Escrow provides safety

It is highly recommended that you ALWAYS use escrow when conducting a real estate transaction. No professional would ever recommend you do it without, and it’s almost never done. If you found a willing buyer and a willing seller, however, you are not required to use escrow.

According to Jason Annotti, Escrow Officer with Chartwell Escrow in Sherman Oaks, CA, “Escrow provides a level of safety to all parties involved and ensures that all parties perform their obligations under a Purchase and Sale Agreement.” That is why you never see transactions without escrow.

Read the full interview with Jason Annotti at: What is escrow? Interview with Escrow Officer Jason Annotti?

What does an escrow officer do?

Before choosing your escrow officer you need to understand what an escrow officer really does. Nicole Phillips, Escrow Officer with Advantage Tile in Westlake Village, CA says “Escrow is the neutral third party between the buyer and seller in a real estate transaction. We hold the funds to pay the bills at the close and affiliate the loan document signing.” They perform a multitude of tasks from ordering payoff demands on existing liens, to preparing preliminary/final closing statements (HUD-1 forms), and getting the transfer recorded on title.

Who chooses the escrow officer?

The escrow officer is chosen in the standard California Association of Realtors California Residential Purchase Agreement and Joint Escrow Instructions (the standard purchase agreement used in the state of California on 1-4 unit residential properties). Generally, your broker will recommend you write it up as “seller choice” or “any reputable company”. This is because it’s typical to let the seller choose the escrow company. It’s their property, so it generally adds a level of comfort for the seller.

This, of course, is not a requirement. You should feel free to name your own escrow company in the purchase agreement; just understand that it will affect your offer.

How Do I Find an Escrow Company or Officer?

Seek Referrals. Nicole Phillips says “The easiest way to find an Escrow Officer is through your Real Estate Agent. Your Agent usually has a team of affiliates assembled to assist in making the transaction as smooth as possible for everyone involved. You can of course find a Title and Escrow company online.”

If you found your real estate broker at CAPropertyFinder.com they’ve completed 10s-100s of properties in the last 12 months. They know a lot of escrow officers and have worked with both the best and worst. Friends, family members and neighbors may be able to recommend a good one from a previous real estate transaction.

Just like with anything you can always “Google it”. Search for an escrow officer who is local. As with real estate brokers, you want someone familiar with the area. With escrow, this is very important. Cities, counties and municipalities have different rules about everything. Some charge fees for things such as water/sewer certifications, retro-fits, transfer taxes and many more. A local escrow officer will not miss items like this and therefore not delay your real estate transaction.

What Should I Look For in an Escrow Officer?

• Licensed with the California Department of Corporations.
• One Who “Works Like You” – If you prefer email to phone calls, your escrow officer should be very willing to do that. If you are only available on nights and weekends, see if you can get an escrow officer who also can also work with your schedule.
• Organization – This is the most important trait an escrow officer can have. They have various events and transactions to coordinate in different locations, with different people, who use different processes and different time lines. An escrow officer MUST be organized.

Read the full interview with Nicole Phillips at: California Escrow Officer – Interview with Nicole Phillips

Now that you’ve secured financing, assembled a team, and prepared for buying a home, the next step is to find the home.

Tweet

Having a contractor on your team will prove to be an incredible investment for many reasons. A general contractor can help you perform basic home upgrades like installing lighting fixtures all the way up to complex construction like building an addition or converting a half bath into a full. It’s important to have a relationship built with a contractor prior to needing one to do the work.

Why Do I Need a Contractor?

