The Asking Price
Picture this...Your house has been on the market for four weeks. There have been a lot of showings but no offers, so you are wondering if you should consider a price reduction. You want to get as much as you can for your home, but more importantly you want it to sell!This may be the time to have a frank discussion with your real estate agent. While price may be a major factor, it may not be the only consideration. Are you making your house easy for agents to show? Have you completed the necessary maintenance and cleaning so that your property is as appealing as possible? Review with your agent the current market conditions and the prices of other homes in your neighborhood before determining that a price reduction is in order.Even though your price may be competitive, the marketplace may be telling you that buyers just won't pay what you would like to get. If all indicators point to a price reduction, it is better to do it sooner rather than later.
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Wednesday, May 5, 2010
Thursday, April 29, 2010
Making an Offer: Be creative
Putting together an offer on a home is easy if the buyer has a lot of money, a terrific job and impeccable credit. Many buyers are not in that precise situation, however. And while sellers like to get their asking price, good listing agents prepare them for the possibility of receiving offers that involve some compromises.Successful real estate agents know how to put together creative offers and do whatever it takes to make a transaction work. If a buyer is low on cash, the agent may structure an offer that shifts closing costs to the seller, minimizing the amount of cash that the buyer needs to close. A variation of a lease purchase arrangement might be effective if a buyer has recently changed jobs or is self-employed. Owner-financing for part of the loan can make a difference in some cases. If your agent brings you a complex offer designed to get a buyer into your home, don't say "no" until you understand the offer.
Sunday, September 13, 2009
Luxury Condo for Lease
Amazing Condo that offers great amenities and value on the heart of Warner Center, WH. Unit located on the 3rd floor with panoramic views, pool view, bright, upgraded floorings thru the unit, height ceilings, corner unit with oversized balcony, kitchen bar with room for three chairs, fireplace,dramatic vaulted ceilings, crown molding in living and dining area, raised-panel cabinetry with stainless steel cabinet knobs, granite coutertops, stainless steel appliances including self-cleaning gas oven and range,built-in microwave and dishwasher, designer lighting fixtures, close to upscale shops and relax sidewalk cafes and restaurants. Enjoy spacious condominium home in a private gated community, elevators,covered parking for two cars, four resort-style swimming pools, rejuvenating spa, six lighted tennis courts,expansive fitness center with cardio theater,two racquetball courts,intimate courtyard gathering areas. Visit our website at www.JHMBusinessServices.com, call (818) 887-2085
Directions Entrance by Canoga between Ventura Blvd and Burbank Blvd
Directions Entrance by Canoga between Ventura Blvd and Burbank Blvd
Wednesday, August 27, 2008
Does Moving Up Make Sense?
Jeny Milosevic
Broker/Realtor/Appraiser
5515 Canoga Ave., #204
Woodland Hills, Ca 91367
Office/Fax (818) 887-2085, Cell (310) 430-6799, (310) 428-7155
Email: jeny@JHMBusinessServices.com
www.JHMBusinessServices.com
Does Moving Up Make Sense?
These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.
1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.
2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.
3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district.
4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.
5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.
6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.
Broker/Realtor/Appraiser
5515 Canoga Ave., #204
Woodland Hills, Ca 91367
Office/Fax (818) 887-2085, Cell (310) 430-6799, (310) 428-7155
Email: jeny@JHMBusinessServices.com
www.JHMBusinessServices.com
Does Moving Up Make Sense?
These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.
1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.
2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.
3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district.
4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.
5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.
6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.
Tuesday, July 1, 2008
Getting Started in Home Ownership
Home ownership is the dream of every couple. Having a place of your own brings stability, the pride of ownership and the right to do as you please with the home and grounds. Knowing where to begin is the first step. The focus of this article is on getting started in home ownership.
