s award-winning website, Windermere.com. From here you can effortlessly preview homes for sale, learn about my company and get information to help you make your buying and selling decisions. The easy-to-use site includes homes listed by Windermere as well as other real estate companies.

Photo Gallery Allows you to view multiple photos of a home.

PropertyPoint An exclusive interactive map search tool now featuring Google Maps.

myWindermere A feature, which automatically notifies you via email of new listings that fit your criteria daily or weekly. You can create multiple searches. Mortgage Calculator Determine if the home is within your price range.

Builder Gallery For newly constructed homes, which can assist you in learning about the home, builder and development.

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Financing Your Dream The buying process... Getting Pre-Approved By getting pre-approved, you know exactly how much home you can afford. There is nothing worse than finding your dream home, only to find out that you cannot qualify for a loan to buy it. A pre-approval also strengthens your bargaining power when negotiating with a seller. Determining how much you can afford before you begin your home search will save you valuable time.

Pre-qualification vs. Pre-Approval Pre-qualifying for a mortgage generally helps you determine how much house you can afford. Remember, becoming qualified does not necessarily mean that you will be approved for a loan of that amount. Pre-approval from your lender means that you have provided them with necessary paperwork, and they have approved you for an actual loan. Having pre-approval for a home will put you in a much better negotiating position, because the seller knows you are able to obtain your loan to purchase their home.

Down Payment Most lenders require a 3.5 to 20 percent down payment. I can help you locate a lender who will assist you in finding a financing package that best meets your needs.

Preferred Lenders If you do not already have a lender, please let me know. I will put you in touch with one of my trusted partners who knows how to get the job done.

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Good Faith Estimate The buying process... What Is A Good Faith Estimate? The Good Faith Estimate or GFE is a form, which lenders are required to complete and provide to borrowers applying for a mortgage. It is intended to make it easier for borrowers to compare mortgage offers from different lenders and it is required under Real Estate Settlement Procedures Act (RESPA) rules. There are actually two forms to look at. The first is the Good Faith Estimate itself, and must be provided when you apply for the loan. The second is the Settlement Statement, which breaks down and details all final costs, and is provided before the actual closing. The two forms are designed to allow the borrowers to compare the estimated and final costs to ensure they are either unchanged or that the changes are within the limits allowed by law.

Origination Charges On the Good Faith Estimate, the main thing a borrower needs to be concerned with is the section titles “origination charges.” These are all the fees that the lender is charging you for making the loan. All a borrower has to do is compare origination charges to see exactly what different lenders would charge for issuing similar loans. The origination charges section also details any points that are being paid or credited to raise or lower the mortgage interest rate. This enables borrowers to more accurately compare the true cost of offers from different lenders.

Settlement Charges The second main item borrowers need to be concerned about is “settlement charges.” This details all third party costs, such as title insurance and transfer taxes. An optional table that can be filled out by the lender shows how you can raise or lower your interest rate by opting for higher or lower settlement charges, and vise versa.

Can Your Rates, Payments, Loan Balance Increase? The Good Faith Estimate also details your initial loan balance, interest rate and monthly payments, and whether any of these can rise during the course of the loan and if so, by how much. It also requires disclosure of any prepayment penalties and whether there is a balloon payment on the loan. Finally, the form spells out which charges on the GFE cannot increase at the time of settlement (as detailed on the Settlement Statement). There’s also a “shopping chart” that allows borrowers to compare terms on up to four different mortgages.

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The Search Begins The buying process... Pre-Approval Letter in Hand Before we begin searching for homes, you should have already contacted a Mortgage Broker and received your pre-approval letter. This allows us to narrow down your search to include only those homes that are within your price range. It makes no sense to look at homes out of your price range and miss something that is. With letter in hand, we are ready to begin the search for your new digs!

Determining Your Wants and Needs I have several methods to help you determine your wants and needs. I have found the most effective method is for everyone who will be living in your home to sit down and fill out a wish list. This helps you, as a group, to really analyze everyone’s expectations.

The Search Begins Often, I will preview properties that meet your style, size, price, location requirements and choose the most suitable properties. Sometimes we discover new listings together. If you are like most buyers you’ll be searching online and visiting open houses whenever you can!

Re-Analyzing Your Wants and Needs Often times after our first day of looking at homes you will gain a greater insight on what you want and need in your new home, and so will I. This allows us to narrow our search and become more focused on your priorities.

New Properties on the Market In addition to checking the MLS database at least once a day, I input your information into the MLS, which notifies me via email when new properties are added that meet your criteria. As new properties come available I will tour them with or without you (your choice).

