Zephyr Real Estate Buyer's Guide. A valuable resource to guide you through your purchase of Marin real estate

Transcription

1 Zephyr Real Estate Buyer's Guide A valuable resource to guide you through your purchase of Marin real estate

2 The Flow of Real Estate Transactions SELLERS BOTH PARTIES BUYERS Present comparble market analysis Establish price Sign listing agreement Prepare for showings Enter into MLS Schedule open houses/showings Advertise/promote Present/review offer(s) Learn about market conditions View properties Write offer with agent Meet to discuss needs, parameters, approach, etc. Commit to agent relationship Qualify for financing Negotiate terms - agents negotiate on behalf of clients Accept/ratify sales contract Open escrow Deposit earnest money Provide property disclosures [Disclosures, inspections and appraisal period] Obtain necessary property inspections Process loan (10 days) 15 Days [Inspection period] Search title history Order/review Preliminary Title Report Remove inspection & conditions contingencies Increase deposit Remove loan contingency (20 days) Negotiate further, if necessary - agents negotiate on behalf of clients Sign escrow documents Receive cash proceeds Rent back or move Fund loan Record title at City Hall Close escrow Turn utilities off/on Get keys & move in!

3 Your Relationship With Zephyr Our goal is to work together as a team to achieve the most successful results and to provide the most rewarding home buying experience. A mutual commitment When you select a Zephyr agent, you can expect to receive the finest comprehensive services available, backed by one of the most respected names in San Francisco Bay Area real estate. When you work with Zephyr, you join our growing family of satisfied clients. You gain access to all the expertise and resources of the entire company, even after you take title to your home. Whether you need a referral to a reliable plumber or an excellent handyman, Zephyr Real Estate is here to help. Zephyr expands your choice of properties With your commitment to a Zephyr agent, you are broadening your options. As members of the Bay Area Real Estate Information Services Multiple Listing Service (BAREIS) and the San Francisco Association of Realtors Multiple Listing Service (SFARMLS), Zephyr agents have access to the listings of all other agents and real estate companies. Your Zephyr agent can inform you of properties for sale by owner and some properties that are not yet on the market. Zephyr agents have an outstanding reputation in the San Francisco real estate community. The excellent relationship and network we have established over the past 30 years with REALTORS from other top firms result in quicker and smoother transactions. The agency agreement As a buyer, you do not pay any fees for your agent s services; the commission is paid by the seller. Because your agent will be investing many hours of time and making available to you all of our expertise, your loyalty is of the utmost importance. As you and your Zephyr agent begin the process of locating a property, a buyer/agency relationship is established in which Zephyr has a fiduciary obligation to you with a duty to provide the utmost care, integrity, honesty and loyalty. In certain circumstances, Zephyr may become a Dual Agent, representing both you and the seller. When acting as a Dual Agent, Zephyr has the same obligations of care, fairness and honesty to the seller as to the buyer, but may not disclose to a buyer that the seller will accept a price less than the listing price or to the seller that a buyer will pay a price greater than the price offered. Dual Agency will occur if you wish to purchase a property which has been listed by any Zephyr agent. At the time an offer to purchase a property is prepared, you will receive a form called a Disclosure Regarding Real Estate Agency Relationships reiterating the different types of agency relationships. At that time, you will know whether Zephyr is acting as a Buyer s Agent or a Dual Agent.

4 Powered by TCPDF ( Louca Bornemann Realtor with Zephyr Real Estate From canvasser and world traveler to landscaping specialist and hospitality maven, Louca's life experiences have guided him to discover, and thrive in, the real estate industry. Born on La Cote D'Azur of southern France, and raised in the Bay Area, Louca's unique combination of European influence and local knowledge have enabled him to offer a well-rounded perspective to an array of clients. After completing high school in Mill Valley, Louca moved to Colorado to attend CU Boulder where he studied interpersonal and organizational communication, while he worked various jobs to support himself and pay tuition. He later returned to Marin where he started his own landscaping business, Marin Landscaping. Later, he decided to follow a bigger calling in his life: travel. He packed his bags and set out on a journey through India, Southeast Asia, and Europe, which ultimately aided him in developing a strong confidence in his ability to problem solve, communicate, and adapt to his surroundings. When his travels were complete, Louca returned to Marin County to begin the next chapter of his life. As he worked up the ranks to management in the hospitality industry, Louca fostered a deeper skill set for customer service and ambiance control. His attraction to the interpersonal side of the business combined with his love for the nature and community of Marin, forged the perfect entry point into the Bay Area real estate scene. With his deep knowledge of the local communities, highly developed personal skills, and technological expertise, Louca provides a sharp marketing advantage for his clients. He stays closely connected to his Millennial spirit and perspective, entrepreneurial and artistic vision, and his pure love for working with people to guide him in providing a well-lit road to his clients' real estate dreams. Equally matched by his round-the-clock work ethic, pure motivation and complete transparency, Louca is a wholehearted REALTOR. Louca Bornemann Tel loucab@zephyrre.com