• Every home needs some work done, even if it’s something as minor as patching old nail holes or cleaning carpets.
• Contractors can usually recommend a good property inspector.
• Contractors can inspect the property you are looking to buy before you make an offer. Knowing how much the repairs/upgrades will cost before making an offer can be very valuable to you. By doing this, you can price the cost of repairs and upgrades into your offer. For people who do not have construction/rehab backgrounds there are always hidden costs. You would hate to find out after purchasing a new home that what you thought was a minor repair could actually cost thousands of dollars.
• Contractors can handle almost any job. If they can’t, they can most likely recommend someone who can perform specialized tasks that they may not be familiar with doing.
• Having your contractor selected in advance can save you time after you’ve already purchased the home. Getting your repairs done quickly means you can enjoy or rent the property sooner.
• Contractors can save you money. The best contractors look for things you won’t look for and can recommend creative solutions that are either less expensive or will save you money in the long run.

Read: Investing in a Fixer Upper – Interview with a Los Angeles General Contractor

Where Can I Find My Contractor?

Just like with a Real Estate Broker, the best way to find a contractor is via referral. Ask your friends, family members, neighbors and most importantly your Real Estate Broker for referrals. If they are being referred to you by someone you know and trust, it should mean that they have worked with that contractor and had a good experience.

In addition to checking around for references you can also do research on your own online:

• Google (www.google.com) – Search for “contractors in (city name)” or “(type of work) in (city name)”. For example, “contractors in Woodland Hills CA” or “home remodel in Glendale CA”
• Craigslist (www.craigslist.org) – Check the Services section of Craigslist or use the search feature.
• Service Magic (www.servicemagic.com) – This website has a database of contractors all over Southern California. When you contact them you request the type of work you need done. They will source your request to their contractors and about 4 will contact you. It’s 100% free to the end user because they charge the contractors to be in their database. While the contractors do pay to be on there, they are researched by service magic ahead of time for added credibility.
• Angie’s List (www.angieslist.com) – An online contractor referral network. End users pay to use the site, so contractors have no control over their inclusion or exclusion. You can search for contractors here and read reliable reviews by paid members.

Other Tips For Choosing A Contractor

• This is the one team member who does not necessarily need to have an online presence for you to trust. Most contractors are sole proprietors. Most of them grew up working construction/doing odd jobs and eventually got licensed and opened their own company. While an online presence is absolutely a plus, a lack of a website or a basic website is not necessarily a red flag.
• Get multiple bids for work. Even if you know and trust your contractor. This will keep him honest. You may be surprised how much bids can differ.
• Ask for References. Any good contractor will happily provide them.

Now that you have your Contractor, the next member of your real estate team to choose is your Escrow Officer.

This blog post is a chapter from our upcoming e-book entitled Southern California Real Estate: How To Pay Significantly Less Than Your Neighbors & Avoid Costly Mistakes. Click here to reserve your limited edition FREE COPY.

Tweet

Now that you’ve obtained a letter of Pre-Approval from your lender and set your investment criteria, the next step is to choose your real estate broker.

Should I Use a Real Estate Broker?

There are many things to consider when purchasing real estate.

• Is one type of real estate better than another?
• Will I have a more difficult time obtaining financing on a condo or a house?
• Is there a market that prices are getting ready to go up?
• Is there a market with a particularly hot rental market?
• How much should I offer on a property if I really want it?
• What if my offer is accepted and I don’t end up obtaining financing?
• What if I change my mind after my offer is accepted because I find out the house needs too much repair work?

These are tough questions that if left unanswered could lead to costly errors & mistakes. If you work with a broker, they can answer and research any questions you have and provide additional important questions to ask the seller. How many times have you thought you knew something about a subject, then upon speaking with a professional, you at some point said, “Good question, I hadn’t even thought of that!”?

The reasons you should work with a real estate broker are endless. Buying a home without representation is not a smart decision. When making such a sizable investment, you MUST work with a professional who is accountable for acting within your best interest. A real estate broker lives and breathes real estate every day and will provide the expertise you need.

One of the best ways to buy a home for significantly less than your neighbor is to avoid costly mistakes. One of the most costly mistakes a person can make is to try and do it without representation.

What If I Don’t Want to Work with a Real Estate Broker?