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Making an Offer The buying process... Determining Your Offering Price Once you have found the right house, you will probably feel educated enough to know what is a good deal and what is a reasonable price. I will also guide you with my knowledge of the marketplace. We will take into account time on market, comparable properties, the condition of the house and decide what is a fair price to offer. It will always be your decision, but I will help you as much as I can to ensure you are educated enough to make confident decisions.

Zillow Schmillow Many buyers look at online sites to get pricing for homes. All these averages don’t matter much if the properties are not really that similar to the home you’re making an offer on. This is the biggest drawback to rough-and-dirty web CMA sites like Zillow. They get their essential specs for your property and the comps from the public records, which are often incorrect. They can’t adjust for a house that has a huge addition, is in an inferior location or is simply very different from neighboring homes. Also, if the neighborhood market took a major upswing or downturn three months ago, the six-month-old sales won’t be nearly as predictive of the value of “your” home. I want my clients to be aware of the difference.

Writing the Offer Our goal is to get the home on your terms which includes things like closing dates, things to be included in the sale, price and earnest money. I will explain your contractual rights and responsibilities, talk about different negotiating strategies and give as much advice as I can. The offer will spell out how much you are willing to pay for the home, what type of financing you will obtain and a myriad of other important details and dates relevant to the purchase of the property.

Remember to Breathe Once I have presented your offer, the seller’s agent will review it with his or her clients and either accept it or send back a counteroffer. This can be a trying time for some people, worrying whether or not their offer will be accepted. I want you to remember to breathe. Know that we have done our best and will be up to the challenge of negotiating anything that comes our way!

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Crafting the Winning Offer The buying process... Homes Will Always Sell at Market Value Market value is determined by what a buyer is willing to pay. Market value is not a fixed, rigid price, but instead a range of value. This is because no two buyers are alike. While one must have a pool, another will consider a pool a liability. You, the buyer, are the market. In our current real estate environment, there are two distinct categories of buyers. One includes the traditional buyer looking for a good home at a good “value” today, because today is when they are shopping. The second category of buyer is a little less concerned with timing or even suitability of the property and much more concerned with value, not only in the context of value today but in terms of anticipated value tomorrow or next year. Regardless of the category in which you fall, keep in mind that both flavors of buyers are in the same market at any given time. Unless your goal is to accumulate a scrapbook of rejected offers you will one day share with your grandchildren, it is critical to remember that you are offering to purchase a home. A home, unlike a share of stock, a gallon of milk, or a commercial office building, is inherently emotional. So, it is helpful to keep in mind a few do’s and don’ts when creating your offer.

Don’t Offend Write a cover letter summarizing why you believe this is the right home for you. On many occasions, I have seen a seller accept a lower offer because they felt a connection with the buyer.

Do Be Prepared to Negotiate No buyer wants to think they paid too much, and no seller wants to think he sold out. Expect to go a round or two. “Take it or leave it” offers are rarely met with high-fives and bear-hugs from the seller. In negotiations, everyone wants to feel like they were in control and that they prevailed.

Don’t Be Unreasonable The is value, and then there is crazy-talk. If a home is offered for X, and you are willing to pay 10% less than X, do not offer X minus $2 million and then ask the seller to throw in his bedroom furniture and a pony. You will not be taken seriously. Today’s real estate market is teeming with opportunity for the buyers. But, insanely great “deals” are still needles in the proverbial haystack, because the market value will always be determined by what a buyer is willing to pay. I will work with you to make sure your offer is strong and that we have discussed every option to get a great house at a great price!

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Taking Care of Contingencies The buying process... Plans A through C When you’re buying a home, Plan A is always to buy the home on the terms in the original contract. Plan B is to buy the home after negotiating some of the terms. Plan C is the contingency plan: if there is an irresolvable flaw in the condition of the home, the home doesn't appraise for the purchase price, or your lender refused to fund your loan for whatever reason, you can back out of the transaction with no penalty (other than money you’ve spent on inspections) so long as you have the appropriate contingencies in place.

Home Owners Association aka HOA If the property is a part of a Home Owners Association, we will have an opportunity to read and accept the documents pertaining to the association. These documents describe the rules, regulations and finances pertaining to the association. We want to make sure that everything is in good order and that there are plans to keep it that way.

Title Commitment The sellers of the property will provide you with an insurance policy. This policy protects you against loss arising from disputes over ownership of a property. We will have an opportunity to review the policy and determine if there are any exceptions to the policy that you find objectionable. Your lender will require you to purchase a separate policy that covers them.

Appraisal Your lender will hire an appraiser to determine if the property is worth the price you are paying. There are contingencies built into the financing addendum to protect your earnest money if the appraisal is lower than the purchase price.