5 Financing Your New Home There are many critical factors involved in determining the best way to finance your home. Working with the right mortgage professional is key. Determining the right price range The first step in the buying process is to determine the price range. You will need to consider how much cash you are prepared to invest in your home and how much money you will need to borrow. Determining cash you will need Your cash on hand will have to cover both the down payment and any closing costs associated with the purchase. Closing costs vary significantly based on the terms of any loan you may obtain, but are generally 1% to 2% of the purchase price. There are also moving expenses to remember. You should also take into consideration how much your property taxes and insurance will cost in addition to a monthly mortgage payment in determining the right price range. talk to your accountant and/or financial advisor to discuss your cash needs and your tax advantages. Pre-qualifying for a loan An offer to purchase a property is given greater consideration by a seller when the offer is accompanied by a pre-qualification or a pre-approval letter from a reputable lender or mortgage broker. This gives assurance to the seller that you will be able to get financing and will not tie up the property needlessly. Potential lenders will inquire about 6 critical factors: 1. Income 2. Available cash 3. Credit history 4. Debt level 5. Employment history 6. The price of the property you wish to purchase Determining additional costs Your agent will help you estimate your purchasing power and costs, but we highly recommend that you Zephyr can recommend several lending institutions from which you may obtain pre-approved financing.

6 Pre-Qualification Worksheet This worksheet offers a basic idea of how qualification works for a single family, owner-occupied property. Total Gross Monthly Income 1. Combined gross household annual income Ð 12 = $ per month 2. Other annual income Ð 12 = $ per month For self-employed borrowers, use pretax income after expenses. = $ per month Total Long Term Monthly Debt 3. Car loans, student loans, installment loans (11 months or more) = $ per month 4. Other obligations (e.g., alimony) = $ per month 5. Charge card totals (minimum monthly payments) = $ per month Total = $ per month Lender Ratio (Complete next section, Total Monthly House Payments, first if you have chosen a house) 6. Most lenders will allow 33% of the total gross monthly income to go toward house payments. Total Gross Monthly Income x 33% = $ (Amount most lenders will allow for PITI*) 7. Most lender guidelines will allow no more than 38% of the total gross monthly income to go toward house payment and the total long term monthly debt. Total gross monthly income x 38% = $ (Amount most lenders will allow for PITI + Long-Term Debt) Total Monthly House Payments Sales Price = $ (Subtract down payment %) = $ Loan Amount = $ Calculate PITI*: Loan %* Interest Rate Ð 12 = $ per month (See Home Loan Payment Guide on following page) Taxes (sales price x.0125) Ð 12 = = $ per month Estimated Insurance (loan amount x.0035) Ð 12 = = $ per month PITI* = $ per month Total Out of Pocket Expenses Down payment = $ Closing costs (approximately 2% of sale; impound accounts may be required if less than 20% down payment) = $ Total = $ *PITI = Principal + Interest + Taxes + Insurance

