What is a Real Estate Escrow?

When entering into an escrow, the buyer and seller of a piece of property establish terms and conditions for the transfer of ownership of that property. These terms and conditions are given to a third party known as the escrow holder.

How does the escrow process work?

The escrow is a depository for all monies, instructions and documents necessary for the purchase of your home, including your funds for down payment and your lenders funds and documents for the new loan. Prior to close of escrow, the buyer deposits the balance of funds required and agreed upon by the parties with the escrow holder. The buyer instructs the escrow holder to deliver the monies to the seller when the escrow holder:

1) Forwards the deed to the title company for recording;

2) Is notified by the title company that a policy of title insurance can be issued that shows title to the property is vested in the name of the buyer.

The escrow holder handles the pro-rations and adjustments on any fire/hazard insurance, real estate taxes, rents, interest, etc., based on the escrow instructions of both parties. The escrow holder thus acts for both parties and protects the interests of each within the authority of the escrow instructions.

How do I open an escrow?

Your real estate agent will open the escrow for you. As soon as you execute your purchase agreement/joint escrow instructions, your agent will place your initial deposit into an escrow account. The escrow holder takes instructions based on the terms of the purchase agreement and the lenders requirements. Escrow cannot be completed until the terms and conditions of the instructions have been satisfied and all parties have signed escrow documents.

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Posted on September 2, 2011 at 1:39 PM
Susan Saurastri | Posted in Advice Column |

Questions to Ask When Hiring a Fountain Valley Realtor

I spoke with a seller recently who told me that he was not satisfied with his realtor. I asked him how he came to hire him. He said he called many agents and he was the first one to pick up the phone. This list will hopefully spare you the aggravation of hiring the wrong person to sell your house.

1) How many years have you been actively selling real estate? (Some agents may have been licensed for many years but never sold a house) Its not how long a person has been in the industry but how well they do their job thats important. How many homes have you sold? Are you a realtor? (A realtor is held to a higher standard of ethics and must be a member of the realtor associations. Are you a full time or part time agent?

2) What is your marketing plan? Now that the market has changed from a sellers market to a buyers market, have you made any changes to your marketing plan? Do you create the property flyer yourself or does a company create them for you? (Ask to see a copy of the flyer; you want it to convey a professional representation of your house.) Are the flyers color or black and white? What other advertising resources do you use?

3) Are you a member of a team, if so what are the responsibilities of each team member? Which member will represent me during the transaction? How often will you communicate with me regarding the status of my listing? May I have your cell phone number and email address? How timely are you responding to messages?

4) How will you describe my home in the MLS (Multiple Listing Service)? Will there be photos with my listing? Listen to determine if the agent will hire a professional photographer to obtain the best photos of your house for the MLS. You also want to ascertain how many photos will be attached to your listing. Did the agent mention that she would provide a virtual tour of your home for the Internet? (Buyers will determine which homes they want their realtor to show them based on the photos and/or the virtual tour they view on the Internet from the comfort of their homes.)

5) Do you have a website? Will my house be advertised on your website? What is your website address? Does your company have a website? What is the web address of your company?

6) I keep hearing about staging. How do you feel about staging and is it necessary to sell my house? If an agent tells you the house is perfect the way it is, although it may be lovely, there is a difference between livability and marketability and every house can use some tweaking to showcase its best features. Remember your house will be in competition with over one hundred and fifty other homes in Fountain Valley..

7) I understand that often times agents dont leave business cards when showing or previewing the house, how will you keep track of who is viewing my home? (Agents can check the codes in the lock box regularly to determine who has shown your house.) Its important for the listing agent to obtain buyer feedback from the buyers agent.

8) Will you provide open houses and if so how often? Will you hold it open yourself or will it be one of your associates? What days and times will the open house be conducted?

9) Does your office provide agent caravans to preview new listings? During the first week my house is on the market, will you put my house on the broker preview sheet for agents from other companies to preview? Will you serve lunch or some other goodies? (Feed them and they will come.)

The agents commission is negotiable however in this slower market most agents will spend considerably more time and money on your listing than ever before. The commission negotiated at the time of the listing contract is normally divided four ways. With a full commission of six percent, three percent will be divided between the listing agent and the listing broker and the other three percent will be divided between the selling agent and the selling broker. Offering a 3% commission in the MLS will attract more buyer showings than a discounted commission. Ask to see a copy of the listing once it has been placed in the MLS to ascertain if the commission offered is the amount you agreed to.

The length of the contract is negotiable. Although six months is the industry standard you may request a shorter term, 3 or 4 months so you arent stuck with an agent who isnt performing satisfactorily. If at any time during the listing period you are not satisfied with the agents performance, make a list of the problems and contact their office manager to discuss a resolution.