Inspection Resolution You have the right to have an inspection of the property prior to closing. I recommend you hire a professional inspector to help you with this task. If you find any problems with the property, you can ask the seller to repair them or compensate you for future repairs. Please see the home inspection article for more on the inspection process and to see my list of trusted providers.

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Numbers to Know The buying process... Purchase Amount The purchase amount is the amount you are paying for the house. It is inclusive of your earnest money. It is inclusive of your down payment. It is not inclusive of your closing costs.

Earnest Money When you make an offer by signing a contract, you’ll also pay a deposit called earnest money, usually 2- 5% of the purchase amount, to show that your interest in the house is serious. Paid by the buyer, earnest money is a portion of the purchase amount that is held by the escrow company while the transaction is in process. When the transaction closes, the earnest money is transferred to the seller as a portion of the original purchase amount. It is not an additional fee.

Closing Costs Closing costs are not a part of the purchase amount, but rather charges associated with the buyers loan, the transaction itself and prepayment required by the lender such as taxes and hazard insurance. The escrow company collects closing costs at the same time that the down payment is collected.

Down Payment The down payment is a portion of the purchase price that the buyer is paying in cash. Down payments can range between 3.5% and 100% and each buyer, working with their lender, determines the best scenario for their particular purchase.

How Does This All Work? Upon entering into a contract to purchase a home for $200,000 (purchase amount) with earnest money of $5,000, the buyer’s earnest money check is deposited into the escrow company’s trust account. The buyer’s decide on a mortgage program with a 5% down payment ($10,000) and their closing costs total $3,750. The buyer will also pay prepaid taxes and insurance etc. The mortgage will be for 95% of the purchase amount ($190,000). Down Payment Closing Costs Prepaid Taxes & Insurance Total

$10,000

Earnest Money Credit Additional Amount Collected

($5,000) $9,775

$3,750 $1,000 $14,750

From Buyers at Closing Purchase Amount Buyer’s Closing Costs Prepaids/Tax & Insurance Total Cost to Buyer

$200,000 $3,750 $1,000 $204,750

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Home Inspection The buying process... Benefits There are many obvious reasons to have an inspection done on a home you are interested in buying. A home inspection evaluates the structure of the house, gives you feedback on other systems such as the roof, electrical system, heating, insulation, doors, windows and plumbing. Yes, home inspections are an added expense and are usually optional, but they make sure your largest purchase is in good working order. No matter how much you like the house—old or new; it’s always a good idea to have an inspection to avoid a “Money Pit” situation.

The Power of the Inspection Contingency If your offer to purchase includes an inspection contingency, you can back out of the purchase if the inspection uncovers more problems than you are willing to take on or if you are unable to come to agreement with the seller regarding repairs or monetary concessions. The sellers are not obligated to make any repairs, so be prepared for the possibility of another round of negotiations.

My Cousin’s Brother’s Friend It’s not a good idea to let family or friends perform the inspections for you. Even though they may have some expertise, there could be a huge problem if they miss a major issue. Inspectors have insurance that is an added protection for you, and it’s far easier to convince a seller to take our requests seriously when the inspector’s name isn’t Uncle Joe.

Hiring an Inspector In addition to checking the licensure, ask about a home inspector’s experience in the building trades, and current membership in a professional inspection association such as ASHI (American Society of Home Inspectors) or you can call me and I will put you in touch with one of my trusted partners.

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Escrow The buying process... What Is Escrow? Escrow is a written agreement (or property or money) delivered to a third party or put in trust by one party to a contract to be returned after fulfillment of some condition.

In Layman’s Terms Escrow is the process by which property is transferred from one party to another, and where the conditions set forth within the Purchase and Sale Agreement, Loan Commitment and other written instructions are satisfied. The escrow process brings together all of the people, paper, money and answers the question—Who gets the money? And who gets the property? It is important to have a neutral third party involved to assure that everyone’s interests are met. The costs for the escrow company are generally split between the buyer and the seller equally and are also a part of the “Closing Costs.”

Escrow Instructions Escrow instructions define all the conditions that must occur before the transaction can be finalized. Your escrow instructions specify, in a debit and credit format, the disposition of your purchase funds. They also provide for title protection for your home.

Who, What, Where, When Your escrow officer will contact you to make an appointment for you to sign your escrow instructions and final loan papers. At this time, the escrow officer will also tell you the amount of money you will need (in addition to your loan funds) to purchase your new home. Your loan funds will be sent directly to escrow by the lender. You may sign your escrow contract instructions and loan documents at the escrow company’s office, or some other location that is convenient.