7 Home Loan Payment Guide A handy reference to chart monthly loan payments at various loan amounts and interest rates. The monthly loan payments below represent initial principal and interest amounts for a 30-year loan. Don t forget, you will have other housing costs, including taxes, insurance, and homeowner s fees (for condominiums). Payment amounts will change if you have an adjustable rate loan. This is not a loan commitment or a commitment to rates or fees. Annual Percentage Rate (APR) figures are not included. Your monthly loan payments: Loan Amount Interest Rate (%) $300,000 1,347 1,520 1,610 1,703 1,799 1,896 1,996 2,098 2,201 $400,000 1,796 2,027 2,147 2,271 2,398 2,528 2,661 2,797 2,935 $500,000 2,245 2,533 2,684 2,839 2,998 3,160 3,327 3,496 3,669 $600,000 2,694 3,040 3,221 3,407 3,597 3,792 3,992 4,198 4,403 $700,000 3,143 3,547 3,758 3,975 4,197 4,425 4,657 4,895 5,136 $800,000 3,592 4,053 4,295 4,542 4,796 5,057 5,322 5,594 5,870 $900,000 4,041 4,560 4,831 5,110 5,396 5,689 5,988 6,293 6,604 $1,000,000 4,490 5,067 5,368 5,678 5,996 6,321 6,653 6,992 7,338 $1,250,000 5,613 6,334 6,710 7,097 7,494 7,901 8,316 8,740 9,172 $1,500,000 6,736 7,600 8,052 8,517 8,993 9,481 9,980 10,488 11,006 $1,750,000 7,858 8,867 9,394 9,936 10,492 11,061 11,643 12,236 12,841 $2,000,000 8,981 10,134 10,736 11,356 11,991 12,641 13,306 13,984 14,675 $3,000,000 13,471 15,201 16,105 17,034 17,987 18,962 19,959 20,976 22,013 $4,000,000 17,962 20,267 21,473 22,712 23,982 25,283 26,612 27,969 29,351 $5,000,000 22,452 25,334 26,841 28,389 29,978 31,603 33,265 34,961 36,688

8 Setting Priorities: Your Vision It is important to be cognizant of your lifestyle to help set priorities in your property search. Your agent will help guide you in this process. The vision of your new home In the initial buyer meeting, Zephyr will help you establish a search process to find a property that suits your lifestyle and needs. We will discuss price and neighborhood. We will take the time to analyze how you live, and where in the house you spend the majority of your time, in order to establish lifestyle priorities. For example, if you work at home, then a space for an office may be essential. If you entertain often you may want larger public rooms. If you are a gourmet chef, a well-appointed kitchen is important. Create a wish list, then prioritize Let your imagination run when creating your initial list of parameters. Then prioritize your list carefully. You may have to make some trade-offs between the various items on your wish list. Questions to consider Why have you decided to move? When would you like to move? How long have you been looking? What do you like most about your present home? What do you like least about your present home? What are your hobbies and special interests? What neighborhoods do you like? What style of property would you like? (e.g., Victorian, Marina, contemporary) What condition? (e.g., fixer upper, new construction) What features are you looking for? Property type Fireplace Bedrooms/baths Garden/yard Size Parking/garage Separate dining room Climate Eat-in kitchen Transit Play area Shopping View Is your home currently on the market? How long? At what price? Are you the sole buyer or do you have partners? Are you ready to purchase now, or do you have to sell a property, let a lease expire or wait for any other reason?

9 Looking for Properties The right property may be found online, through agent networking or another source. Establish search parameters and a method for viewing properties. Properties on the market We will begin by viewing properties already on the market. This will help both you and your agent define what you like and dislike and help your agent select the most appropriate properties to show you in the future. Whenever possible, your agent will preview properties to make sure they meet your needs before showing them to you. Your agent will arrange for you to view new listings as they come on the market. You may need to make yourself available on short notice in order to secure desirable or well-priced properties. Searching for properties online When you register at ZephyrRE.com, you gain access to a powerful property search that includes the entire MLS and allows you to save searches and favorites, and sign up for new match alerts by . Properties off the market Our favorable reputation in the brokerage community allows us to learn about properties before they are publicly marketed or even listed on the MLS, both at Zephyr and throughout the San Francisco Bay Area. Sunday open houses You may wish to go to Sunday open houses on your own. Please tell the agent holding the open house that you re working with Zephyr and give him or her one of the business cards your Zephyr agent has provided you. Brokers tours Each Tuesday, new property listings are open to agents and brokers for viewing. If your agent finds a property that is appropriate for you, he or she will provide you with the address and arrange for a showing at your earliest convenience. How to look at a house Each time you look at a property, compare that property to your search parameters. If a specific home falls short of your desires, consider whether you can alter the home to make it acceptable. Some features are impossible to change, such as location, but others can be changed or modified by painting, remodeling or making structural alterations. Questions to consider Are there any recent inspection reports? The seller may have a recent pest control or general contractor s inspection report available for review. What is the condition of the plumbing, electrical system and the roof? If these systems are old, the cost to repair or replace should be considered in the terms and conditions of your offer. What items of personal property are included in the sale? Appliances that are not built-in, such as stoves or refrigerators, may not be part of the sale. Are there any signs of dampness or poor drainage? These conditions are often difficult to find and expensive to correct. When were improvements made and were they done with permits? Many properties in Marin have had improvements or additions completed without the benefit of permits and may not comply with city or county building and zoning codes. Your agent can arrange to obtain a full disclosure package from the listing agent.