As in any major investment, it pays to know several things before you approach a lender. With the market in an unstable condition recently, many people with blemished credit are having a tough time securing a loan. To make matter worse, predatory and unethical lenders take advantage of the market, and it is easy to be taken in by this slick group of lenders. Now more than ever, "let the buyer beware" should be the caveat of all prospective home buyers. Before you make the decision to buy, do a thorough check on your credit to help determine the ability to buy.
First Things First
It makes little sense to approach a lender if your credit is less than perfect. Get a copy of your current credit report and study your credit history. These reports can be obtained for free online through sites such as Experian, Equifax and TransUnion. Their parameters are based on the guidelines of the Fair Isaac Corporation (FICO). A good place to begin this process is through visiting AnnualCreditReport.com, who claim to be the official site for consumer credit reports. Obtain your report and check your numbers. If your credit score is 720 or above, you are an excellent candidate for a loan. 620 to 650 is considered to be a good risk. Anything below these figures is considered to be sub prime.
If you find that you are an excellent candidate for a loan with a credit score of 720 or above, begin the search for an ethical real estate agent. Use referrals from family or friends, and ask business owners you are familiar with for recommendations. Always interview the agent to determine their area of expertise. If the agent is on the up and up, there should be no problem with questions asked. If the agent appears unsure of themselves, then use good judgment and move on. Good agents will answer all questions quickly and truthfully. This interview process is essential to your success.
Find an Ethical Lender
It is essential that you only deal with a lender that has a high code of ethics. Interview the lender in the same way you did the realtor. Do not be intimidated by a lender, or think you are wasting their time. It is, after all, your money. Visit at least four lenders before making your choice.
The lender will look at your debt to income ratio. This figure is currently 28/36%. The first figure, 28%, is what the lender feels is the maximum amount of your gross income that is available for monthly mortgage payments. This includes monthly mortgage payments, private mortgage insurance if you must pay it and property taxes. The second figure, 36%, is the amount the lender signifies as housing expense and recurring debt. This includes such things as utilities, phone and cable bills and trash removal.
Always Pre-qualify
Pre-qualifying for a loan tells the seller that you are committed to buying a home. The process of pre-qualifying is simple and painless. A seller will be more willing to negotiate if they know you are pre-qualified for a home loan. When you have determined you are capable of paying a monthly mortgage payment, the lender will go through your credit history, verify employment and income and generally do a property appraisal on a home you are interested in buying. A certificate or letter is given to you by the lender to verify that you qualify for a loan of a set amount.
Start Your Search
Once the groundwork is in place, you can begin the process of finding the ideal home. Knowing that you pre-qualify helps considerably in narrowing down the search. This process should be enjoyable to you and your family. Look at homes you know you can afford, but also look at homes that may be priced higher than you qualify for. Often, the owner may be anxious to sell if the home has been on the market for a long time. The owner may negotiate with you to unload the home, and you can generally get a reduction in price. Be determined to find the home that is perfect for you and that is in your price range.
Always be cautious when entering the real estate market. A little education goes a long way in helping you to both determine what you can afford, and how to find ethical lenders and real estate agents to work with. Use common sense, and your dream home can be yours.
As in any major investment, it pays to know several things before you approach a lender. With the market in an unstable condition recently, many people with blemished credit are having a tough time securing a loan. To make matter worse, predatory and unethical lenders take advantage of the market, and it is easy to be taken in by this slick group of lenders. Now more than ever, "let the buyer beware" should be the caveat of all prospective home buyers. Before you make the decision to buy, do a thorough check on your credit to help determine the ability to buy.
First Things First
It makes little sense to approach a lender if your credit is less than perfect. Get a copy of your current credit report and study your credit history. These reports can be obtained for free online through sites such as Experian, Equifax and TransUnion. Their parameters are based on the guidelines of the Fair Isaac Corporation (FICO). A good place to begin this process is through visiting AnnualCreditReport.com, who claim to be the official site for consumer credit reports. Obtain your report and check your numbers. If your credit score is 720 or above, you are an excellent candidate for a loan. 620 to 650 is considered to be a good risk. Anything below these figures is considered to be sub prime.