If you are a buyer, you have nothing to gain by choosing not to work with a broker. It’s free! Who would turn down free expert advice? If you are a seller, the cost to you is the commission you pay the broker for selling your home. However, if you are a seller and opt out of listing with a broker, you are still likely going to pay a buyer’s broker. The majority of homes are purchased by a buyer who is represented by a buyers agent. If selling your home For Sale By Owner (FSBO), you have to cooperate with buyers agents and offer 2-3% or they will have no incentive to show your home. A good broker easily pays for himself, and then some!

Read: Should I Attempt to Sell My Home For Sale By Owner FSBO?

What Should I Look for in a Real Estate Broker?

You should consider at least the following when choosing a real estate broker to work with.

• Where do I want to buy? – Choose a broker who works in the area you are looking to buy. A broker who lives or has an office where you want to buy a home should be very well versed in that area. It’s important to find someone who is an expert in that particular sub-market. Quiz them. What is happening in this market? What are prices doing? What is inventory doing? How is the local economy? What are the main employment drivers?
• Are they the expert they say they are? – If they claim to be an expert in the area, ask questions and have them prove it. How many transactions did they do last year in that area? Do they have testimonials? We are seeing many brokers calling themselves short sale or REO specialists, however, we find that many of them haven’t done many or any REO or short sale transactions.
• Compassion, Patience, Sharing and Knowledge – Your broker should never pressure you unnecessarily. They should understand that you are making a big decision in buying a home and sympathize with you. More importantly, your broker should educate you. Brokers should not tell you to do something without explaining why. CAPropertyFinder.com’s goal is to educate our clients which is why we are writing this book. Give a man a fish, he eats for a day. Teach a man to fish, he eats for a lifetime. We believe that information is the most valuable resource, and we like giving it away for free.
• Communication – How important to you is it that your broker pick up the phone when you call? Return your e-mails in a timely manner? Are available to visit homes and open houses with you? Most likely, very important. A readily available broker is essential to buying a home because homes are going fast! Wouldn’t you hate to miss out on an opportunity to make an offer because your real estate broker doesn’t call you back for 2 days? At CAPropertyFinder.com, we pride ourselves on the fact that we pick up the phone when you call! We keep you up to date on our home search efforts. We don’t just TELL you we’re working hard to find you a home.. we SHOW you. And most importantly we are there for you when you need us.
• Online Presence – The entire world is becoming more and more Internet based. Real Estate is certainly no different. In fact, even more so than many industries, real estate is taking place online. The MLS is Internet based, buyers and sellers can do their own online research better than ever with sites such as CAPropertyFinder.com, Zillow.com and Trulia.com. Entire transactions are even completed now without people meeting face to face. If the broker you are considering does not have a powerful online presence, it’s a big red flag.

Read: Online Location Matters Too in Real Estate

What Should I Expect Out of My Real Estate Broker?

Real Estate Brokers are Full Service! Do not just expect full service.. demand it! One of the most common things buyers do now is perform all of their own research. Listing brokers get calls daily from buyers who find them on CAPropertyFinder.com or Zillow.com or a similar site. There is nothing more aggravating than having a buyer call up and spend a considerable amount of time with them over the phone only to find out that they are already working with a buyers broker.

If you are working with a buyers broker, the BROKER should do all the research for you. Your broker should send you every available home that fulfills your investment criteria. Every time a new property comes on the market that fulfills that criteria, they should be immediately sending you those homes too. You should not be able to find anything online that your broker hasn’t already sent you.

If you work with the right broker, you do not need to waste your time (a costly mistake) on searching for homes, that’s what the broker is there for. Instead you spend your time living your normal life, preparing to move, preparing for you loan, and touring properties with your broker. Sure there is nothing wrong with doing your own online research, in fact, you should. That’s why we provide such a powerful California MLS Search on CAPropertyFinder.com However, if you find a home your broker has not already sent you, send the home information to your broker. They may be able to find out much more and better information about that home than you could on your own.