Now that we have established the listing price, how long do you believe that it will take you to sell my house? The average time on the market in Fountain Valley is 53 days. Staged homes usually sell faster and for a better price.

If an agent suggests a higher listing price than the comparative market analysis provides, show the agent the door. Some agents will “buy the listing” by providing the seller with a higher than reasonable list price which sounds enticing to the seller; the house will linger on the market without any offers, because the buyers know the house is overpriced. Once the agent has the listing for a few weeks he will start to harp on the seller to reduce the price.

Ask the realtor for the names and phone numbers of recent sellers in your area who were represented by this realtor to determine what practices the agent used. Ask the seller if they would hire the agent again and why? Interview two, three or four agents before you sign on the dotted line. After all is said and done, trust your instincts. Happy selling!

Susan Saurastri, a Fountain Valley resident is a realtor with Star Real Estate. Contact her at SusanSellsOCHomes@gmail.com or 714-317-0664.

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Posted on September 2, 2011 at 1:32 PM
Susan Saurastri | Posted in Advice Column |

How to sell your Fountain Valley house in today's Competitive Real Estate Market

Today there are 132 houses on the market in Fountain Valley, 34 of them are condominiums. In the last month twelve single-family homes and 8 condos have closed escrow in Fountain Valley. They sold for between $350,000 and $820,000.

Why are some Fountain Valley houses selling and others aren’t?

Location, Condition and Price are still and always will be the 3 factors that govern the sale of a house. Why are some houses selling quickly and other houses lingering on the market? It takes strategy.

Timing is crucial. Youll only get one opportunity to impress a buyer. Once the buyer has toured your Fountain Valley home and is not impressed, they wont be back. Selling a house is a collaborative effort between the seller and their agent. Sellers make a mistake when they dont listen to and apply the advice of their realtor. Clutter will dwarf the size and minimize the attractiveness of the house. Clear off the kitchen and bathroom countertops except for one or two items. Move the excess or oversized furniture from each room. Buyers want to see space and envision their own furnishings in your house. A vacant house lacks emotion. If you are moving out prior to putting your house on the market, it pays to either leave some pieces that can be used to decorate it or hire someone to stage the house.

One week prior to putting a house on the MLS, I educate my clients on how I market their property and then I call Jerri Hebert. Jerri knows how to stage a house to sell. Shes a decorating dynamo who in one day can transform a house from nice and inviting to drop dead gorgeous. She puts the wow in the wow factor just by moving furniture and bringing in accessories. If the house calls for it, she also paints. When Jerri is finished preparing the house I bring in a professional photographer. He will photograph the house and each room to its best advantage. Those are the photos the perspective buyers will view online along with the virtual tour. 90% of buyers now choose their selection of homes via photos on the Internet, before calling their realtor for a personal tour. Some listings on the MLS have no photos or just one of the homes exterior. Buyers are more likely to skip seeing those homes all together. Ask your agent to provide you a copy of your MLS printout; the number of photos will be listed as media. I will happily refer Jerri to other agents and Orange County sellers.

If you told your agent that you want to market your Fountain Valley home by appointment only prepare to live in the house for a long time. The same is true if you don’t have a lock box available for agent showings. This competitive market calls for sellers to step back and give the buyers access when and how they want it. Agents have too many homes to show their buyer clients to adhere to a particular sellers schedule. Now is the time to distinguish your house from all the others on the market. The days of discount commissions are over, at least for the time being. Some sellers are offering exotic trips on top of full commissions and bonuses to the buyers agent in order to get their homes shown.

Remember the 6 Ps. Proper prior pricing prevents paltry paydays.

Buyers are writing low ball offers. Sellers are wise to counter offer rather than reject the offer outright. Sometimes it will take four or five counter offers before a deal is struck. Its worth the time and the energy if at the end of the process both the buyer and the seller walk away feeling they made a good deal.

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Posted on September 2, 2011 at 1:23 PM
Susan Saurastri | Posted in Advice Column |

Termite and Pest Inspection

As part of your offer, you may require a termite and pest inspection. This company not only inspects for termite damage and pest infestations, but also inspects for dry rot and water damage, among other things. The company that performs the inspection is important to you as a buyer, because you want to be sure they do a good job. It’s important to the seller because it’s customary that they pay for the inspection and some types of repairs that may be required.

You should determine which company you want to perform this inspection and make it a part of your offer. Otherwise the seller will choose. If you do not know which company to hire, I can make a recommendation.

