Advice Corner- Get practical tips on buying, selling, financing, owning and maintaining a home.

Tips for Buyers

• Choosing a Neighborhood
• Should I buy or Rent?
• How Do I Prepare For Closing?
• Your Escrow and You

With so many homes on the market you'll never get anywhere unless you narrow your choices. You can begin this process by first identifying one or a few neighborhoods that are right for you by:

• Consider Local Factors; and 
• Using Neighborhood Strategies

When evaluating a neighborhood, you should investigate local conditions. Depending on your own particular needs and tastes, some of the following factors may be more important considerations than others:

• Quality of schools 
• Property values 
• Traffic 
• Crime rate 
• Future construction 
• Proximity to: Schools, Employment, Hospitals, Shops, Public transportation, Cultural Activities (museums, concerts, theaters, etc.), Prisons, Freeways, Airports, Beaches, Parks, Stadiums

Neighborhood Search Strategies

If you’re a first time-buyer with limited financial resources, it’s a wise purchasing strategy to buy a home that meets your primary needs in the best neighborhood that fits within your price range.

You can maximize your home purchase location by incorporating some of the following strategies into your neighborhood search:

• Look for communities that are likely to become "hot neighborhoods" in the coming years. They can often be discovered on the periphery of the most continuously desirable areas. 
• Look for a home in a good neighborhood that is a bit farther out of the city. If commuting is a concern, purchase a home that is close to public transportation. 
• Look at the neighborhood demand by asking us whether multiple offers are being made, whether the gap between the list price and sale price is decreasing, and whether there is active community involvement. You can also drive around neighborhoods and see how many "sale pending" and "sold" signs there are in a particular area. 
• Look into purchasing a condominium or co-op, rather than a house, in a desirable neighborhood. This way you still may be able to purchase in a prime area that you otherwise could not afford.

Should You Buy or Rent?

Know Your Budget

There's no point wasting time and energy house-hunting before you know what you can afford. So your next step is to assess your finances:

Compare Buying with Renting

Find out about interest rates

Understand your closing costs

Figure out your income, debt and down payment

Calculate how much home you can afford!

If, like most first-time buyers, you are presently renting, it's easy to calculate your cost - simply, the monthly rent you pay. (utilities, phone, cable, and other costs can be ignored in this comparison because they'll be approximately the same whether you rent or buy.)

But calculating the cost of homeownership is much more complicated, because income tax considerations affect your bottom line. And there is, in addition, the uncertainty about how much the value of your home will rise (or even fall) in the coming years.

As a tenant, you may be taking a standard deduction on your income tax return. This is the time to judge how that standard deduction stacks up against the amount you'd be able to subtract from income if, like most homeowners, you itemized deductions instead.

Once you itemize, you can deduct:

• Home mortgage interest 
• All real estate taxes on any property you own 
• Your state income taxes 
• Charitable contributions 
• Medical and dental expenses that exceed 7.5% of your income 
• Personal property taxes if your state has them; and most important 
• Certain moving expenses

At the start of a mortgage repayment schedule, when the debt hasn't been reduced yet, almost all of your monthly payment goes toward interest. A bit goes toward reducing principal (the amount borrowed), so that the next month you're borrowing a bit less, and owe a little less interest. That allows more of your next payment to go toward reducing principal. However, this process is very slow in the beginning and the interest portion remains high for many years.

Between the mortgage interest and the property tax deductions, you can figure that Uncle Sam is shouldering part of your monthly mortgage payment - 28% of it, in fact, if that's your tax bracket. Your state income tax bracket can also be added to that, before you calculate how much you save on income tax as a homeowner.

How do I prepare for Closing?

Double-Check the Money

Prior to the actual closing day, there are several things you should do to be certain that your real estate transaction will close on time, and that everything will go smoothly. A day or two before closing, you should review your final closing statement or HUD-1 Statement, whichever is used in your area of the country. You should go over all the calculations and be certain that you are given credit for all your deposits and any other credits due to you from the seller or for other items agreed upon between buyer and seller. Go over all the lender and title and escrow fees, to be sure they are what you had been told and that you agree to them. Check the math calculations on the closing statement. Errors do occur.

Review the Documents

Carefully review the preliminary report or the guarantee of title insurance, to verify the exact legal description of the property and any liens, encumbrances or other items which may have been discovered on the property. Be sure that all items are removed that you did not agree to. Verify that the title or escrow agent has your correct vesting, or the way you want to take title to the property. This is important because to correct a vesting on a deed later on is time consuming and can be avoided if care is taken when escrow is closed.

Re-Inspect the Property

Besides the paperwork which you must review and verify, you should re-inspect the property once again just prior to closing. Is everything the way you expect it to be? Have all the necessary repairs or other corrective work been done that were promised to you? This is important so that you don't arrive at your new house and find unexpected surprises.

