Pacific Real Estate

A Fully Licensed Broker / Realtor Serving All of San Diego County

YOUR SAN DIEGO, CA REAL ESTATE CLOSING TIMETABLE

Presumably you set a realistic date for closing with the lender. Lenders have a tendency to want to stretch it out because they have so much work to do. There is nothing more infuriating than asking your banker, a few days before closing, how things are coming, only to hear, “Oh, we didn’t get the appraisal yet,” or “We didn’t get the termite inspection yet.”

The time to act is immediately on signing the contract. As soon as you sign the loan application, ask, “When are you going get the appraisal done? Who is doing it? Who is the person in charge? Make a list of names and phone numbers and follow through in the weeks to come. You need to manage every item, because it’s your CA home. Manage is spelled P-U-S-H. Now, a week after you have received the mortgage commitment, call your banker and say, “We now have forty-three days left before closing. What’s been done?” If the banker answers, “The file has been sitting on my desk for the last seven days,” make it clear that this does not satisfy you. A good comeback is, “If you don’t close in time, I am going to suffer damages.” You have to push it. Otherwise you get put on a stack of files, like everybody else.

TITLE INSURANCE
Title insurance is a one-time premium paid to a company to guarantee that you own a particular piece of land and that no one else has a claim to it. A title search is not automatically conducted when you buy a house. Insist on it. Obviously, title insurance is a crucial part of owning San Diego, CA real estate. Yet most of us neglect to learn about it until disaster strikes, often at the closing.

Here are some tips on how to read your title policy: Make sure the legal description on the title insurance policy is exactly the same as the legal description on the deed. You can request a copy of the unsigned deed in advance of the closing. Next, look on the policy under “Exceptions.” This will list all the items needed to clear the title on that specific piece of property in order for you to take possession. Exceptions could include such things as past due tax statements, liens from creditors such as Sears, in the event a previous owner failed to pay bills, or assessments for a road or sewer that has not been built yet. If these exceptions have not been paid, and you were not told you had to pay them, that is a negotiating point for just before closing.

Transfer by occupancy for San Diego, CA real estate

Ownership of San Diego real estate and the use of real property, can be gained through three types of occupancy:

1. Abandonment
2. Adverse Possession
3. Prescription (by use)

ABANDONMENT is the process of acquiring property that someone has left. One cannot acquire title to abandoned San Diego, CA real estate without court action, but a landlord can acquire possession of a property that is left (abandoned) by a tenant simply by gaining full control of the property. In the case of a lease, a financially troubled tenant might negotiate a release or abandon the property, thereby forfeiting part of the deposit.ADVERSE POSSESSION is acquiring title to another’s property through continuous and notorious occupancy under a claim of title. It is the legal way to acquire title without a deed. Title may be obtained through adverse possession only as long as certain conditions are met:

1. Property taxes – The adverse possessor must have paid all taxes levied and assessed on the property for five consecutive years.
2. Open and notorious occupancy – The adverse possessor must live on, or openly use, the property in such a way that the titled owners might easily detect his or her presence.
3. Uninterrupted use for five years – The adverse possessor must use the property continuously for at least five consecutive years.
4. Claim of title – The adverse possessor must have some reasonable claim of right or color of title (perhaps a defective written instrument) as a basis for his or her assertion. For example, a person could claim that his uncle gave him property before he died, but the deed is missing.
5. Hostile – The adverse possessor must possess the property hostile to the legal owner, without his or her permission or any rental payment (consideration).

No fighting please, just confrontation in the legal sense.The courts will require substantial proof before consenting to adverse possession. To obtain marketable title, or before a title insurance company can insure a property, clear title must be obtained by a court decree. This essentially means that a “quiet title” action is brought into court to prove that you have fulfilled all the five requirements. In the peoples’ interest, adverse possession is not possible against public or government lands, but only against privately owned San Diego real estate.

PRESCRIPTION is an easement, or the right to use another’s land, which can be obtained through five years continuous use. Its requirements are similar to those of adverse possession, the differences being: (1) By prescription, only the use of the property has been obtained. (2) By prescription, taxes are still paid by the property owner. There is no confrontation and no property taxes.

Transfer by dedication

DEDICATION is the gift (appropriation) of land, by its owner, for some public use. To be fully dedicated, the land must be accepted for such use by authorized public officials. Dedication may be either (1) voluntary or (2) mandated by statute.

A developer will “dedicate land” for a street to the city.

Title for San Diego, California real estate

TITLE is the evidence that one has the right to possess a parcel of real property. There are five distinct methods of holding title.

Severalty (separate ownership)

SEVERALTY is the sole and separate ownership of property by one individual or by a corporation. The word “severed” means to sever, to cut off or separate. The name severalty is misleading; it does mean one.

San Diego, California real estate held by corporations is owned in severalty, as if by a single individual. A CORPORATION is a body of persons treated by law as a single “legal person,” having a personality and existence distinct from that of its shareholders. A corporation can go on forever; it does not die.