Read: Working with a Buyer’s Agent 101

How Can I Get Help Choosing the Right Real Estate Broker for Me?

CAPropertyFinder.com specializes in setting buyers and sellers up with the best brokers for them. We interview every broker before agreeing to work with them. We drill them on their expertise in local markets and on their experience in the industry. Our brokers are easy to work with, experts in local markets, and have completed many transactions to give them the foundation they need to work with you. Call or email us today, we are here to help. 1-800-287-1808 or homes@capropertyfinder.com.

Your friends, neighbors and family members are great resources too. Perhaps someone living in the neighborhood you are looking to move to knows a great agent. Real Estate Brokers thrive on referrals. A referral means someone has had good experience with that Real Estate Broker; they are at least worth following up on.

Now that you’ve selected your Real Estate Broker it’s time to Choose your Contractor.

Tweet

“None of us is as smart as all of us.”
- Ken Blanchard (American author and management expert)

A football quarterback is nothing without his offensive line. Any good quarterback knows there is only so much he can do without his team who provide the strength, support, and individual expertise needed to win games. In real estate, it’s equally important to put together your team if you want to avoid making costly mistakes.

Each avenue of real estate requires certain expertise. You’ve heard the expression “Jack of all trades, master of none.” This is especially true in real estate due to how quickly things change with laws, financing programs, building codes, and individual markets. Learn below about the people involved in real estate transactions.

Real Estate Team Members:

Real Estate Agent / Broker

Other than yourself, your real estate agent is the most important member of your team. He or she can provide the most broad range of expertise because they are involved in every aspect of your transaction. Based on their experience working with previous buyers, a good agent should be able to refer other qualified members of your team which makes your job a little easier.

Loan Officer / Mortgage Broker

The job of a loan officer is to help you obtain a loan to purchase your future home. Loan officers are the intermediary between lenders and borrowers. They can work directly for banks and credit unions, or as independent mortgage brokers.

Read: Choosing Your Loan Officer

Escrow Officer

Escrow officers are independent third party companies whose job it is to ensure that property titles are clear, outstanding debt is paid, and the buyer and seller have fulfilled their obligations according the real estate agreement. Escrow Companies hold the funds in an independent Escrow Trust Account and disburse the funds upon a successful close of escrow based upon the instructions provided. Escrow provides a level of safety to all parties involved and ensures that all parties perform their obligations under a Purchase and Sale Agreement.

Read: What is Escrow? Interview with Escrow Officer Jason Annotti

Read: California Escrow OFficer – Interview with Nicole Phillips

Home Inspector

A certified home inspector’s job is to perform a thorough visual inspection of your home. If the home has pest infestation, a cracked foundation, or a problem with the electrical system, a home inspection will reveal it, potentially saving you thousands. On the other hand, if the home is in sound condition, you can rest easy, knowing its been thoroughly inspected by a professional.

Read: Why You Need A Home Inspection

Appraiser

An appraisal is the process taken by a licensed, professional, third-party appraiser to value a piece of real estate. Appraisals are done for many reasons, but typically the purpose is to find a fair market value. The most common type of appraisal is done in order to value the property to secure a loan for a new purchase. You are not able to choose your appraiser when they are hired by your lender. You may, however, privately employ an appraiser on a home you want to purchase which can be a valuable second opinion. Often times your real estate broker will have the experience to help you adequately judge the value of your home.

Read: What is a real estate appraisal?

Read: Market Value vs Tax Value vs Appraisal Value

Title Representative

Your title representative will be involved in researching the property’s chain of title and placing a title insurance policy on it. Title Insurance will help protect you against fraud as well as hidden liens or easements on title. It is a standard cost and is based on the purchase price. Depending on purchase price, title insurance policies can cost anywhere from $500 for a property under $100,000 to several thousand when a purchase price is in the millions. A good title representative will help compare available policies and choose one that best suits your needs.

