Buyer Representation

Working with me

I love working with buyers. I am a keenly focused listener. I have a lot of patience and never mind looking at all of the potential houses…. occasionally clients may look at 40 or 50 homes over the course of a year (or three!). Conversely the perfect home may show up before you are ready. I will never sell a home to you, but I will ask lots of questions to help you with your consideration of the home. If you want it, I am committed to helping you get it. There are no stupid questions – it’s an open forum. My greatest satisfaction comes from helping you find just the right home, and to have a steady, appropriate and fun transaction to make it yours.

My approach is to help you understand the subtle nuance of neighborhoods, Davis home styles, schools and prices. You want to know your lender and know what you can comfortably afford. During this process, your understanding of value in Davis will become highly tuned. I may encourage you to have faith and have fun – and above all, patience. We will find your home. If you are moving from afar and end up renting for a year, there may be a silver lining in a double move. Taking time to get to know Davis may alter your first impressions, and you can choose more appropriately.

Shop for a House

I will be looking for your home. I will be in contact with my broad sphere of friends and acquaintances, asking after new listings on your behalf. And we will both be searching the readily available information on the web:

Moving to Davis.com – particularly if you are a researcher seeking all the information you can find, please use the community research that is provided here for you.

Trulia.com and Zillow.com – these sites present high quality images and are easy to use. Beware, Trulia and Zillow may represent that sold properties are still available for sale.

Craigslist.com – Go to Sacramento Homes for Sale and search on keyword “Davis”. You may locate for sale by owner homes here.

Davis Enterprise – there is a real estate section that comes out every other Friday. This is a good source for finding open houses.

Go to open houses, as much as you can. You will learn a lot.

Get a Loan

If the loan looks too good to be true, it probably is…there are many ways that fees can be slipped in. All too often I have seen clients be surprised at the final signing, and not in a good way.

The lending world has been shaken and stirred and it continues to change. The mounds of regulation add layers of process – your lender may not even know how to anticipate the process for completing the loan. For this reason, bigger is not better – there are excellent smaller local lenders whose loans are processed internally. The loan world is always changing, so lets talk about the best lender for you when you need it.

My first go-to lender is Cara Mengali from Comstock Mortgage. She is responsive, clear, direct, and she does what she says she is going to do. There are other tried and true great lenders as well, and I will be happy to introduce you.

When you get a loan I will be in close contact with your lender, from the pre-approval process through the appraisal, loan processing, and the final signing.

Write an offer

You could find the home you want only to learn several others want it too. There is a great deal of frenzy around multiple offers and I hope to help you stay clear about your motives and limits.

Money is a key driver for most sellers, but it is not the only driver. As your agent I strive to learn what the sellers life situation is and make an offer that makes it easy for the seller to want YOUR offer. For example, if we learn the seller needs to be in town for a few more months but is trying to buy elsewhere, offer a quick close but make it easy for them to stay in the house via a rent back.

It is our local convention that we do not have more than a couple of cycles in the counter response to your offer. Do not over-strategize: make a strong offer that the seller may wish to accept right away.

I can help you write an excellent letter – complete with photos – that will personalize your offer, and it can make the difference in the offer chosen.

What your offer tells the seller

If you find yourself competing with others, here are some ways in which you can communicate your enthusiasm to the sellers:

1. Know the details of the sellers move and frame your offer with the correct sensitivity to their situation. You want to offer terms that make selling and moving easiest for the seller.

2. Make a strong offer for what you believe the value of the home to be. Take time to understand what the cost represents in the context of your life financial plan. How long are you planning to stay? What would it mean if you had to move suddenly and had to take a loss? How would you feel if you didn’t get this house – are there more like it to be had? Taking a long perspective on the value of the home can make you feel more comfortable with your offer. Above all, do not make an offer without complete confidence in your ability to carry it forward.

3. Decide whether you are comfortable competing with other buyers. Some buyers may feel frustrated or manipulated with a multiple offer and walk away. Still others are in it to win at all costs. What can you stomach? Know your approach as you and I strategize your offer. Most often it is to your benefit for me to communicate this to the sellers agent.