10 Making an Offer Your Zephyr agent will help tailor your offer to best position it for current market conditions and will advocate for you in all negotiations. Financial and other considerations Once you have identified the property that can fulfill your goals and are prepared to make an offer, there are financial, psychological and emotional considerations in structuring your offer. Is the property hot one that could invite multiple offers? If the seller counters your offer and asks for a higher price, what is your top dollar? Is the property in dire need of improvement? How motivated is the seller? How motivated are you? What contingencies have you placed in the offer? Do you have to sell a property in order to purchase this one? Are you pre-approved for a loan? Writing the offer In writing the offer, there are several factors that your agent can discuss to help you make an informed decision: Purchase price. Having viewed other properties, you will have a good idea of the value of your prospective home. Your agent can provide you with information about similar properties in the neighborhood that have sold recently. This information will help you establish fair market value and guide you to the right price. Loan contingency. If you are obtaining a loan to finance the purchase of your home, your agent will structure the purchase contract to allow reasonable time to obtain a loan from a lender of your choice and at terms that are acceptable to you. It often takes 3 to 4 weeks to obtain a loan commitment. Inspections. In the majority of transactions, offers are made contingent upon obtaining and approving inspection reports on the property by licensed professionals. This is to inform and protect the buyer about known and unknown conditions. We recommend that three major inspections be conducted: pest control, general contractor and underground storage tank inspection. It may also be appropriate to have inspections by structural engineers, roofers or other specialists. Personal property to be included. It is important to clearly identify all personal property that will be included in the sale. Presenting and negotiating your offer Your Zephyr agent will represent you to the seller and seller s agent in the best light possible to obtain an accepted offer. When presenting your offer, pre-approvals, financial statements, etc. may be appropriate. Submitting your deposit Evidence of a good faith deposit must accompany your offer. It is customary for your initial deposit to be 3% of the purchase price. This is usually a personal check made payable to a title company of your choice.

11 Summary of Closing Costs Although who pays for various closing costs is negotiable between the buyer and seller, the following is the customary division in Marin County. Closing costs are the various charges made by the lender, the title company, real estate agents and other service providers necessary to complete a transaction. The SELLER customarily pays: Real estate commission Document preparation for deed County and/or city transfer tax (depends on sales price and location) Payoff of all loans against the property Interest accrued on loans being paid off, reconveyance fees and pre-payment penalties Home warranty (if specified in contract) Any judgment or tax liens against seller Property tax proration Bonds or assessments Delinquent taxes Unpaid homeowner s dues (for common interest developments) Move-out fees (for common interest developments) Notary fees and recordation fees Third party Natural Hazard Disclosure Statement & California Tax Disclosure Report Pre-sale pest inspection fee City Resale Inspection Report (if required) The BUYER customarily pays: Title insurance premium for lender and buyer Escrow fee Notary fees Contractor s and pest inspection fees All new loan charges (points, appraisal, document processing fees, etc.) Interest on new loan from date of funding to 30 days prior to the 1st payment date Home warranty (if specified in contract) Homeowner s insurance for 1st year Earthquake insurance (optional) Private mortgage insurance (typically 2 months) if required by lender Private mortgage insurance impound account (1 year) if required by lender Property tax impound account if required by lender Move-in fee (for common interest developments) HOA document fee and transfer fee Mobile signing fee Miscellaneous charges Water conservation retrofits (if required) Sewer lateral inspection (if required) Mobile signing fee Miscellaneous charges (This list is a general guideline of charges and may not be wholly inclusive for your transaction.)