Check and Double-Check

The most important thing to remember is that before closing you want to be certain that all the conditions of the purchase contract have been met. You want to be sure that all directions given to the closing agent have been performed. Before signing your name to any closing documents, check and double check that everything is correct, interest rate, fees charged and condition of the property.

Your Escrow and You

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.

Tips for Sellers–Look at it like a Buyer!

People usually decide within two minutes whether they like your home or not...The first impression is often the lasting impression, and they start forming their opinions before they even walk in the front door!
So it is smart to ask yourself if your house is as presentable as it can be for a faster sale at the best price. The best way to find out is to imagine you're a prospective buyer. You've probably been looking at other homes:so approach your present home the way you look at other houses.

I will do all of the things necessary to bring in the prospects-but when it comes down to the nub of it, you're house is going to help sell itself once prospective buyers get there. Here are 20 tips I suggest to make your home more presentable. A good rule to follow is to do cosmetic things which will improve your chances of selling, but avoid making major changes unless they will increase the value of your home more than the cost of the improvement.

1. Make the Most of a First Impression
A well manicured lawn, neatly trimmed shrubs and a clutter-free porch will welcome prospects. So does freshly painted, or at least a freshly scrubbed front door. If it's autumn, rake the leaves. If it's winter, shovel the walkway. The fewer obstacles between prospects and the true appeal of your home, the better.

2. Invest a few hours for the future Dividends
Clean up in the living room, the bathroom, the kitchen. If our woodwork is scuffed or the paint is fading, consider some minor redecoration. Fresh wallpaper adds charm and value to your property. Prospects would rather see how great your home really looks than hear how great it could look.

3. Check Faucets and Bulbs
Dripping water rattles the nerves, discolors sinks and suggests faulty or worn out plumbing. Burned out light bulbs leave prospects in the dark. Don't let little problems detract from what's right with your home.

4. Don't Shut Out a Sale
If cabinets or closet doors stick in you home, you can be sure they will also stick in a prospect's mind. Don't try to explain away sticky situations when you can easily plane them away. A little effort on your part can smooth the way toward a closing.

5. Think Safety
Homeowners learn to live with all kinds of self-set booby traps: roller-skates on the stairs, festooned extension cords, slippery throw rugs and low hanging overhead lights. Make your residence as non-perilous as possible for uninitiated visitors.

6. Make Room for Space
Remember, potential buyers are looking for more than just comfortable living space. They're looking for storage space too. Make sure your attic and basement are clean and free of unnecessary items.

7. Consider your Closets
The better organized a closet, the larger it appears. Now is the time to box up those unwanted clothes and donate them to charity.

8. Make Your Bathroom Sparkle
Bathrooms sell homes, so let them shine. Check and repair damaged or unsightly caulking in the tubs and showers. For added allure, display your best towels, mats and shower curtains.

9. Create Dream Bedrooms
Wake up prospects to the cozy comforts of your bedrooms. For a spacious look, get rid of excess furniture. Colorful bedspreads and fresh curtains are a must

10. Open up in the Daytime
Let the sun shine in! Pull back your curtains and drapes so prospects can see how bright and cheery your home is.

11. Lighten up at Night
Turn on the excitement by turning on all your lights-both inside and outside-when showing your home in the evening. Lights add color and warmth, and make prospects feel welcome.

12. Avoid Crowd Scenes
Potential buyers often feel like intruders when they enter a home filled with people. Rather than giving your house the attention it deserves, they're likely to hurry through. Keep the company present to a minimum.

13. Watch Your Pets
Dogs and cats are great companions, but not when you're showing your home. Pets have a talent for getting underfoot. So do everybody a favor: Keep Kitty and Spot outside, or at least out of the way.

14. Think Volume
Rock-and-roll will never die- but it might kill a real estate transaction. When it's time to show your home, it's time to turn down the stereo or TV

15. Relax
Be friendly, but don't try to force conversation. Prospects want to view your home with a minimum of distraction.

16. Don't Apologize
No matter how humble your abode, never apologize for its shortcomings. If a prospect volunteers a derogatory comment about your home's appearance, let your agent handle the situation.

17. Keep a Low Profile
Nobody knows your home as well as you do. But, an experienced sales associate knows buyers- what they need and what they want. Your agent will have an easier time articulating the virtues of your home if you stay in the background.

18. Don't Turn Your Home into a Second-Hand Store
When buyers come to view your home, don't distract them with offers to sell those furnishings you no longer need. You may lose the biggest sale of all.

19. Defer to Experience
When prospects want to talk price, terms, or other real estate matters, let them speak to an expert- your sales agent.

20. Help Your Agent
Your agent will have an easier time selling your home if showings are scheduled through the office. You'll appreciate the results.