Read: Buying a Home? Better Consider Title Insurance and Title Search

Contractor

Having a contractor on your team will save you a lot of money and headaches. A general contractor can help you perform basic home upgrades or complex construction. A contractor can also provide an essential opinion about a home BEFORE you buy it so that you are prepared for the home improvement expenses you will incur.

Read: Investing in a Fixer Upper – Interview with a Los Angeles General Contractor

Real Estate Attorney

A real estate attorney can protect you from costly mistakes, errors, and other problems that could lead to litigation or expensive legal action. An attorney can also help you set up a living trust after your investment so your intended heirs may inherit the property in the event of your unexpected death. In most cases, your real estate broker will be able to handle the complexities of your real estate transaction, however, even the best brokers occasionally seek the legal advice of a competent real estate attorney.

Accountant

Your accountant is involved in all aspects or your finances and you should include them throughout the process of purchasing real estate. An accountant can provide an educated opinion on how much you can afford to put down in cash and how much to finance. They can also advise you of tax laws and loopholes that could potentially save you thousands of dollars.

Additional Team Members

In addition to the line-up above, you will also potentially find yourself working with a termite inspector, mortgage insurance agent, mold inspector, and more. Your real estate agent should be able to provide you referrals for most of the team members above.

Now that you’ve learned about the members who will make up your Real Estate Team, the next step is to choose your real estate broker.

Tweet

Earlier this year, we interviewed Jason Annotti about escrow–an area of real estate that is foreign to a lot of people. Since we always like a “second opinion”, we sent the interview to Nicole Phillips, an Escrow Officer with Advantage Title, Inc in Westlake Village, CA, to see her take on our questions.

What is escrow?

Escrow is the neutral third party between the buyer and seller in a real estate transaction. We hold the funds to pay the bills at the close and affiliate the loan document signing.

How do you find an escrow officer?

The easiest way to find an Escrow Officer is through your Real Estate Agent. Your Agent usually has a team of affiliates assembled to assist in making the transaction as smooth as possible for everyone involved. You can of course find a Title and Escrow company online.

How do you choose the right escrow officer for you?

It’s hard to know up front if you are choosing the right Escrow Officer. We do the same job. There are officers that of course have been in the business longer and have more experience and knowledge.

Are there any escrow caveats, or anything people should be on the look out for?

Not really.

What should buyers and sellers have to be prepared to open and more importantly close escrow?

Current ID for all involved. For Buyers, funds to close, do the research in advance to determine how you will want to hold title to the property.

What is your outlook for the real estate market in 2012?

It’s good. The market will never be what it was, but there are buyers and with the rates as low as they are the market is moving. I am encouraged.

Thank you for the interview Nicole. For escrow services, you can contact Nicole Phillips at (805) 367-5629 or nicole.phillips@title365.com.

Tweet

Setting your investment criteria is one of the most important things you will do when preparing to purchase a home. However, it’s vital that you understand that your criteria is only good if you stick to it. You must throw emotion out the door if you are going pay significantly less than your neighbors.

Sometimes there will be multiple offers on properties which can create a bidding war. When you’ve reached your mark, STOP. Do not “fall in love” with a home based on a feature it has; you can always add it to the house you ultimately buy. Never be afraid to walk away. Not walking away can be a costly mistake. As Kenny Rogers said, “You got to know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run.”

What can you afford?

If you are getting a loan, your lender has already determined how much you can afford. Your Pre-Approval letter will state that they say they will loan you a percentage of the purchase price (Loan to Value or LTV) up to a certain price. Let’s say for example your lender approved you for an 80% loan to value loan on a $100,000 purchase price. This means the most they are willing to give you is $80,000, up to 80% of the purchase price of the home. Does this mean $100,000 is the max you can pay? No. It does mean that if you go over that price, the % of loan (or leverage) will go down. If you pay $110,000, the lender will not give you $88,000 (leaving the remaining $22,000 for your cash). They will instead give you only the $80,000 (leaving the remaining $30,000 for your cash).