Where Is My Money? Written evidence of your deposit is generally included in your copy of your purchase contract. Your funds will then be deposited in your separate escrow or trust account and processed through your bank.

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Title The buying process...

What Is It? For a seller, it is important to prove that they own the property and that there are no liens against it, other than the mortgage. This is done by showing clear title to the buyer. The title to the property can be insured as marketable and the buyer is made aware of title issues that might need to be resolved prior to closing. This is why it is beneficial for the seller to order a “Preliminary Title Commitment.” Upon listing their property, one of the first steps they will do is order this report from the Title Company, who will research ownership of the land back to the time it was owned by the government.

Who Pays For It? Once an offer is received, all parties involved will want to review the Preliminary Title Commitment. There will be two separate title insurance policies purchase. The seller will buy the purchaser a title insurance policy, and the buyer will purchase one for their lender. This is a one time charge and a policy that last as long as the buyer owns the home.

The Title Search After your sales contract has been accepted, a title professional will search the public records to look for any problems with the home’s title. This search typically involves a review of land records going back many years. More than 1/3 of all title searches reveal a title problem that title professionals fix before you go to closing. For instance, a previous owner may have had minor construction done on the property, but never full paid the contractor. Or the previous owner may have failed to pay local or state taxes.

The Owner’s Title Policy Owner’s Title Insurance, called an Owner’s Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you or your heirs have an interest in the property. Only an Owner’s Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search.

The Loan Policy aka Lenders Title Insurance Most lenders usually require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender’s interests in the property should a problem with title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.

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Pending to Close The buying process...

The Details Once we make an offer on a home it is my job to make sure your offer is accepted, carefully executed, that every detail of your transaction is completed, and adheres to the strict time schedules of your contract.

Timeline I will be providing you with a Pending-to-Close timeline once we have mutual acceptance on your home. The timeline below is a visual display of the important dates of your contract.

Sample Transaction Time Table for Mr. & Mrs. Smith 09/23/11 09/26/11 09/28/11 10/12/11 10/15/11

Mutual Acceptance! Congratulations. Must have written application for financing. Must have the inspection contingency removed. Estimated signing date. Closing and Possession.

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Closing and Possession The buying process... Closing The “closing” is actually comprised of two separate closings. At the real estate closing you will sign closing documents relating to the transfer of the property. The loan closing takes place after you sign the loan documents. Once all documents are signed, the lender disburses the funds to the closing agent, the seller is paid and title to the home is transferred into your name.

Don’t Be Nervous Closing makes many first-time buyers nervous because it seems like a procedure where you sign your life away on a bunch of papers you don’t have time to read. Actually, by the time closing rolls around, the hardest part is truly over. Closing actually feels a little bit giddy and at the end, you have the keys to your new house! You will sign your name 487 times, but if you’ve done everything right up to this point, it will not be stressful. Relax.

Possession The time and date of possession of the property is negotiated on the contract. Upon possession, you can start moving in!

Open Champagne & Smile!

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Closing Costs Defined The buying process... What Are Closing Costs? Throughout the shopping phase of buying a home, choosing a lender and settling on a mortgage program, the words closing costs are tossed around frequently. Closing costs are an assortment of fees based on the transaction between the seller and the buyer of a home (fees based on the closing of the transaction, hence the name). They are fees that are collected by the escrow company at the signing appointment, usually a day or two before the transaction is recorded.

Who Pays Them? Some closing costs, such as excise tax on the sale and real estate commissions, are the responsibility of the seller. Some closing costs, such as the cost of the escrow company, are split between the buyer and seller. Many of the closing costs are related to the buyers mortgage and these are the buyer’s responsibility. One of the largest costs associated with the mortgage is the “loan origination fee” or the fee charged by the lender to provide the loan. This varies between lenders and is something that should be considered when shopping for a lender. Some buyers, at times, will elect to pay a separate fee to “buy down” or lower the interest rate. Lenders can also charge for appraisal, title insurance, courier fees, etc. In addition to closing costs, the escrow company will be instructed by the lender to collect “pre-payment amounts”, also referred to as “pre-paids”. These pre-payments are for such things as real estate taxes, insurance, etc.

How Much Are They? The kind and amount of closing costs you will incur will depend on your loan, your lender and the home you decide to purchase. Upon making your initial loan application, your lender will provide you with a Good Faith Estimate which will give you a better idea of what to expect.

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Stuart Vincent 206-914-0911 StuartVincent@windermere.com

Windermere Real Estate/Wall Street Inc.

2420 2nd Ave Seattle, WA 98121

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