12 Methods of Holding Title It is very important that two or more individuals buying a property together review the possible forms of ownership, known as vesting of title. The method of holding title will determine who may sign various documents and future rights of the individuals in the transaction. These rights involve such matters as real property taxes, income taxes, inheritance and gift taxes, transferability of title and exposure to creditors claims. The form of ownership also has significant probate implications in the event of death. Common forms of ownership: Tenancy In Common Joint Tenancy Community Property Partnership Interest Community Property w/right of Survivorship Parties Two or more persons or entities (can be a married couple) Two or more persons (can be a married couple) provided the tenancy is properly created Only a married couple or domestic partners Only partners (more than one) Only a married couple Division Ownership can be divided into any number of interests, equal or unequal. Joint tenants have one and the same interest. Ownership interest is equal. Ownership interest is in relation to interest in partnership. Ownership interest is equal. Title Each co-owner has a separate legal title to his/ her undivided interest. There is only one title to the whole property. Title is in the community. Each interest is separate. Title is in the partnership. Title is in the community. Each interest is separate. Possession Equal right of possession. Equal right of possession. Both co-owners have equal possession. Equal right of possession but only for partnership property. Both co-owners have equal possession. Conveyance Each co-owner s interest may be conveyed separately by its owner. Conveyance by one co-owner without the others breaks his/her joint tenancy. Real property requires written consent of other spouse, and with separate interest cannot be conveyed except upon death. Conveyance of partnership property is defined in the partnership agreement. No partner may sell his/her individual interest without consent of the co-partners. Real property requires written consent of other spouse, and with separate interest cannot be conveyed except upon death. Death On co-owner s death, his/ her interest passes by will to his/her devisees subject to administration by the local Superior Court. No survivorship right. On co-owner s death, the entire tenancy remains to the survivor. This right of survivorship is the primary incident of joint tenancy. On co-owner s death, 1 2 belongs to survivor in severalty. 1 2 goes by will to decedent s devisee(s) subject to administration by the local Superior Court. On partner s death his/her partnership interest passes to the surviving partner(s) pending liquidation of the partnership. Share of deceased partner then goes to his/her estate. On co-owner s death the entire tenancy remains to the survivor. The right of survivorship is one of the primary incidents of community property with right of survivorship. Successor s Status Devisees or heirs become tenants in common. Last survivor owns property in severalty. If passing by will, tenancy in common between devisee and survivor results. Heirs or devisees have rights in partnership interest but not in specific property. If passing by will, tenancy in common between devisee and survivor results. Creditors Rights Co-owner s interest may be sold on execution sale to satisfy his/her creditor. Creditor becomes a tenant in common. Co-owner s interest may be sold on execution sale to satisfy creditor. Joint tenancy is broken and creditor becomes a tenant in common. Property of community is liable for contracts of either spouse which are made after marriage and prior to or after January 1, Coowner s interest cannot be sold separately, whole property may be sold on execution to satisfy creditor. Partner s interest cannot be seized or sold separately by his/her personal creditor but his/her share of profits may be obtained by a personal creditor. Whole property may be sold on execution sale to satisfy partnership creditor. Property of community is liable for contracts of either spouse which are made after marriage and prior to or after January 1, Co-owner s interest cannot be sold separately, whole property may be sold on execution to satisfy creditor. This is provided for informational purposes only. Specific questions for actual real property transactions should be directed to your attorney, CPA or both.

13 Navigating Escrow After your contract is ratified, the escrow process begins. Escrow usually takes days. Your agent will guide you through the process. What is escrow? The sale of real property involves transferring large sums of money and signing very important documents by you, the seller, your lender and your agent. To protect all parties involved, escrow was developed. Escrow is the process in which a third party usually your title company acts as a stakeholder for both the buyer and the seller, carrying out both parties instructions and assuming responsibility for handling all of the paperwork, distribution of funds and recording of the deed which transfers title to you. Escrow activities Escrow is normally opened within one business day after acceptance of the purchase agreement. Zephyr will coordinate the activities that take place during this process. This is a sample of typical escrow activities: Schedule and attend property inspections. Inspections are usually conducted within the first 15 days of escrow. Since most of the homes for sale in San Francisco are not new, we recommend that you obtain major inspections, even if there are prior reports on the property. It is valuable for you to attend so you can see for yourself any problems that may surface, ask pertinent questions and gain knowledge about your prospective property: Pest control inspection. A licensed structural pest inspector will examine your home for any evidence of problems such as termites, dry rot, earth to wood contact, excessive dampness, and beetle infestation. The inspector will provide you with a written re port along with a bid for any corrective work. This is a critical inspection because this type of damage can be very costly to repair. The cost of correcting pest control work normally is a negotiable item between you and the seller. General contractor. This inspection covers major systems, structural elements, safety features and code compliance. Accompanying the contractor during the inspection gives you the opportunity to ask questions and to get many valuable maintenance tips. Underground storage tank inspection. The City of San Francisco requires an owner of real property to make a reasonable effort to locate and remove abandoned underground storage tanks (UST). If a UST is found, the cost of removal may be very expensive. Other inspections may be warranted based on the findings of these inspections and on the disclosures provided by the seller. The costs of inspections are normally paid by the buyer. The results of the inspections can be points for negotiating the final purchase price with the seller. Review all disclosure materials. Sellers of residential properties and involved agents are required by law to disclose to you any information which may materially affect the value of your home. There are some exceptions to disclosure requirements, such as probate and foreclosure sales. Secure financing. During escrow, you must select a lender or mortgage broker and submit a loan application if you have not already done so. Be prepared to submit tax returns and other financial documentation. The lender will require an appraisal of the property. It usually takes 3 to 4 weeks to secure financing. Ideally pre-approval should be completed prior to a written offer.