Choosing the Area

Choosing the area is very important. Real Estate values vary from location to location. You cannot expect to get a house in Santa Monica for the same price as you would in Lancaster. They are different markets, so knowing your price range can guide you to the areas that fit your criteria. In determining an area, factor in how far away it is from your work or if its an investment how far away your primary residence is. Make sure you are prepared for the commute or the ability to check on or service the property if you rent it.

Read: Southern California Traffic

Then narrow down your geographic criteria. Consider several key factors in determining your area:

• Proximity to schools
• Proximity to hospitals
• Freeway access
• Proximity to dining and retail
• Pride of ownership in the neighborhood
• Crime Rates in the Area
• Proximity to Parks and Recreation
• Proximity to Business Centers

Read: Homes for Sale Near Top Elementary Schools

Read: Homes for Sale Near Top Middle Schools

Read: Homes for Sale Near Top High Schools

Read: Homes for Sale Near Top Hospitals

Do you want a house or a condo/townhome?

Determining whether you should get a condo can depend on many things. Ultimately, there are benefits to both, so you need to make sure you make the right choice for you. In most markets, more homes sell each month than condos. This is because there are flat out more homes than condos for sale in any given area. Also, in most markets, this is a function of there being more demand for homes than condos.

Some things to factor into your decision here are:

• Do you want a yard? You can get a yard with a home, but then you also have to maintain a yard. They are fun to play and entertain in, but some condo communities also offer green space, bbq’s, playgrounds, basketball or tennis courts, pools, and more.
• Costs – Most of the time, a similar quality condo will be cheaper than a home in the same area. This is for a lot of reasons; size, multi-family living vs more privacy, building vertical, etc. So you can typically expect to save on the price with a condo. However, condos have HOA fees to pay for common area expenses. In some HOA’s this can be several hundred or even thousand per month. Make sure you check HOA fees before buying a condo
• Pets – Some condos do not allow pets, or restrict breeds. If you have a pet, make sure yours can live in the condo you may be considering

Read: Should I Buy a Condo or a House

How many bedrooms and bathrooms?

This might seem obvious but in actuality, multiple setups could work for you. For example, do you need two full bathrooms or are you willing to settle for one full bath and one half bath if you find the right home at the right price? Is the extra bedroom for your home office crucial, or would a dedicated work space in a den, loft, basement, or garage also work for you? Although you should try and define your investment criteria as best as possible, consider a flexible living setup.

What amenities can you not live without?

Decide what are your wants, needs, and must-have’s before you’re in a position where you want to make an offer. If you wait too long to figure this out, you might be too late to make an offer, depending on the competitiveness of your market.

Read: Don’t Be Afraid to Act or You Might Miss Out on a Great Home

What Returns are you Seeking?

If you are buying a home to live in this section should be based on your enjoyment of the home. If this is your dream home, that should be factored into your buying decision. Most people are willing to splurge if it’s their own home. There is value in your happiness. Follow the tips in this book and make sure you get a good deal.

If you are buying an investment home you need to consider the returns you seek. How much are you looking to make? Are you trying to merely break even every month and look for your returns when you sell the home? Or are you hoping to rent it each month and cash flow? Do a rent study before purchasing. Survey several similar properties in the area. Try to stay in a 1-2 mile radius of the property, survey properties of similar age and condition, and properties with similar amenities (pools, green space, fitness, etc). Determine what these comparables are renting for per sq ft by dividing the rent by the size of the property. Then apply that rent per sq ft to the size of the property you are looking at.

You can calculate your monthly payment based on a certain price, interest rate and loan term. Then use the rent study to determine the monthly rent you can hope to bring in. Do not forget to factor in other monthly expenses like HOA Fees, Real Estate Taxes, Repairs/Maintenance (leaky faucets, light bulbs, filters, etc), Long Term Capital Improvements (Major components – New Roof, AC, Flooring, etc).