Examples to show ownership by severalty are:

as a natural person, a real person “Mary Smith, a single woman” or “Mary Smith, an unmarried woman”

or as a legal person; charter granted by the state “Urban Analysis Inc., a corporation”

Sometimes married people wish to keep ownership to certain properties as separate property (in severalty). They could then use the phrase:

“Mary Smith, a married women, as her sole and separate property”

or “Jim Smith, a married man, as his sole and separate property”

THE CLOSING OF SAN DIEGO HOMES – HOW TO AVOID NASTY SURPRISES

The home is almost yours. The negotiations are done, the terms agreed on, the mortgage arranged for. The last major hurdle buyers face before moving into their new San Diego homes is the closing.

Technically, closing is the word for exchanging papers that make you the official owner and for clearing up other details. However, if you ask friends what the closing on a residence is, four out of five will reply, with a pained look, “the moment when suddenly you have to write a big fat check in order to really buy the place.” But closing costs should not be the nasty surprises they often are. The closing is simply a meeting, involving buyer, seller, their respective lawyers, real estate agents and lender. The approximate date is decided by you and the seller when you sign the contract to buy a California home.

In today’s world a typical closing should not take place any more than 45 days from the time you sign a contract, unless you cannot obtain a mortgage commitment. Then you both agree to extend the time period. If this is the case, there should be a provision in the San Diego homes purchase contract that if that period does run longer you can extend the date without paying a penalty. The definite date is when funding occurs. To make the closing as palatable as possible, why not think of it in terms of a big dinner party? I will give you the list of guests, and the menu is fairly standard for a residence. It is up to you to get the ingredients and cook the meal. What makes things easier is that you can prepare some of the “dishes” in advance-as early as the day after you receive a mortgage commitment from a lender. What’s more, you can clear up many nagging details ahead of time with a few phone calls.

The federal government offers you a hand, believe it or not. Since 1974, everything at closing is governed by RESPA-the Real Estate Settlement and Procedures Act. The lenders must let you know prior to the closing exactly what costs are going to be paid by each party.

TASKS DONE THE DAY BEFORE CLOSING ON SAN DIEGO HOMES

If you request it, one business day before settlement, the person conducting the settlement must allow you the opportunity to see the HUD- designed Uniform Settlement Statement. This tells you precisely how much each closing charge will cost.

The day before the closing: verify the provisions of your contract by checking one final time that all “subject to” issues have been cleared up and that such things as surveys have been done. (Your earlier phone calls should have taken care of these things.)

Have you ever planned a party and then realized the day before that you forgot to open your freezer to make sure the steaks are there? The most common closing item people forget is to inspect for one last time the home they are buying. Your last-minute inspection of the property should cover its condition and any personal property you were led to believe you were getting with the San Diego, California home. Your contract should have stated that the home is to be turned over to you broom-clean. The debris of moving, like trash and paper, is not to be left inside. Cleaning could cost you time and money. Besides, you do not want to bring your clean things into a dirty place. The bathroom, the kitchen, the oven, the refrigerator and other appliances should all be clean, and that fact should be stated in the contract. Did you check the model numbers on the appliances in your newly purchased home, to make sure they are the ones you thought you were getting, rather than smaller or older ones substituted in the final hours before you moved in? If the carpet is to be removed, make sure the floors have no cracks or major problems. Try all light switches. If it is winter, turn off the heat and turn on the air-conditioning. Summer? Vice versa. If personal property is included, you should either have the lock changed once you get the key at the closing or make a list, to be signed by the seller, of items remaining, to be certain no one moves anything out.

COUNTEROFFERS AND MULTIPLE OFFERS

The house you like was listed at $475,000. You offer $450,000. The seller balks. “No way,” he or she declares. “I was originally asking $475,000, and I want at least $460,000.” That is known as the counteroffer. The seller writes out a counteroffer in the $460,000 amount, signs it, and sends it back to you. Now it is your turn to accept or reject the counteroffer. If you have decided you can afford to go up to $455,000, which is halfway between $450,000 and $460,000, then you come back with what is known as a counter-counteroffer. There are no rules about how much over or under -this is bargaining, a game that undoubtedly began when some caveman saw a nicer cave down the road and offered to pay his neighbor a handful of flints for it. You go back and forth as many times as you need to in order to arrive at an agreement.

If you are not comfortable haggling, you would be well advised to hire a broker to do it for you. I do not recommend letting your attorney bargain for you: this is not a legal procedure, it is a marketing one.

On the house we have used as an example, there may be a second offer lurking in the shadows. You have offered $450,000. A smart seller might already be holding an offer sheet from another person for $460,000. That offer gives the seller a powerful bargaining tool in reply to you. You go back and forth as many times as you need to in order to arrive at an agreement.

BEHIND THE SCENES IN THE NEGOTIATION DRAMA
My first rule is: always be prepared to walk away. If you cannot get your terms, back out. The other side can sense when you really want that property. The minute you say to yourself, “I want this property,” you’ve lost as a negotiator. There is nothing worse than an overenthusiastic buyer. Learn to play the reluctant suitor.