More Fountain Valley home buyer tips and advice

Posted on September 2, 2011 at 1:20 PM
Susan Saurastri | Posted in Buyers |

Title Insurance


Title insurance is important because, by providing you with an Owners Policy, they insure that you have clear title to the property. If there are any problems later, you can always go back to the title insurance company and have them clear it up. Since it is customary for the seller to pay for the owner’s policy, they have an interest in which company is used.


However, you are going to pay a fee to the title insurance company, too. This is for the Lender’s Policy. The lender’s policy insures your mortgage lender that there are no liens or judgments against the property and that the mortgage will be in first position. In other words, should you sell the property or refinance it, their mortgage gets paid first, before any other claims against the property.


The lender’s policy is less expensive than the owner’s policy.

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Posted on September 2, 2011 at 1:19 PM
Susan Saurastri | Posted in Buyers |

Escrow and Settlement


For example, you are going to need an escrow or settlement company to act as an “independent third party” between you and the seller. Without having a third party involved, how do you know that when you fork over the money, you are going to get the deed? This is the type of service provided by escrow and settlement. They will hold your deposit and coordinate much of the activity that goes on during the escrow period.


Since this third party is very important to both you and the seller and both of you will pay fees to this company, it is important to agree on which service to use. Therefore, your choice should be part of the offer. Since you do not buy a home every other week or so, you are probably unfamiliar with companies that provide this service. Your agent will make a recommendation. You have the authority to accept this recommendation and include it in your offer, or make your own choice.


Keep in mind that the seller will also have a preference and this may be a point of negotiation in a counter-offer. It has become customary that one side will choose the escrow/settlement agent and one side chooses the title insurance company. Even so, everything in real estate is negotiable.

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Posted on September 2, 2011 at 1:19 PM
Susan Saurastri | Posted in Buyers |

You and the Seller Must Agree

Buying a Fountain Valley home does not occur in a vacuum, involving only you and the seller. There are all kinds of people and services involved behind the scenes to make it happen. Since some of these services affect both you and the seller, there will have to be an agreement on which companies you will use for them. When you make your offer, you should request your favorites for these services. If you are unfamiliar with these service providers, I can give you recommendations.

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Posted on September 2, 2011 at 1:18 PM
Susan Saurastri | Posted in Buyers |

VA and FHA Appraisals


Home appraisal inspections on FHA and VA loans are a little more detailed than on conventional loans (and more expensive). The appraisers are required to perform certain minimum inspections as well as evaluate the market value of the property. Although these inspections are not as detailed as a professional home inspection and should not be considered a substitute, sometimes repairs are required.


These are additional costs the seller would not be obligated to pay for someone obtaining conventional financing, so your offer should include a maximum figure for these repairs. Otherwise the seller is signing the equivalent of a blank check, and they do not want to do that.


At the same time, whatever figure you put in will most likely affect the seller’s willingness to negotiate on price. If you put $500 as an estimate, the seller may be $500 less negotiable on their price. If no repairs are required, you may have been able to get the house for $500 less than what you and the seller agreed on as the price. The solution is to add a clause to your offer that goes something like this. “If required repairs cost less than the maximum amount allowed, the excess will be credited toward buyer’s closing costs.”

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Posted on September 2, 2011 at 1:17 PM
Susan Saurastri | Posted in Buyers |

How FHA and VA Loans Affect Your Offer


Extra Costs to the Seller


If you are obtaining a VA or FHA loan in order to finance your purchase, you must include that information in your offer. This is because government loans place additional financial and performance obligations on the seller.


Non-Allowable Fees


First, VA and FHA loans prohibit buyers from paying certain types of fees that are often charged by lenders, escrow companies, settlement agents, and title companies. They are called “non-allowable” fees. They still get charged anyway, but as the buyer, you are “not allowed” to pay them. The result is that the seller ends up paying them instead of you.


Most of these “non-allowable” fees come from your lender. By the time you are making an offer you should have already been pre-qualified by a loan officer, so you or your real estate agent can ask how much the lender’s non-allowable fees will be. Experienced agents should also have an idea of what non-allowable fees will be charged by the escrow or settlement agent and the title insurance company.


Since these are fees the seller would not pay on an offer with conventional financing, this information must be included in your offer. You should also realize that since the seller will be paying these additional fees, they may be a little less negotiable on the price.

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Posted on September 2, 2011 at 1:16 PM
Susan Saurastri | Posted in Buyers |

Other Financing Details in Your Offer


Your offer should also contain information on whether you are obtaining a fixed rate or an adjustable rate mortgage. It should also state whether you are obtaining conventional financing or obtaining a VA or FHA loan.

More home buyer tips and advice

Posted on September 2, 2011 at 1:15 PM
Susan Saurastri | Posted in Buyers |