If you find that you are an excellent candidate for a loan with a credit score of 720 or above, begin the search for an ethical real estate agent. Use referrals from family or friends, and ask business owners you are familiar with for recommendations. Always interview the agent to determine their area of expertise. If the agent is on the up and up, there should be no problem with questions asked. If the agent appears unsure of themselves, then use good judgment and move on. Good agents will answer all questions quickly and truthfully. This interview process is essential to your success.
Find an Ethical Lender
It is essential that you only deal with a lender that has a high code of ethics. Interview the lender in the same way you did the realtor. Do not be intimidated by a lender, or think you are wasting their time. It is, after all, your money. Visit at least four lenders before making your choice.
The lender will look at your debt to income ratio. This figure is currently 28/36%. The first figure, 28%, is what the lender feels is the maximum amount of your gross income that is available for monthly mortgage payments. This includes monthly mortgage payments, private mortgage insurance if you must pay it and property taxes. The second figure, 36%, is the amount the lender signifies as housing expense and recurring debt. This includes such things as utilities, phone and cable bills and trash removal.
Always Pre-qualify
Pre-qualifying for a loan tells the seller that you are committed to buying a home. The process of pre-qualifying is simple and painless. A seller will be more willing to negotiate if they know you are pre-qualified for a home loan. When you have determined you are capable of paying a monthly mortgage payment, the lender will go through your credit history, verify employment and income and generally do a property appraisal on a home you are interested in buying. A certificate or letter is given to you by the lender to verify that you qualify for a loan of a set amount.
Start Your Search
Once the groundwork is in place, you can begin the process of finding the ideal home. Knowing that you pre-qualify helps considerably in narrowing down the search. This process should be enjoyable to you and your family. Look at homes you know you can afford, but also look at homes that may be priced higher than you qualify for. Often, the owner may be anxious to sell if the home has been on the market for a long time. The owner may negotiate with you to unload the home, and you can generally get a reduction in price. Be determined to find the home that is perfect for you and that is in your price range.
Always be cautious when entering the real estate market. A little education goes a long way in helping you to both determine what you can afford, and how to find ethical lenders and real estate agents to work with. Use common sense, and your dream home can be yours.
Your Escrow and You
Prepared by the Escrow Institute of California, P.O. Box 5792, Orange, CA 92613-5792(The information presented here was taken from a pamphlet prepared by the Escrow Institute of California to be handed out by escrow companies to their clients. We decided to present it pretty much as written because escrow companies very rarely get to explain what goes on in escrow in their own words. Usually your lender or Realtor explains the function of escrow to you. Most escrow officers do not feel we do an adequate job of explaining their important role in a real estate transaction).Additional Note: For states that do not have escrow, we hope to have an article written about settlement practices in other states.
Escrow: What is it?
Very simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event. The California Escrow Law : Section 17003 of the Financial Code : provides the legal definition.
Why Do I Need an Escrow?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
Escrow : How Does it Work?
The principals to the escrow : buyer, seller, lender, borrower : cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.
The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed." Each escrow, although following a similar pattern, will be different in some respects, as it deals with your property and the transaction at hand.
The duties of an escrow holder include; following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same : the Closing or Settlement Statement.
Who Chooses the Escrow?
The selection of the escrow holder is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend an escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees; this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.
What Do I have to do while in Escrow?
The key to any transaction as important as your sale, purchase or loan is to read and understand your escrow instructions. If you do not understand them, you should ask your escrow officer to explain the instructions.
Your escrow officer is not an attorney and cannot practice law; you should consult your lawyer for legal advice. Do not expect your escrow officer to advise you as to whether or not you have a "good deal" or are doing things the right way. The escrow officer is there to follow the instructions given by the principals in the escrow.
In order to expedite the closing of the escrow, you should check with your escrow officer as to what specific items you could do to assist. Ask the question: "What can I do to expedite the closing of this escrow?"
Respond quickly to correspondence. This will assist in the timely closing of the transaction.