Everybody has a mental negotiating range-a high figure that he or she hopes to get . . . An acceptable midpoint . . . and a bottom line. You need to find those numbers. If a seller starts to wriggle out of a deal, find out what it takes to keep it together. Maybe it is a matter of upping the price $5,000, or increasing the down payment. Perhaps you always prefer to buy with the least amount of money down. Be flexible. Settle in your own mind, in advance, those things you might compromise on.

FINDING AN INVESTING “ANGEL”

Broadway producers often try to mount shows by finding “angels” who will invest in them. You, too, can find an “angel” to help you buy a house.

It is amazing how few people know about private investors and how simple it is to find them. All you have to do is advertise in the classified section of a newspaper. A man from a southwestern U.S. city who called me was a good candidate to join with a private investor. This fellow already had a house, but he had not made mortgage payments in three years because of money troubles. He wanted to refinance. His house was worth $460,000. He owed over $350,000 in loan and interest. So he had a $110,000 equity. He would have trouble getting money from a lending institution because of his past credit problems. “You need a private investor,” I told him. “Put a classified ad in your local paper with the headline ‘Money Wanted.’ The ad would then read: ‘Have $110,000 equity in my house. Will give you a first mortgage on my house if you will loan me $50,000 or $60,000.’ There are lots of people out there who will take a first mortgage on your house and lend you the money,” I said.

The man would arrange with an investor who answered the ad to give the investor a 50-percent security position in the home. He would also pay his investor 1 or 2 points above going mortgage rates. Then an attorney would set up a deed in lieu of foreclosure. That investor would stand to make double his money, if he were forced to take the man’s house away. “But you’re not going to let him have your San Diego home,” I continued. “Like other people in your position, you just need a new start.” It was another “win-win” shared equity arrangement.

“SIX MONTHS LATER, THE SAN DIEGO HOMES BEGAN CAVING IN”

Recently, an inspector told me a classic horror story. A couple wanted him to inspect a new home they were considering. When he arrived in the subdivision, he noticed the ground level in certain parts of the development was extremely low. He also found that this particular subdivision was in an area susceptible to sinkholes. After checking the house that the couple had chosen, plus several of the San Diego homes other than the model home, the inspector found that many of the slabs of concrete that had been poured on the ground had cracks in them. This inspector advised the couple not to purchase any house in this specific geographic area, because of the possibility of sinkholes. Six months later, the developer was sued by new homeowners, because, just as the inspector had predicted, the ground was not stable and many of the San Diego homes were sinking beyond the point of repair.

YOUR SAN DIEGO, CA REAL ESTATE CLOSING TIMETABLE

Presumably you set a realistic date for closing with the lender. Lenders have a tendency to want to stretch it out because they have so much work to do. There is nothing more infuriating than asking your banker, a few days before closing, how things are coming, only to hear, “Oh, we didn’t get the appraisal yet,” or “We didn’t get the termite inspection yet.”

The time to act is immediately on signing the contract. As soon as you sign the loan application, ask, “When are you going get the appraisal done? Who is doing it? Who is the person in charge? Make a list of names and phone numbers and follow through in the weeks to come. You need to manage every item, because it’s your CA home. Manage is spelled P-U-S-H. Now, a week after you have received the mortgage commitment, call your banker and say, “We now have forty-three days left before closing. What’s been done?” If the banker answers, “The file has been sitting on my desk for the last seven days,” make it clear that this does not satisfy you. A good comeback is, “If you don’t close in time, I am going to suffer damages.” You have to push it. Otherwise you get put on a stack of files, like everybody else.

TITLE INSURANCE
Title insurance is a one-time premium paid to a company to guarantee that you own a particular piece of land and that no one else has a claim to it. A title search is not automatically conducted when you buy a house. Insist on it. Obviously, title insurance is a crucial part of owning San Diego, CA real estate. Yet most of us neglect to learn about it until disaster strikes, often at the closing.

Here are some tips on how to read your title policy: Make sure the legal description on the title insurance policy is exactly the same as the legal description on the deed. You can request a copy of the unsigned deed in advance of the closing. Next, look on the policy under “Exceptions.” This will list all the items needed to clear the title on that specific piece of property in order for you to take possession. Exceptions could include such things as past due tax statements, liens from creditors such as Sears, in the event a previous owner failed to pay bills, or assessments for a road or sewer that has not been built yet. If these exceptions have not been paid, and you were not told you had to pay them, that is a negotiating point for just before closing.

Restrictions (C,C&Rs) and zoning for San Diego, California real estate

Restrictions are: 1) private deed restrictions, such as those placed on real estate by the grantor or developer, or 2) public restrictions, such as city zoning laws. The restrictions that are the most restrictive will always apply.

PRIVATE DEED RESTRICTIONS limit the use or occupancy of the land. A typical restriction would be to limit the types of buildings on a given piece of land to only single family homes (no condos). Also, a restriction might require future construction to meet specific standards. For example, all homes erected on a specific property must be at least 5,000 square feet. Another example might be a setback requirement, which would require any structure to be set back so many feet from the street or adjoining property.