14 Navigating Escrow (Continued) Decide on a home warranty. Either a buyer or a seller may buy a home warranty. Such plans are designed to protect you against unknown defects and failures in certain systems and appliances in your new home. Your Zephyr agent will provide referrals to companies where you can obtain information on how home warranties work, their costs and what is covered. Remove contingencies. Following satisfactory inspection and approval from the lender, you must remove your contingencies. Increase your deposit. Generally, if your deposit was less than 3% of the purchase price, after all the inspection contingencies are removed you must increase your deposit to approximately 3% of purchase price. This amount is deposited into your escrow account. Choose how to hold title. If more than one person is buying the property, you must decide upon the form of ownership. Arrange for homeowners, fire/liability insurance. This is required by your lender. Give 30 day notice. If you are renting, notify your landlord. Select a moving company. Arrange for all utilities to start. Notify the post office of your address change. Don t forget doctors, banks and others. Sign loan documents and closing papers. Your Zephyr agent will accompany you to the title company to sign documents. Deliver the balance of funds needed to close escrow to your title company within two business days prior to the close of escrow (down payment and closing costs). Funds should be in the form of a cashier s check or wire transfer. Pick up your keys to your new property. Receive your closing documents from Zephyr and the title company. Closing escrow Once you have completed your obligations according to the contract and have gone to the title company to sign your closing papers, your lender will wire the loan proceeds to the title company. Your title company will take your deed and various loan papers to the Recorder s Office to be recorded into public record. Once this happens, you are the proud new owner. Your Zephyr agent will arrange the delivery of the keys. Occasionally, sellers may request the right to rent back the property after the close of escrow, delaying your possession of the property. This usually happens when the sellers next home is not ready for them by the close of escrow. If you agree to a seller rent-back, the custom is for the seller to pay you rent to equal your mortgage payments plus property taxes and hazard insurance (PITI) on a per day basis. A written rent-back agreement will be provided.

15 Moving Checklist Moving can be stressful. Be prepared and start organizing for a smooth move with this handy checklist. Buyers often feel excited yet overwhelmed by the prospect of moving into their new home. It is a good idea to start preparing for your move as soon as you can. Collecting records, arranging your finances and notifying your loved ones takes time. Also, changing your address on your subscriptions often takes several weeks. Before you leave Address Change Notification Post office forwarding address Subscriptions (requires several weeks) Friends and relatives Bank Insurance Notify carrier of new location for coverages: Life, Health, Fire and Auto Change Over Services Gas, electric, water, phone, cable TV, garbage Newspaper Gather Records (for a new city) Ask doctor and dentist for referrals; transfer needed prescriptions, eyeglasses, x-rays Obtain birth records, medical records, etc. Obtain pet records, tags Movers Arrange for moving company. Clean rugs or clothing before moving; have them moving-wrapped. Check insurance coverage, packing and unpacking labor, arrival day, various shipping papers, method and time of expected payment. Plan for special care needs of infants or pets. On Moving Day (to a new city) Carry enough cash to cover cost of moving services and expenses until you make banking connections in your new city. Carry jewelry and documents yourself or use registered mail. Plan for transporting pets; they are poor traveling companions if unhappy. Let a close friend or relative know the route and schedule you will travel, including overnight stops; use him/her as message headquarters. Double check closets, drawers, shelves, etc. to be sure they are empty. Leave all old keys needed by new tenant or owner with Realtor or neighbor. At your new address Check on service of telephone, gas, electricity, water and garbage. Check pilot light on stove, hot water heater and furnace. Have appliances checked. Have new address recorded on driver s license. Visit city offices and re-register to vote. Register car within five days after arrival in state or a penalty may have to be paid when getting new license plates. Apply for state driver s license. Register children in school. Arrange for medical services: doctor, dentist, veterinarian, etc.