If you are required to deliver funds into the escrow, make sure that you provide "good" funds in the form required by the escrow officer. Company procedures differ in this regard, and there are many ways you can help at the time of closing; check with your escrow officer. Do not give the escrow officer a personal check and expect the escrow to close immediately; the escrow can only close on cleared funds, and the processing of a personal check can take days, possibly even a week or more.
When the escrow officer closes the escrow, some of you may want the closing papers, checks, title policies, statements, etc. Made available immediately. There are many aspects to the closing of the escrow, and some of these cannot be processed on the day of the closing; they may take several days. If you have a special need, for example, a cashier's check on the day of closing, you should communicate that need to the escrow officer early in the processing of the escrow.'
Escrow and Your New Loan
If you are obtaining a new loan, your escrow officer will be in touch with the lender who will need copies of the escrow instructions, the preliminary title report and any other documents escrow could supply. In the processing and the closing of the escrow, the escrow holder is obligated to comply with the lender's instructions.
It has become a practice of some lenders to forward their loan documents to escrow for signing. You should be aware that these papers are lender's documents and cannot be explained or interpreted by the escrow officer. You have the option of requesting a representative from the lender's office to be present for explanation, or arrange to meet with your lender to sign the documents in their office.
Escrow: What is a Closing Statement?
A closing statement is an accounting, in writing, prepared at the close of escrow which sets forth the charges and credits of your account. The items shown on the statement will reflect the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services and a determination of the funds you are entitled to at the close of the escrow. When you receive your closing papers, review the closing statement; it is extremely logical and reflects the financial aspects of your transaction. If anything does not make sense to you, you should ask your escrow officer for an explanation.
When going through your closing papers, examine all of them; there may even be a refund check hiding in there. Cash the check quickly, please. Be sure to have the check properly endorsed. All payees must endorse the check. This will eliminate the check being returned unpaid due to irregular or missing endorsements. Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes.
Your accountant will need the information about the sale or purchase of the property. IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The closing statement will assist in this task.
Do not rely on your escrow holder retaining the escrow file so that you can "always call and get copies of the closing statement." Most escrow holders will be destroying the files after the statutory retention period, usually five years. Maintaining and storing the closed escrow files is a costly endeavor to the escrow holder. Therefore, a nominal fee may be charged by your escrow holder for the retrieval of a file from storage, photocopying the requested documents and returning the file to storage.
What Fees and Costs will be Charged?
Escrow fees are not regulated by the State. Escrow holder, like any other businesses, will charge fees that are commensurate with the costs of producing the service, the liability undertaken, and the overhead expenses which include a profit factor. Therefore, the fees will vary between companies and from county to county. Normally, the escrow holder will follow its minimum fee schedule, which will provide for extra charges based upon the differing elements of your escrow. On occasions, an additional fee will be charged for unusual expenditures of time on a given transaction.
The escrow holder has no control over the costs of other services that are obtained, such as the title insurance policy, the lender's charges, insurance, recording charges, etc.
Your escrow officer, upon request, can provide you with an estimate of the escrow fees and costs as well as fees charged by others, provided such information is available.
What About Cancellations?
No escrow is opened with the intention that it will cancel, but there are occasions when a contingency cannot be met or when the parties disagree during the pendency of the escrow. Some escrow holders provide for such an event by incorporating an instruction in the typed or printed General Provisions.
Ordinarily, an escrow holder will take the positions that no funds on deposit can be refunded until the escrow holder is in receipt of mutual cancellation instructions signed by the principals. The escrow holder cannot normally make a determination as to who is the "rightful" party in a dispute on a cancellation and therefore will not return the funds or documents until the principals agree; the escrow holder is not a judge.
Do expect to be charged a cancellation fee, as this is a charge for professional services rendered and quite often for several "out of pocket" expenses that have been incurred on the client's behalf. These fees can vary from company to company depending upon their policies.