There are three types of private building restrictions: Covenants, Conditions and Restrictions. They are usually included in the deed at the time the real estate is subdivided, or may be created by a written contract. Their main purpose is to keep use of the land uniform throughout certain tracts of land. Subdivisions and condominiums usually include deed restrictions as a method to increase the aesthetics and economics of the project. These private deed restrictions (C,C&Rs) and bylaws are usually recorded separately, and are only referenced in the original grant deeds.

Covenants

A COVENANT is a promise to do or not to do a certain thing. For instance, a home could sell with a covenant stating that the property shall never be used to sell alcoholic beverages. If the covenant is broken, the usual court remedy would be an action for money damages. A court may also grant an injunction requiring compliance with the covenant.

Conditions

CONDITIONS are promises to do or not to do something. The penalty for not following the set conditions is the reversion of the property to the grantor. This penalty is so stiff that most courts will treat a condition as a covenant unless the terms are clearly stated in the deed or other contract.

Deed restrictions are not liens.

Governmental Restrictions (Zoning) PUBLIC RESTRICTIONS are limits made by governmental agencies; usually cities and counties in the form of zoning.

“Public restrictions” promote health, safety, morals and general welfare of the public. This is the use of police power.

Private restrictions are made by the present or previous San Diego real estate landowners and are created only for their benefit. On the other hand, zoning restrictions are created by and for the benefit of the general public to insure its health, safety, comfort and morals.

Cities within the county can divide land into districts for control over local real estate through local laws that enforce zoning, rent control, building codes and other subdivision land use regulations.

Zoning is the restriction on the use of private property by the local government agency. Zoning dictates how San Diego, California real estate can be used, the setbacks required and the height limit on any structures.

Private restrictions are placed on real estate by the grantor or developer. If there are two restrictions, the most restrictive of the two will take precedence. For example, if a developer sets a deed restriction of 15,000 square feet to a lot but zoning only allows 10,000 square feet per lot, the zoning restriction is more restrictive and would prevail.

WATCH OUT FOR LAWYERS’ “ABSTRACTS” LETTERS ON SAN DIEGO HOMES

Let your attorney know you are shopping, since he or she probably can come up with policy discounts on San Diego homes. As I mentioned previously, real estate lawyers often write policies for title insurance companies, and can pass some savings on to you in the form of a discount on their fee for closing the sale. In some states attorneys will write you a letter stating they have examined your abstract. Such a letter would tell you, “Your title is good. Go ahead and close the deal.” Warning! This is an archaic and dangerous way to close a real estate transaction. What the attorney is doing is examining the history (that is what the abstract is), going as far back as he or she can go – sometimes back to the land grant from the king before the Revolution. If all the papers in that history are in order legally, the attorney writes the letter. However, what if the attorney dies, or is put in jail for fraud? The only thing you have to guarantee your title to the property is a worthless piece of paper.

A classic case showing the value of title insurance for San Diego homes happened to a friend of mine. She bought a piece of property without buying title insurance to go with it. Six months later, someone did, in fact, show up at her door – with a bulldozer. A road builder wanted to tear her home down in order to put a road through. If she had purchased title insurance, the title company would have paid for her property in full. Since she had none, what she got instead was a lot of national publicity but no money – and she lost her California home.

INSURANCE AGAINST DIVORCE BATTLES
Time and time again, homeowners receive letters from divorced spouses who claim their ex sold the property without the necessary spouse’s signature on the deed. They insist they still have a right to the property. In most cases, the title insurance company settles with the claimant, if the claim is legitimate. The title insurance company also defends you if you are sued over the title for this or other reasons.

RENOVATING OLDER SAN DIEGO, CALIFORNIA HOMES – DON’T LET A FIXER-UPPER BE A DOWNER

“Fixer-upper” is a term used by real estate professionals to describe any home that needs more than cosmetic work such as a paint job, carpeting and minor repairs. A house that requires major work such as a new roof, new wiring or new plumbing gets the fixer-upper moniker. Some people buy $500,000 San Diego, California homes and are not concerned with $100,000 improvement bills. However, the real estate industry still labels such homes as fixer-uppers. It is imperative that you inspect a fixer-upper for both cosmetic and more serious problems before you make any decisions. Fixer-uppers can be the worst real estate investment you can make. You are almost guaranteed to lose your shirt unless you do a lot of the renovation with your own hands. When someone tells me about a fabulous CA home he or she is going to buy that “needs some work,” I barrage the person with questions. Is it just a paint job? If more work is involved, how much will it cost? How do you obtain realistic estimates on repairs? Is your sweat equity going to pay off when you are ready to sell the California home?