16 About Property Taxes Your property tax is based on the assessed Full Market Value of your home at the close of escrow, which is typically the sales price. The tax year Property taxes are charged on a fiscal year beginning July 1 and ending June 30. Hence tax years are referred to as 2013/2014 or 2014/2015. Taxes are billed in two equal installments. Tax bills are sent to homeowners in the last week of October. The first installment, which covers the period from July 1 through December 31 is delinquent if not paid by December 10. The second installment, which covers the period from January 1 through June 30, is delinquent if not paid by April 10. How to calculate property taxes In most cases, the assessed valuation in your first year of ownership will be same as the purchase price. It may be increased by up to 2% per year for each year you own the property. Homeowners exemption If you own and occupy a dwelling on March 1 as your principal place of residence, you are eligible to receive a reduction of up to $7,000 of the dwelling s taxable value in the form of a Homeowners Exemption. To receive this exemption, you must file a claim with the Assessor. Once you receive the exemption, it is not necessary to file each year as long as you own and occupy the residence. Mello-Roos Community Facility Districts: A Mello-Roos District is an area where a special property tax on real estate, in addition to the normal property tax, is imposed on those real property owners within a Community Facilities District. These districts seek public financing through the sale of bonds for the purpose of financing public improvements and services. These services may include streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax paid is used to make the payments of principal and interest on the bonds. Supplemental taxes Upon change of ownership, the Assessor s Office will reappraise the property and will bill the new owners for any difference in taxes resulting from a higher assessed value. The Assessor will issue you a supplemental assessment bill which is prorated based on the number of months remaining in the fiscal year ending June 30. For the current tax rate, go to: Example: The San Francisco Tax rate for 2012/13 was set at $ per $100 of property value. The resulting property tax for an owner occupied property with an assessed valuation of $1,000,000 would be as follows: Assessed Property Value = $1,000,000 Homeowner s Exemption Adjustment = $7,000 Adjusted Assessed Property Value = $993,000 Multiplied by the Tax Rate Factor x Estimated Annual Tax Calculation = $11,636 Please note: Tax Calculation figure has been rounded. This example does not include an adjustment for the Mello-Roos annual payment. For more detailed and accurate figures, please see your CPA.

17 About Zephyr: Who We Are At Zephyr, being local and connected means something. So does being at the top of your game. Highly competitive and famously complex, the San Francisco Bay Area real estate market can be both challenging and rewarding. Zephyr is the local specialist who knows how to traverse this unique market and reap its rewards. Smart, informed, tenacious, and up-to-date on current market data, our agents are a lot like the clients they serve. Founded in 1978 by a group of entrepreneurial REALTORS, Zephyr has enjoyed enviable growth and now provides services from six strategic locations with a roster of more than 300 full-time real estate agents. Appealing to savvy urban investors, Zephyr helps clients buy and sell intelligently. For more information about our local ownership, please visit ZephyrRE.com. GREENBRAE 350 Bon Air Center #100 NOE VALLEY th Street PACIFIC HEIGHTS 2523 California Street POTRERO HILL th Street UPPER MARKET 2822 Market Street WEST PORTAL 215 West Portal Avenue