4. While it is not illegal for a seller’s agent to submit an offer into the mix, it doesn’t feel clearly ethical to me. If this situation occurs I will ask to personally present your offer to the seller and will do my best to provide strong representation for you.

5. In Davis the convention for the good-faith deposit is 3%. You can make it in one initial sum or divide into two payments. Your deposit is not at risk until you remove your contingencies, so what is to lose by doing it right?

6. There are 4 potential contingencies (“outs” in the eyes of the seller) – inspection, loan, appraisal, and occasionally contingency for the sale of a property. An ideal offer would have no contingency at all, or only a very short one for inspection. As much as you can, shorten or eliminate contingencies. Contingencies for the sale of your home rarely work.

7. AS IS – meaning that you will not put forth a request for repair – is usually very attractive to the already-too-busy seller. This requires a conversation between us.

8. A loan amount of 80% or less is standard in Davis. A greater cash-to-loan value will give the seller more inspiration to choose your loan. If your loan is an FHA or similar, that may give the lender pause, as the there will be more demands on the seller and less control over timing.

9. Who is the lender? The seller is going to be looking for you to have a lender that they feel confident will complete the loan, as stated and on time.

10. Requesting to keep the refrigerator, washer/dryer, fountains, etc. may not matter to the seller during a move, but we will find out for sure before requesting them.

11. Our local conventions for shared costs are this: Title and escrow are shared 50/50, seller pays for the transfer tax, pest clearance and City Resale Clearance. If you wish to make it easier on the seller, accept the pest or city resale as is and let the seller be free of these irksome tasks. If the seller is old, infirm, or in a rush they will favor this offer. Offering to cover the full title and/or escrow fee is another way to sweeten your offer.

12. The default period for the seller to respond to your offer is 3 days. In a multiple offer situation they will probably respond more quickly. If yours is the only offer but you fear other offers may come in, shorten response time to 24 hours.

13. Personalize your offer, unless it is strictly for investment. We can work on this together.

Know your market

While we have been in a low inventory/ high demand market for nearly 2 years this is always subject to change. We have a strongly cyclical market with most sales occurring prior to July. If you are shopping in the fall, you will have less to choose from, but more power in your negotiation. It is always important to know if the market has shifted to a buyers market, in which case, we can create an offer with more thought given to your needs and requirements.

Escrow Activities

Escrow is both a time period (usually 30 days) and a place. A file is opened by the neutral escrow officer – monies, instructions, and collections of documents are stored here in the escrow.

This is an active time during which you will complete your loan application and finance decisions and together we will inspect the house. Here are the basic tasks we will be undertaking:

• Day 1 – 3 – make your good faith deposit to the title company via check or electronic funds transfer
• Day 1 – 7 – complete your loan application
• Day 1 – 14 (less if the inspection is shortened) complete inspections, which may include whole house, HVAC, roof, chimney, sewer, structure, and more
• By day 14 – submit your request for repair to the seller and negotiate the outcome
• Day 17 (or sometimes sooner) – Remove contingencies for the inspections (repairs), loan approval, appraisal and if necessary, the sale of your home. Increase your deposit if contracted. This is a significant point in the sale. If you back out after this point, it is likely the seller will keep your deposit !
• Contact insurance companies to prepare for home insurance
• Interview painters, roofers, flooring companies, etc. if you are planning to make changes prior to moving in
• About one week prior to closing we will be working closely with your lender to ensure that all requisites are complete. 4-6 days prior to close, we will meet at the title company to sign your loan documentation. Plan to spend an hour.
• You will receive the estimated settlement statement – this will let you know how much money you need to bring to closing. This will be submitted as a cashier’s check or an electronic wire transfer (not a personal check).
• The final closing is anti-climatic. I receive a call from the escrow officer letting me know that the title for the house has been recorded into your name. You now own the house, and we can safely bring the champagne out along with the keys.