The truth is, most of the time you should not buy a fixer-upper. You will always end up paying more money than it is worth. The only reason to buy one, in fact, is if your love affair has no economic bounds, and you accept the idea that you will pay more per square foot than you would for a house that does not need work. Of course, there are exceptions to the rule that fixer-uppers are really “fixer-downers.” Some older San Diego, California homes, even those 50 or 100 years old are kept in mint condition. They are prize-winners, not fixer-uppers. Nevertheless, as I cautioned earlier, if you move into even a well-kept home built before World War II, you can expect to replace windows, doors and eventually the roof. A good home inspector or engineer will estimate how much such repairs will cost. These professionals will tell you that they can go only so far in dealing with pre-World War II homes. Such items as wiring might have been partially replaced but will need work within a few years. Be prepared for the surprises that lurk underneath basements, behind walls, inside heating and cooling systems and between layers of shingles.

PREPARING FOR HASSLE-FREE CLOSING ON SAN DIEGO, CA HOMES

The closing, or settlement, is basically a review of documents and an exchange – you turn over the keys to the house to your buyer in exchange for a certified check covering the sales price. Top professionals pride themselves on keeping closings on San Diego, CA homes short – 15 to 20 minutes. An associate of mine did, when he handled up to twenty closings a day some years back as chairman of the board of a title company. If a closing goes beyond 30 minutes, there is either too much social chatter or something is wrong.

Your job as a seller is to ride herd on your team from the beginning, so that those “wrongs” never develop. The closing is the mouth of a river of paperwork. All the tributaries – information from the lender, the brokers, the tax assessor, the pest control company, the house inspection company, everyone else involved – flow into this river. Why do we need a six-inch- thick file of papers? Because there are a series of laws and customs designed to guarantee that you are, in fact, selling what you think you own. The closing is a formality, confirming that all these laws have been observed. People in the real estate business once kept closings a deep, dark, mystic procedure that gave sellers, as well as buyers, sweaty palms. Finally, in 1974, the federal government passed the Real Estate Settlement Procedures Act (RESPA), which gives you the right to receive all the information on closing costs. Do not allow anyone to stall you by saying, “We will get you everything,” and then to hand you material as you walk in the door at the closing itself.

READY: KEEPING YOUR TEAM ON ITS TOES
Nobody likes to be a pest, but once you have made a deal to sell, you are within your rights to call the title company, your attorney or both regularly. Step 1 is to push for a firm closing date. This step should be taken right after you shake hands on a sale. Step 2, done at the same time, is to review your file yourself at your broker’s or attorney’s office. If anything is missing, have them keep you posted weekly on progress.

Proposition 13

PROPOSITION 13 limits the amount of taxes to a maximum of 1% of the March 1, 1975, market value of the property plus the cumulative increase of 2% in market value each year thereafter. Improvements made after March 1, 1975, are added to the value in the year they are made. If ownership has changed after March 1, 1975, the tax is limited to 1% of the market value plus the 2% cumulative increase each succeeding year.

Real property tax base is transferable
Under the following conditions, homeowners may be permitted to transfer their current Proposition 13 tax base with them when they move:
Homeowners over the age of 55
Replacement home of equal or lesser value
Purchased within two years of original sale
New home must be in the same county; or another participating county (check first).

This allows “empty-nesters” to purchase a new home while holding on to their low tax base, thus freeing up larger multiple bedroom San Diego homes for younger families.

INSPECTIONS AND WARRANTIES SPEED UP SALES OF SAN DIEGO HOMES

Owners of San Diego homes who want to upgrade their property can get professional inspections before putting their homes on the market. Remember, there is a difference between an appraisal and an inspection. An appraisal tells you the fair market price of your house for sale. An inspection tells you what is physically wrong with it, if anything. After a professional inspection, you will know if your roof needs repairs, if your electrical wiring is in good condition, if your plumbing is sound. Then, when a prospective buyer walks in the front door and says, “What kind of condition is this house in?” you can hand the buyer a certificate from a respected firm, complete with a one-year warranty. Imagine how much more comfortable your visitor will feel, and how quickly you might be able to shake hands on a sale.

A home inspection coupled with a warranty covering such systems as heating, wiring, roofing and plumbing is a powerful magnet for buyers. In a competitive market, San Diego homes with inspections and warranty’s starts out giant strides ahead of others. Smart brokers suggest these sales tools; if yours does not, ask about them.

The process

1. Qualifying the borrower
2. Qualifying the property
3. Approving and processing the loan
4. Closing the loan
5. Servicing the loan

Qualifying the borrowerIn understanding lender requirements for qualifying borrowers, you should realize that lender requirements often are dictated by the secondary mortgage market. Unless a lender expects to hold on to a loan for the life of the loan, the lender wants the loan to meet the requirements of a holder in the secondary market, such as Fannie Mae (FNMA).

Lenders first ask prospective borrowers to complete an application form. Most applications ask for the borrower’s employment record, credit references and a financial statement of assets and liabilities. To verify the accuracy of the information, the loan officer checks with past employers, requests verification of deposits from the bank(s) and contacts references. The loan officer also may obtain a Dun & Bradstreet report (in case of commercial loans) and a credit report by an outside agency, so there is no question of the borrower’s ability to repay the loan.

In addition, most lenders use the “three Cs” – character, capacity and collateral – as a screening device to determine if the borrower meets the qualifications set by the lender.

