Real estate contract decisions

Real Estate Contract Decisions - two women drafting an offerThe real estate contract decisions faced by home buyers include the price and terms – and terms are basically “everything else” beyond the price.

Real estate contract decisions – price and terms

Assuming that you are pre-approved for a mortgage and that you are are working with a great Realtor or real estate licensee (those should be your starting point), you’ll have a number of things to address and choices to make involving price and terms.  The next is to find out if there will be multiple offers or not – your agent should call the listing agent to inquire.  That is a game changer so should be done upfront. Here are a few of the basic considerations.

1. FORMS Most listing agents prefer the CAR contract, but some may request that offers be written on PRDS forms. Will you draft your offer on the CAR or PRDS contract?

This is perhaps the first “term” to be considered.  In general, this decision is influenced by geography: the “west valley” communities from Almaden or Los Gatos on the southern end up to Redwood Shores or a bit further north will tend to use the PRDS contract.  Most of San Jose, Santa Clara, Milpitas and so on will usually prefer the CAR contract.

If you have written a couple of offers on one of them and then shift to the other, this can be unsettling. Talk with your agent about this decision.

2. TIME / DEADLINES Some of the most important terms among your real estate contract decisions are the timeframes. Other terms matter, such as having a pre-approval letter and providing all the required documentation, such as the proof of funds.  Contingencies are also hugely important terms. Today most sellers want to see no contingencies. That doesn’t always happen, though.
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What happens at the sign off? Is it the same as closing?

What happens at signoffThe sign off is an appointment in which home buyers and sellers sign the final papers which will lead to closing a few days later.  (In some states, the closing happens when all parties sign, and both sellers and buyers meet at the same time for the official paperwork.  Not so here in Silicon Valley, though.)  Usually the appointment takes place at the title company which is also handling the escrow – that is the norm in northern California.  Sometimes either buyers or sellers cannot be available during regular business hours.  In that case, they have an option of paying for a mobile notary to do the signing at their home or some other convenient location.

The closing, or close of escrow, takes place when the deed is recorded with the county at the County Recorder’s Office.  Usually each title company will send one person to record all of the deeds scheduled to close that day for that firm.    Once a particular property has been recorded, we say “it is on record”.  Someone from the title company will call or email the clients or the real estate agents (or both) to confirm that it’s on record.  For short, they often say “we have confirmation” – meaning that they’ve been told that the deed was recorded.  The property transfer happens when the deed is recorded – not when the papers are signed.

Related reading:

Who should be at the sign off or closing in Silicon Valley?

What is escrow?

 

 

 

You say you are an “all cash home buyer”? Be prepared to perform like one!

In our overheated Silicon Valley real estate market with so many multiple offers, a lot of properties are selling to “all cash buyers”*.  Some of the contracts are written as all cash when in fact the buyers are actually trying to get a loan (for all kinds of reasons, perhaps including tax reasons). Listing agents and home sellers are wary of the promise of an all cash offer when the close of escrow is long.  Really buying all cash?  You can close in a few days, not a few weeks, if that’s the case.

Home buying all cash but not really

What’s the problem with getting a loan, anyhow?

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Real Estate Purchase Contract: Better to Pick a Close of Escrow Date or Number of Days to Closing From Acceptance?

Closing date or number of days to closing?Silicon Valley home buyers (and sellers) are faced with a myriad of questions and choices when completing or reviewing residential real estate contracts to purchase the property.  One of them, early on, is whether or not a particular day is chosen for closing escrow or if instead it’s a number of days from contract formation (acceptance) to closing.

Which is better?

The are pros and cons to each approach, of course.  Many buyers want to be able to plan, without any ambiguity, when they will move in to their new home.  (For some this can be a matter of feng shui, astrology or a sense that some days are more fortuitous than others.)  This can work if negotiations are not protracted.

With distressed sales, though – bank owned properties (REOs) and short sales – and sometimes with multiple offers, the negotiations time frame can be hard to predict and if you pick one particular date, you may well have to change it later or find that you don’t really have enough time because a week or more gotten “eaten up” with counter offers, waiting for a bank or seller to respond or other delays. In those cases you may want to have the flexibility of writing in the length of escrow (number of days) rather than picking a certain date.

As always, talk with your professional real estate licensee for guidance as each case may be different.