Appraisals matter

You do not need to do anything – your lender will initiate the appraisal. It will cost you between $400 and $600. The lender does not select the appraiser – they have a pool of appraisers – a neutral third party selects the appraiser.

Appraisers are humans too – as much as the process is intended to be formulaic, there can be biases. I try to be present for the appraisal, particularly if the appraiser is not from Davis. I come prepared to share and discuss comps if the appraiser is willing.

If the house you are buying does not appraise it does not mean it is not worth it. However, if you have an 80% loan or more, you may need to bring more cash to the closing. In some situations we may want to ask the seller to negotiate a price reduction.

Inspections and repair requests

Immediately after your offer is accepted I will schedule inspections. These may include a whole house, roof, chimney, HVAC, sewer and/or structural inspection. This will be the best money you ever spent if the house turns out to have serious hidden issues. I have great inspectors to recommend but you may wish to consult with your friends as well.

A strong offer substantiates a complete repair request. I suggest that you choose the 5 or 6 most important repairs to be made, and if there are a lot of smaller repairs, group then into one. Make it easier for the seller to accept by offering a shorter list. We may want to submit bids for the repairs so we can tie the request to a specific dollar amount.

The negotiation for repairs may result in an agreement to repair or a cash settlement.

California law protects you during the investigation. If you feel that the inspections results make you very insecure about the home, walk away. There is no loss to you.

Three things NOT to do during your escrow

You may not know that even small changes to your financial status can invalidate your loan and derail your purchase of a home….please, be sure not to:

1. Quit your job even if you are accepting a better job – wait until your loan is complete!
2. Buy a car, boat, furniture or other purchase of note.
3. Accept a large gift of money – if someone is giving you money to help with the down payment, please transfer the money before applying for a loan, and let the money “mature” in your account for 60 days

The Cost of Home Ownership

When buying a home for the first time, you may make the disturbing discovery within the first year that it’s costing them much more to own a home than originally calculated. New homeowners tend to focus on what the mortgage payment (principal and interest) will be, neglecting to plan for taxes, insurance, utilities, and maintenance. Here are some costs to be aware of:

Property Taxes
Taxes are due twice a year, in February and November. They are generally paid in 6-month installments, unless you make an arrangement with your mortgage holder to pay a monthly tax installment along with your mortgage payment. It’s a good idea to calculate your tax total for the year, divide it by 12, and deposit that amount into a savings account each month so you will be prepared when the installment comes due.

The tax bill for an individual property is assessed on sales price, but also includes assessments that are unique to that street, neighborhood, district, city or county. When you buy a home, you will be able to view the current tax bill for the property, but it will take the county tax assessor a few months to generate the new, adjusted bill. (Yes, you will have to pay the difference retroactively via a “supplemental tax bill”). Taxes in Davis run between 1.11% and 1.5% of the purchase price.

Property Insurance
Hazard or fire insurance is due once per year, with the first year’s premium due at close of escrow. A typical policy costs in the range of $800 – $1500 per year. Most people elect not to obtain a special policy for earthquake coverage, but if you do choose earthquake coverage, your premium may be roughly doubled. Most Davis properties are not in a flood zone and do not require flood insurance.

Utilities
Costs include city services (water, garbage, sewer), communications services (phone, cable, satellite dish), gas and electric and alarm systems. Costs of utilities vary greatly by property, and I recommend that during the escrow period you obtain information about the current owner’s typical expenses, and budget accordingly.

Maintenance
Every home requires maintenance, even one that appears to be in perfect condition upon purchase. Your roof will eventually need replacement, as will your furnace and water heater. You will need to paint and seal the exterior periodically, clean the chimney and gutters, repair plumbing leaks, replace pool equipment and maintain fences and landscaping. Your appliances will not last forever, your windows will crack, and your hardwood floors will wear. This is all a normal part of home ownership, and if you plan ahead it will not be burdensome. I can help you budget an appropriate amount to put aside for maintenance, depending on the particular home you buy.