Character. With regard to prospective borrowers’ character, lenders consider their attitude toward financial obligations as evidenced by their track record of borrowing and repaying loans. Lenders also try to ascertain whether borrowers are honest in their dealings.

A borrower may have the capacity to make the payments but not the desire to make them in a timely manner. Late payments affect the lender’s yield (profit). A ten-day-late payment means that the lender has lost ten days of interest on that money.

The desire to pay for San Diego real estate is very difficult to measure. There are methods used by a lender to determine the borrower’s desire to make timely payments. Lenders will check the applicants’ credit report to see if the borrowers have any late payments. If the borrower has a number of late payments, this usually means the borrower does not have a desire or cannot afford to make timely payments. Too many late payments can influence the lender to reject making a loan to the borrower.

A SELLER’S SAN DIEGO REAL ESTATE SALES COMFORT ZONE TEST

1. Do I really need to sell my house? Why?
2. Can I list three good reasons for not selling it?
3. How soon do I actually need to sell it?
4. Do I want to sell it myself? Do I have the time?
5. Would I rather sell it through a San Diego real estate broker?
6. If my home sells before I buy or rent a replacement house, have I arranged to pay rent to the buyer of my home so I can remain there for a while?
7. How much have other houses similar to mine in my neighborhood sold for within the past six months?
8. What is the price I would like to place on my house?
9. What is the least I will accept?
10. How much cash do I need from the buyer to make a deal?
11. Am I willing to finance part of the down payment myself?
12. Am I willing to finance the entire purchase myself, if necessary?
13. Have I made arrangements for a replacement residence?

SELLER’S TIME-FRAME COMFORT ZONE

1. I am due to start my new job on?
2. Time needed for interviewing brokers: 7 days.
3. Time needed for cleaning up house interior: days?
4. Time needed for cleaning up front yard and exterior of house: days?
5. Time needed for work by professional on landscaping and pruning: days?
6. Time needed for paint jobs: days?
7. Target date for yard sale?
8. Target date for first open house?

HOW LONG DOES THIS PARTY GO ON? IS IT YOUR SAN DIEGO REAL ESTATE YET?

A good closing can take place in about 30 minutes; if there are many problems, a couple of hours. Here are a few items that could crop up at the closing:
You want to make sure the survey and credit report costs have been paid. These are bills incurred for services to get you to the point of closing. Sometimes the lender requires a survey. You want to make sure the pest control inspection has been paid. Finally, you should know whether the commission to the broker is being paid at closing. If not, you could have a broker barking at your door.
Closings at the title company is most common when purchasing San Diego real estate. You might want to delay the transaction, or you might be out of town at the time of closing. You can close the deal in trust by giving someone else power of attorney, so you do not have to be physically present. A closing in trust is the same as what is known as an escrow closing. It can be compared to what happens when two teams get ready to play pick-up softball for money. Both teams give money to someone sitting on the sidelines. He is an escrow agent.
When a buyer or seller cannot be there in person, or when there is something missing, the title insurance policy, for instance, you close in escrow. That is, you appoint an agent like a banker or trust officer. Everything is held in escrow (in trust) by that person, in an escrow account, until the closing is finished. (If you are going to have a six- month closing, you might want to put the escrow money in an interest- bearing account held by your attorney.) Then you go ahead and close in reality and take possession.

QUESTIONS FOR SELLERS WHEN CLOSING ON SAN DIEGO, CA HOMES

• Do you know what you must pay for such items and services as title fee, unpaid taxes, mortgage prepayment penalty, loan points, appraisal fee, document preparation fee, recording and transfer fees, survey, real estate commission, legal fees, special assessments, termite inspection, house inspection, repairs when transferring ownership of San Diego, CA homes?
• What will the sale net you after you deduct selling costs, credits to you, and your mortgage balance?

LEAVING THE HOUSE AFTER A SALE

• Have you arranged for the electricity to be disconnected?
• The gas?
• Have you notified the water company?
• The oil company?
• Have you given a forwarding address to the post office?
• Have you given the telephone company a forwarding number and a disconnect order?
• Have you notified your long-distance phone company?
• Did you empty your safe-deposit box if you are moving to a new community?
• Did you stop newspaper delivery?

HOW: PROTECTION FOR NEW SAN DIEGO HOMES

A pair of friends called not long ago to thank me for urging them to buy a HOW – a Home Owners Warranty. Seven months after moving into their new two-story house, they noticed cracks in the family room ceiling, which was under the upstairs bathroom. They repeatedly called the builder, whom they discovered had moved out of town. They solved the problem temporarily by putting a large pot under the drip that started in the family room every time someone took a shower in the bathroom. But one day their entire first floor was flooded. An entire wall and the ceiling had caved in! They shut off the main water line and called in their insurance adjuster. They were told their home insurance did not protect them against faulty construction. But their Home Owners Warranty rode to the rescue. A HOW representative said the plumbing throughout the place was below standard Still, the plumbing in the upstairs bathroom, which had ruined the ceiling and everything else below it, was covered by the HOW warranty. Buyers considering new San Diego homes should have the same protection, but sadly, a few do not. You can get an excellent one-year Home Owners Warranty that covers workmanship and materials, plus an additional ten- year warranty for major structural defects that affect plumbing, wiring, heating and air-conditioning. In most cases the one-time insurance premium for HOW is paid by the builder. It remains in effect even when the house is sold to another owner. A total of 12,000 home builders belong to the HOW program. If the builder goes out of business, the warranty corporation will repair the major items. You also can get warranties on your appliances. Most builders will not come back to fix things that go wrong more than six months after you have moved in. No one should buy a new home without a HOW policy, not even (or perhaps especially!) if it is a house built by your favorite nephew, your oldest friend or the most famous home building company in the country.