Sometime, when a dispute exists, the escrow holder may be forced to allow a court to decide which party is entitled to what documents or funds; this is called an Interpleader Action. Fortunately, most disputes are resolved before the Interpleader is filed, as the costs for such legal actions are extreme. Those costs, incidentally, are normally paid out of the funds on deposit in the escrow.
What about Title Insurance?
Title Insurance is usually obtained when real property is purchased. The policy of title insurance insures the owner and/or the lender of ownership of the property. There are various coverages afforded, but a basic policy insures that the buyer is the owner and that any lender shown on the policy is an "insured" lender. Many different types of extended coverages are available; for example, an ALTA policy is quite often required by institutional lender to afford them additional protection under the title insurance policy. The title policy is written after an extensive examination of the public record is made and the recording of the required documents as called for in the escrow.
The title insurance policy fee is a one-time fee, paid at the close of escrow. The determination of who pays for the policy is not uniform from county to county in California. In some counties, the buyer will pay while in others the seller will pay. In other counties the seller will pay for the lender's title policy. But in almost every case, the question of who pays closing costs is a matter of agreement between the parties. Usually this agreement is based on the customary practice in your county or area. In the case of some FHA or VA transactions, the escrow officer must follow the guidelines as required by the lender and/or government.
What About Property Taxes?
The terms of your transaction and the resultant escrow instructions determine how the property taxes will be handled. If there is no mention of the proration of taxes, your escrow officer will not deal with any credits or charges for prorated taxes. However, if your escrow calls for a proration of taxes, there will be an item in your closing statement that will reflect either a credit or charge to your account. If the taxes are not paid (even though there has been a credit or charge against your account), the buyer is obligated to obtain a tax bill and pay the taxes. If the buyer does not have a tax bill with which to pay the taxes, you can request a bill from the Tax Collector; send a photocopy of the deed.
Supplemental Property Taxes is another concern of the buyer. Upon transfer of real property, a supplemental tax bill is generated. This is accomplished in cooperation with the County Assessor and the County Tax Collector.
Shortly after the close of an escrow involving the conveyance of real property, the County Assessor will request information about the property from the buyer. This information assists the Assessor in determining the value of the property for taxation purposes. The escrow holder may have previously supplied some of the information at the time of the closing of the escrow, via Preliminary Change of Ownership form that should accompany each deed when it is recorded.
The Perfect Escrow; Does it Exist?
Perfection is sometimes difficult to achieve, especially in dealing with the complexities of the escrow, the desires of the parties and other matters that are sometimes far beyond the control of the escrow officer. It is human nature to err on occasion, but your escrow officer has the background, training, education, support and systems in place necessary in order to accomplish the objectives of the escrow instructions.
In the event you have any problems in the handling of your escrow, you should first contact the escrow officer.
If you problem is not resolved, you should next contact the management or owner of the company.
If the matter requires additional attention, you can call the proper regulatory agency.
Escrow: What is it?
Very simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event. The California Escrow Law : Section 17003 of the Financial Code : provides the legal definition.
Why Do I Need an Escrow?
Whether you are the buyer, seller, lender or borrower, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.
Escrow : How Does it Work?
The principals to the escrow : buyer, seller, lender, borrower : cause escrow instructions, most usually in writing, to be created, signed and delivered to the escrow officer. If a broker is involved, he will normally provide the escrow officer with the information necessary for the preparation of your escrow instructions and documents.
The escrow officer will process the escrow, in accordance with the escrow instructions, and when all conditions required in the escrow can be met or achieved, the escrow will be "closed." Each escrow, although following a similar pattern, will be different in some respects, as it deals with your property and the transaction at hand.
The duties of an escrow holder include; following the instructions given by the principals and parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; closing the escrow only when all terms funds in accordance with instructions and provide an accounting for same : the Closing or Settlement Statement.
Who Chooses the Escrow?