Make sure your rent can cover all expenses and the monthly loan payments. The money left over there is your cash flow or return. Determine how much money you need to make to offset anything you could be doing to invest; such as buying stocks or bonds.

Stick to the plan

Always remember, once you determine your investment criteria, stick to it! A plan only works if you follow it.

Tweet

Are you a homeowner in California? Is your home underwater? Are you struggling to make your monthly mortgage payments? Well good news was just released for you!

Fannie Mae (FNMA) and Freddie Mac (FHLMC) are on board to play a role in the California Housing Finance Agency’s “Keep Your Home California” program. The whole goal of the program is to reduce the principal balance for homeowners who are underwater on their mortgages.

Both Fannie and Freddie made the announcement that they would do principal reductions, but they’d been reluctant to do so in California because officials of the “Keep Your Home California” program required that banks match taxpayers funds for principal reductions. Principal reductions are not write downs, the bank does not just forgive this money. When a reduction does occur, the principal is actually paid down using funds from programs like “Keep Your Home California”. Until now, banks had to match those funds in California, but now that requirement has been lifted. This saves the banks billions of dollars by not having to match the reduction.

The funds that come from the Federal Government to reduce principal is from a fund named the “Hardest Hit Fund” or HHF. This fund was set up originally by the US Treasury to help homeowners in states where housing prices had dropped at least 20%. It is being projected that before the Hardest Hit Fund program expires in 2017 that more than 459,000 homeowners will have received some help.

Subscribe to our RSS Feed, Like us on Facebook, and Follow us on Twitter for more Real Estate News Updates.

Tweet

Are you a licensed real estate agent in Southern California looking to hang your license with an established real estate brokerage firm? We are looking for top-notch agents to join our team.

NOW HIRING AGENTS

Our recent growth in the Greater Los Angles Area means we are in need of new agents to cater to our expanding client base. If you are a licensed, practicing Realtor in California with an impeccable reputation and a history of successful relationship marketing, we are interested in getting to know you. Or if you are a newly licensed agent with a desire to join a team that will teach you the ropes and help you get started in your new career, you’ve come to the right place.

Whether a new licensee or an established Realtor, we don’t just throw you out into the field and expect you to do it all yourself. Unlike our competitors, we are very instrumental in creating new business and building client relationships for our agents.

One thing to note – we don’t hire just anyone with a license. We only want the best agents, and agents that will fit in with our team and our beliefs in client service. (See Our About & FAQ pages for more on our philosophy.)

Interested in joining the team?

Call 1-800-287-1808 or use the contact form below. You may also call the owners directly. You can reach Scott Mehlman at 310-430-6361 or scott@capropertyfinder.com. You can reach Paul Drecksler at 828-273-3031 or paul@capropertyfinder.com

Tweet

What does a loan officer do?

The job of a loan officer is to help you obtain a loan to purchase your future home. Loan officers are the intermediary between lenders and borrowers. They can work directly for banks and credit unions, or as independent mortgage brokers.

Barry Horiuchi, a loan officer for Wells Fargo Home Mortgage in Los Angeles, California explains:

“The loan officer plays arguably the most important role in a real estate transaction with regards to closing escrow on time — the loan officer is the one responsible for telling you up-front whether or not the financing terms can be provided as requested, setting up the proper expectation for what kinds of paperwork you will need to provide during the process in order to qualify, and communicating with all parties in the transaction as to the status of the financing. A good loan officer needs to have knowledge of a wide variety of different loan products and guidelines while also being extremely detail-oriented and having excellent communication skills.”

Read the full interview with Barry Horiuchi at: Mortgage Questions – Ask a Wells Fargo Loan Officer

How to search for and choose a loan officer

Due to how close a role your loan officer will play in your real estate transaction, it’s important to build rapport and a good working relationship with the lender you choose. You should ask friends and coworkers for referrals and interview several loan officers before making a decision on who to work with. Another good place to start is your bank and your employer’s bank since a relationship is already established. You can also search Google for “loan officers” in your area because a credible loan officer will have a visible online presence in today’s day and age.