MORE OF: SAN DIEGO HOMES CAN NEVER BE TOO CLEAN!

Check every faucet in your kitchen and bathrooms to make sure they do not drip. Particularly in areas where water bills are high, smart people know what extra costs a dripping faucet can cause. Recently, in my home, a faucet was leaking for thirty days before I noticed it. My water bill was up $100 that month! Cost to fix the faucet? Twenty-five cents, for a rubber ring.

While you are in the bathrooms, clean out the grout areas between the shower tiles. If a bathroom has no window, be generous with deodorizer spray or solid sticks. Somewhere in the house, you are bound to come upon a door that does not close completely. First, try rubbing soap on the door jamb. If that does not work, hire a handyman for a few dollars to shave the door so it closes properly. In San Diego homes, the work room or garage often have too much clutter. That includes old toys, rusted garden tools and lawn furniture, ancient back- yard swings. Once you are in the backyard, check to see that your dog, whom you have sent to visit a friend, did not leave behind anything for potential buyers to step on. Once you are through with your own inspection, it is time for a professional one. This will reveal any major problems with your operating systems – heat, cooling, wiring, water, sewage, plumbing, roof. Should your house be in excellent condition, by all means let buyers know. If there are things that need to be improved, the home inspection report shows that you have taken trouble to point out what must be done to make the house perfect.

As you have guessed by now, I lean toward as much cosmetic work and theatrically appealing lighting, expanding and emptying as possible. I do as little renovation work as possible. Why spend thousands of dollars on renovations such as the construction of a fireplace or an extra bath, when you could tuck that money away as part of the nest egg you are building to buy your next California home?

MAKING THE MOST OF SAN DIEGO HOMES DURING A HOT MARKET

“Wait a minute!” hundreds of people cry. “We have just the opposite kind of market here. San Diego homes are selling like hotcakes. There are twenty buyers for every house that goes on sale!” Congratulations, when you are in a hot market, you are in the driver’s seat. The pressure is on the buyer to get you to accept an offer as soon as possible, because others are lining up to offer you a better deal.

Let us imagine that thanks to a job transfer you must move out of the hottest real estate market in the country, and you do not want to keep your house. You put your house on the market and presto! Within hours, the broker brings you four qualified buyers, checkbooks in hand. Three are ready to buy at the asking price. What you have on your hands is a certifiable “bidding war.” If you have a broker, ask the broker to bring you the highest bid within 24 to 48 hours. Believe me, the broker is as excited as you are. The more money paid for the property, the bigger the commission the broker makes. Analyze the other parts of the deal. Sales price is important, but it is not everything.

Make sure of the following elements:

• All the bids must include the amount of the down payment.
• The closing date should be the one most convenient for you.
• Most important, the bidders must be “qualified” in advance by the broker. (“Qualifying” is the real estate term for determining that the buyer has the income and financing to purchase your house without any difficulties.)

Finally, in a bidding situation, the broker should put you in a position to accept a good lower bid that might not have every term that you want, just in case your first choice among the buyers moves out of the picture. One way to arrange this “fall-back” position is to give the second or third bidder a right of first refusal within the time frame of the closing period. Thus, if you have a closing set for 30 days, you would want to give the second bidder a chance to buy within those 30 days should your first bidder drop out. One last note – never close the door on negotiations, even when you feel you have reached an impasse. As long as your prospect will accept a telephone call or an invitation to sit down for lunch, negotiations can continue. Only communication ends; negotiation does not.

HOW TO BUY RECREATIONAL SAN DIEGO, CALIFORNIA REAL ESTATE DESPITE YOUR NEIGHBOR’S HORROR STORIES

A vacation home can be a wonderful retreat or an albatross. I am sure you have friends who have had very pretty pictures painted for them in their favorite resort area – pictures that then have been smashed by the reality of burdensome mortgages, changes in tax laws, high vacancy rates. It does not have to be that way.

The first rule of vacation San Diego, California real estate is this: buy because you plan to enjoy it, not as a tax shelter. The second rule: buy property you can afford, or else look into time sharing. The third rule: buy your acre of paradise in a market where you can offset many of your costs by renting your home while you are not using it.