The selection of the escrow holder is normally done by agreement between the principals. If a real estate broker is involved in the transaction, the broker may recommend an escrow holder. However, it is the right of the principals to use an escrow holder who is competent and who is experienced in handling the type of escrow at hand. There are laws that prohibit the payment of referral fees; this affords the consumer the best possible escrow services without any compromise caused by a person receiving a referral fee.
What Do I have to do while in Escrow?
The key to any transaction as important as your sale, purchase or loan is to read and understand your escrow instructions. If you do not understand them, you should ask your escrow officer to explain the instructions.
Your escrow officer is not an attorney and cannot practice law; you should consult your lawyer for legal advice. Do not expect your escrow officer to advise you as to whether or not you have a "good deal" or are doing things the right way. The escrow officer is there to follow the instructions given by the principals in the escrow.
In order to expedite the closing of the escrow, you should check with your escrow officer as to what specific items you could do to assist. Ask the question: "What can I do to expedite the closing of this escrow?"
Respond quickly to correspondence. This will assist in the timely closing of the transaction.
If you are required to deliver funds into the escrow, make sure that you provide "good" funds in the form required by the escrow officer. Company procedures differ in this regard, and there are many ways you can help at the time of closing; check with your escrow officer. Do not give the escrow officer a personal check and expect the escrow to close immediately; the escrow can only close on cleared funds, and the processing of a personal check can take days, possibly even a week or more.
When the escrow officer closes the escrow, some of you may want the closing papers, checks, title policies, statements, etc. Made available immediately. There are many aspects to the closing of the escrow, and some of these cannot be processed on the day of the closing; they may take several days. If you have a special need, for example, a cashier's check on the day of closing, you should communicate that need to the escrow officer early in the processing of the escrow.'
Escrow and Your New Loan
If you are obtaining a new loan, your escrow officer will be in touch with the lender who will need copies of the escrow instructions, the preliminary title report and any other documents escrow could supply. In the processing and the closing of the escrow, the escrow holder is obligated to comply with the lender's instructions.
It has become a practice of some lenders to forward their loan documents to escrow for signing. You should be aware that these papers are lender's documents and cannot be explained or interpreted by the escrow officer. You have the option of requesting a representative from the lender's office to be present for explanation, or arrange to meet with your lender to sign the documents in their office.
Escrow: What is a Closing Statement?
A closing statement is an accounting, in writing, prepared at the close of escrow which sets forth the charges and credits of your account. The items shown on the statement will reflect the purchase price, the funds deposited or credited to your account, payoffs on existing encumbrances and/or liens, the costs for all services and a determination of the funds you are entitled to at the close of the escrow. When you receive your closing papers, review the closing statement; it is extremely logical and reflects the financial aspects of your transaction. If anything does not make sense to you, you should ask your escrow officer for an explanation.
When going through your closing papers, examine all of them; there may even be a refund check hiding in there. Cash the check quickly, please. Be sure to have the check properly endorsed. All payees must endorse the check. This will eliminate the check being returned unpaid due to irregular or missing endorsements. Your closing statement and all other escrow papers should be kept virtually forever for income tax purposes.
Your accountant will need the information about the sale or purchase of the property. IRS and other agencies may require you to prove your costs and/or profit on the sale of any property. The closing statement will assist in this task.
Do not rely on your escrow holder retaining the escrow file so that you can "always call and get copies of the closing statement." Most escrow holders will be destroying the files after the statutory retention period, usually five years. Maintaining and storing the closed escrow files is a costly endeavor to the escrow holder. Therefore, a nominal fee may be charged by your escrow holder for the retrieval of a file from storage, photocopying the requested documents and returning the file to storage.
What Fees and Costs will be Charged?
Escrow fees are not regulated by the State. Escrow holder, like any other businesses, will charge fees that are commensurate with the costs of producing the service, the liability undertaken, and the overhead expenses which include a profit factor. Therefore, the fees will vary between companies and from county to county. Normally, the escrow holder will follow its minimum fee schedule, which will provide for extra charges based upon the differing elements of your escrow. On occasions, an additional fee will be charged for unusual expenditures of time on a given transaction.