The loan officer you choose should be easy to talk to, readily accessible, and have a positive history of successful loan approvals. A successful loan officer has good relationships with their lenders and will look out for your loan from beginning to end, which is important to both of you.

Bill Rayman, a mortgage broker in Los Angeles California explains, “A broker is only going to get paid if we make a transaction happen. We have a license and a fiduciary responsibility to our clients.”

The Interest Rate

Bill advises not to get too hung up on the interest rate. “If you’re looking to buy a house, frankly I don’t think the interest rate should be something you should make your primary concern. I do the math for people and point out that on a $300k loan, the difference on 1/8th point is about $20/month. Maybe your neighbor got 4 1/8 and you were quoted 4 1/4… Sure, in dollar terms it’s measurable, but it’s not the reason to buy or not buy a house. You should be aware of your priorities and react accordingly.”

Read the full interview with Bill Rayman at: Expert Advice from a Los Angeles Mortgage Broker – Interview with Bill Rayman

Now that you’ve chosen a loan officer to work with and Pre-Approve financing, the next step is to Set Your Real Estate Investment Criteria.

Tweet

Like most buyers, you will probably be paying for your home using financing of some sort. Before determining your price range and searching for homes, you need to know if you will be able to get the loan you desire for the amount you require.

If you are buying a home using financing, the first thing you should do is get Pre-Qualified or Pre-Approved.

Pre-Qualification

Pre-Qualification is when a lender evaluates the credit history of a potential borrower to determine an estimated range that the person can afford to borrow. Most lending institutions or mortgage brokers offer free Pre-Qualification. Either in person or over the phone, you will give the lender information about your down payment, assets, debts and income. The lender will then determine an estimated loan amount you could potentially qualify for. The lender will not verify your income and they will not check your credit. A Pre-Qualification is NOT A COMMITMENT to give you a loan and is the bare minimum of what you should do prior to searching for homes.

Pre-Approval

A Pre-Approval is a tentative commitment to give you a loan in a certain amount. For a Pre-Approval you will give the lender the same types of information as you would for a Pre-Qualification, only this time they will verify all of the information you provide them. The lender will contact your employer to verify your income and check your credit to see about your debts and history. A Pre-Approval is much more desirable to potential sellers as they can rest assured that at a minimum you can qualify to purchase the home.

The Pre-Approval will be conditional. This means that they approve you based on certain criteria. The most typical are:

• An appraisal performed on the property that is satisfactory to the lender
• The lender reviews and is satisfied with the purchase contract
• A valid title review is performed and title insurance placed in effect
• The final approval be given by the lender’s underwriting department

Which should I do?

If serious about finding a home, always go the Pre-Approval route. You will most likely have to pay an application fee, but that small fee goes a long way to strengthen your offer. Many people think financing does not affect the offer and that the only thing to consider is price. This is far from the truth. Real estate financing affects every offer.

Why is this so Important?

If you make an offer on a property that is contingent upon financing, but you do not have a loan Pre-Approval or even Pre-Qualification the seller has no cause to actually believe that you can close. Unless you can prove substantial proof of funds (i.e. having more than 20%, probably closer to 50%), the seller basically has to take your word that you can qualify. They will not know if you have a bankruptcy or a foreclosure on your record which may preclude you from getting a loan. The seller risks turning down a more qualified offer or losing time (and therefore money) opening an escrow with a buyer who cannot close.

Read: Financing – It Affects Your Offer

http://capropertyfinder.com/reo-financing-it-affects-your-offer/

Submitting an offer with financing

Send a copy of all documents when submitting your offer with financing including a copy of your Pre-Approval letter, proof of all funds needed to close, and a copy of your credit score.

Now you know the differences between and the importance of Pre-Qualifications and Pre-Approvals, it’s time to make this happen. The next step is Choosing a loan officer.

Tweet