FUN LOVERS, THIS IS YOUR CHANCE
If you do not yet have a vacation home, and if you can afford one, you are apt to find bargains galore. Since pure investors can no longer take advantage of major tax breaks, real vacationers can jump into a buyer’s market. How do you know if you are a “real vacationer”? Do you reserve time every year to play golf in San Diego? Do you leave your city residence every weekend in search of a place to recharge your batteries? If your answer is yes, it is time to figure out what that annual, semiannual or every-weekend trip adds up to in U.S. currency.

Figure what it will cost you over the next 10 years. You have to increase the amount each year to cover inflation. I use a conservative rate of 4 percent a year. Let us assume your two golf holidays (or July by the shore) ran $4,000 a year in lodging last year. That equals $40,000 for vacations for the next 10 years. Add 4 percent a year for inflation, and you can end up spending $60,000 to $70,000 for those lovely holidays. You would probably put 10 to 20 percent down and take out a mortgage for the rest. This is money you would have paid for a vacation in any event, and you can build equity at the same time.

THE FINAL WEEK: BUYERS CLOSING ON SAN DIEGO, CALIFORNIA HOMES

Four or five days before the closing, take a last-minute look at the personal property list that should be attached to your sales contract. This is the list of items that sellers agree, or decline, to include in the sale of San Diego, California homes – such as your custom drapes, light fixtures, dishwasher, refrigerator and other “extras.” What if your daughter has taken a favorite lamp back to her college dorm, not realizing you promised it to the buyers in your negotiations? The buyers will look for it on their final inspection. It sounds petty, but this sort of thing can turn a closing into a shouting match. It is a good idea to have a written memo ready for the buyers to sign on the day before closing, stating that the buyers have actually made their inspection and found all personal property in place.

CALCULATING YOUR CLOSING COSTS
About two or three days before the closing, be sure to get a copy of the seller’s portion of Estimated Closing Costs, as required by federal law, from whoever is running the closing – the title insurance official or your lawyer. The closing charges are smaller for you (the buyer pays most settlement costs), but you do not want to let bills sneak up on you. Contact your bank if you have a present mortgage. Will there be any additional charges as the result of your prepaying your loan early? The Estimated Closing Costs sheet should include this, but it does not hurt to double-check.

Finally, in the hectic time right before a closing, it is easy to forget little things – like canceling your newspaper delivery, forwarding your mail and, above all, arranging disconnect dates (or transfer dates) with your utility companies. One envelope you do not want to receive two months later at your new address is a $350 electric bill from your former home!

LET A LAWYER TACKLE A SAN DIEGO REAL ESTATE ASSESSMENT CHALLENGE

A sudden increase in property taxes drives many people, especially those about to sell their San Diego real estate, to the tax collector’s office, demanding an explanation. You are safer turning the matter over to a lawyer. An woman called me with a typical story: “I was getting ready to sell my house when I received a notification from my tax collector. It doubled the assessment value of my home!” I responded by asking her, “Do you understand what tax assessors do and how they arrive at the assessment value?” In most states the assessor reevaluates your home no less than once every two years. The assessment tax is based on what the market value of your home is – a price someone will pay at any given time, and the price a person will sell for at any given time. After an assessor decides your home is worth more than it was the last time around, you receive a new assessment, or reassessment. This is the assessor’s opinion. In some markets, it is linked to the economy of that area, and your assessment may go down if the economy has gone down.

You have a right to challenge an assessment, but the burden of proof is on you. At the assessor’s office, there are forms you can fill out to file an objection. The laws and procedure vary from state to state. Usually, you need to appear before a review board, armed with documentation, such as appraisals and reports of sales in your area. Should your request for a lower assessment be denied, there are further remedies in court. However, if the assessment raises your tax bill more than 25 percent, I recommend that you do not handle the dispute yourself. Let an expert fight for you. At the courthouse, the clerk can show you other cases currently pending. Make a list of lawyers whose specialty is representing owners in these disputes. Lawyers in this field take cases on a percentage basis, which is good for you because a lawyer will work harder for a percentage. The percentage is a portion of the amount of tax that the lawyer saves you in a given year. If there are many cases in your community, the lawyers clearly feel the assessor has made an error. If you plan to stay in your San Diego real estate for several years, a higher assessment can be quite a load. The assessment raises your taxes every year. So if your taxes went up $250 this year, you will pay $2,500 or more in the next 10 years. In a hot real estate market, you can also count on having that assessment raised as often as every year or at least every two years.

Approving and processing San Diego, California real estate loans

Processing involves drawing up loan papers, preparing disclosure forms regarding loan fees and issuing instructions for the escrow and title companies. Loan papers include the promissory note (the evidence of the debt) and the security instruments (the trust deed or mortgage).

Closing the loan
Closing the loan involves signing all the loan papers and preparing the closing statements. First-time buyers, especially, are often confused by the various fees involved. Real estate agent’s play a vital role in making this transition period smooth.

Servicing the loan
After the title has been transferred and the escrow closed, the loan servicing portion of the transaction begins. This refers to the record-keeping process once the loan has been placed. Many lenders do their own servicing, whereas others use outside sources. The goal of loan servicing is to see that the borrower makes timely payments so that the lender makes the expected yield on the loan, which keeps the cost of the entire package at a minimum.