The escrow holder has no control over the costs of other services that are obtained, such as the title insurance policy, the lender's charges, insurance, recording charges, etc.
Your escrow officer, upon request, can provide you with an estimate of the escrow fees and costs as well as fees charged by others, provided such information is available.
What About Cancellations?
No escrow is opened with the intention that it will cancel, but there are occasions when a contingency cannot be met or when the parties disagree during the pendency of the escrow. Some escrow holders provide for such an event by incorporating an instruction in the typed or printed General Provisions.
Ordinarily, an escrow holder will take the positions that no funds on deposit can be refunded until the escrow holder is in receipt of mutual cancellation instructions signed by the principals. The escrow holder cannot normally make a determination as to who is the "rightful" party in a dispute on a cancellation and therefore will not return the funds or documents until the principals agree; the escrow holder is not a judge.
Do expect to be charged a cancellation fee, as this is a charge for professional services rendered and quite often for several "out of pocket" expenses that have been incurred on the client's behalf. These fees can vary from company to company depending upon their policies.
Sometime, when a dispute exists, the escrow holder may be forced to allow a court to decide which party is entitled to what documents or funds; this is called an Interpleader Action. Fortunately, most disputes are resolved before the Interpleader is filed, as the costs for such legal actions are extreme. Those costs, incidentally, are normally paid out of the funds on deposit in the escrow.
What about Title Insurance?
Title Insurance is usually obtained when real property is purchased. The policy of title insurance insures the owner and/or the lender of ownership of the property. There are various coverages afforded, but a basic policy insures that the buyer is the owner and that any lender shown on the policy is an "insured" lender. Many different types of extended coverages are available; for example, an ALTA policy is quite often required by institutional lender to afford them additional protection under the title insurance policy. The title policy is written after an extensive examination of the public record is made and the recording of the required documents as called for in the escrow.
The title insurance policy fee is a one-time fee, paid at the close of escrow. The determination of who pays for the policy is not uniform from county to county in California. In some counties, the buyer will pay while in others the seller will pay. In other counties the seller will pay for the lender's title policy. But in almost every case, the question of who pays closing costs is a matter of agreement between the parties. Usually this agreement is based on the customary practice in your county or area. In the case of some FHA or VA transactions, the escrow officer must follow the guidelines as required by the lender and/or government.
What About Property Taxes?
The terms of your transaction and the resultant escrow instructions determine how the property taxes will be handled. If there is no mention of the proration of taxes, your escrow officer will not deal with any credits or charges for prorated taxes. However, if your escrow calls for a proration of taxes, there will be an item in your closing statement that will reflect either a credit or charge to your account. If the taxes are not paid (even though there has been a credit or charge against your account), the buyer is obligated to obtain a tax bill and pay the taxes. If the buyer does not have a tax bill with which to pay the taxes, you can request a bill from the Tax Collector; send a photocopy of the deed.
Supplemental Property Taxes is another concern of the buyer. Upon transfer of real property, a supplemental tax bill is generated. This is accomplished in cooperation with the County Assessor and the County Tax Collector.
Shortly after the close of an escrow involving the conveyance of real property, the County Assessor will request information about the property from the buyer. This information assists the Assessor in determining the value of the property for taxation purposes. The escrow holder may have previously supplied some of the information at the time of the closing of the escrow, via Preliminary Change of Ownership form that should accompany each deed when it is recorded.
The Perfect Escrow; Does it Exist?
Perfection is sometimes difficult to achieve, especially in dealing with the complexities of the escrow, the desires of the parties and other matters that are sometimes far beyond the control of the escrow officer. It is human nature to err on occasion, but your escrow officer has the background, training, education, support and systems in place necessary in order to accomplish the objectives of the escrow instructions.
In the event you have any problems in the handling of your escrow, you should first contact the escrow officer.
If you problem is not resolved, you should next contact the management or owner of the company.
If the matter requires additional attention, you can call the proper regulatory agency.
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