18 Glossary of Real Estate Terms A Adjustable Rate Mortgage (ARM): A mortgage where the rate changes over time in line with movements in an index. ARMs are also referred to as AMLs (adjustable mortgage loans) or VRMs (variable rate mortgages). Adjustment Period: The length of time between interest rate changes on an ARM. For example, a loan with an adjustment period of one year is called a one-year ARM, which means that the interest rate can change once a year. Amortization: Repayment of a loan in equal installments of principal and interest, rather than interest-only payments. Annual Percentage Rate (APR): The total finance charge (interest, loan fees, points) expressed as a percentage of the loan amount. Assumption of Mortgage: A buyer s agreement to assume the liability under an existing note secured by a mortgage or deed of trust. The lender must approve the buyer in order to release the original borrower (usually the seller) from liability. B Balloon Payment: A lump sum principal payment due at the end of some mortgages or other long-term loans. Binder: Sometimes known as an offer to purchase or an earnest money request. A binder is the acknowledgment of a deposit along with a brief written agreement to enter into a contract for the sale of real estate. C Cap: The limit on how much interest rates or monthly payments can change, either at each adjustment or over the life of the mortgage. CC&Rs: Covenants, Conditions & Restrictions. A document that controls the use, requirements and restrictions of a property. Certificate of Reasonable Value (CRV): A document that establishes the maximum value and loan amount for a VA-guaranteed loan. Closing Statement: The financial disclosure statement that accounts for all of the funds received and expected at the closing, including deposits for taxes, hazard insurance and mortgage insurance. Condominium: A form of real estate ownership where the owner receives title to a particular unit and has a proportionate interest in certain common areas. The unit itself is generally a separately owned space whose interior surfaces (walls, floors and ceilings) serve as its boundaries. Contingency: A condition that must be satisfied before a contract is binding. For instance, a sales agreement may be contingent upon the buyer obtaining financing. Conversion Clause: A provision in some ARMs that enables you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate is generally set at the prevailing interest rate for fixed-rate mortgages. This conversion feature may cost extra. Co-operative: A form of multiple ownership in which a corporation or business trust entity holds title to a property and grants occupancy rights to shareholders by means of proprietary leases or similar arrangements. CRB: Certified Residential Broker. To be certified, a broker must be a member of the National Association of Realtors Managers Council, have two years of experience as a licensed broker manager and have completed five required management courses. CRS: Certified Residential Specialist. To be certified, an agent must be a member of the National Association of Realtors Residential Sales Council, have completed at least 50 residential transactions and have completed five required Residential Division courses. D Due-On-Sale Clause: An acceleration clause that requires full payment of a mortgage or deed of trust when the secured property changes ownership.

19 Glossary of Real Estate Terms E Earnest Money: The portion of the down payment delivered to the seller or escrow agent by the purchaser with a written offer as evidence of good faith. Escrow: A procedure in which a third party acts as a stakeholder for both the buyer and the seller, carrying out both parties instructions and assuming responsibility for handling all of the paperwork and distribution of funds. F FHA Loan: A loan insured by the Insuring Office of the Department of Housing and Urban Development, the Federal Housing Administration. Federal National Mortgage Association (FNMA): Popularly known as Fannie Mae. A privately owned corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by the VA, as well as conventional home mortgages. Fee Simple: An estate in which the owner has unrestricted power to dispose of the property as he/she wishes, including leaving by will or inheritance. It is the greatest interest a person can have in real estate. Finance Charge: The total cost a borrower must pay, directly or indirectly, to obtain credit according to Regulation Z. G Graduated Payment Mortgage: A residential mortgage with monthly payments that start at a low level and increase at a predetermined rate. GRI: Graduate, Realtor Institute. A professional designation granted to a member of the National Association of Realtors who has successfully completed three courses covering Law, Finance and Principles of Real Estate. H Home Inspection Report: A qualified inspector s report on a property s overall condition. The report usually includes an evaluation of both the structure and mechanical systems. Home Warranty Plan: A warranty that protects against failure of mechanical systems within the property. Usually this includes plumbing, electrical, heating systems and installed appliances. I Index: A benchmark on which changes to an ARM s interest rate are based. Common indices include: industry cost of funds, 6-month LIBOR and various term Treasury notes. J Joint Tenancy: An equal undivided ownership of property by two or more persons. Upon the death of any owner, the survivors take the decedent s interest in the property. L Lien: A legal hold or claim on property as security for a debt or charge. Loan Commitment: A written promise to make a loan for a specified amount on specified terms. Loan-To-Value (LTV) Ratio: The relationship between the amount of the mortgage and the appraised value of the property, expressed as a percentage of the appraised value. M Margin: The number of percentage points the lender adds to the index rate to calculate the ARM interest rate at each adjustment. Mortgage Life Insurance: A type of term life insurance often bought by mortgagors. The coverage decreases as the mortgage balance declines. If the borrower dies while the policy is in force, the debt is automatically covered by insurance proceeds. N Negative Amortization: Negative amortization occurs when monthly payments fail to cover the interest cost. The interest that isn t covered is added to the unpaid principal balance, which means that even after several payments you could owe more than you did at the beginning of the loan. Negative amortization can

20 Glossary of Real Estate Terms occur when an ARM has a payment cap that results in monthly payments that aren t high enough to cover the interest. O Origination Fee: A fee or charge for work involved in evaluating, preparing and submitting a proposed mortgage loan. P PITI: Principal, Interest, Taxes and Insurance Planned Unit Development (PUD): A zoning designation for property developed at the same or slightly greater overall density than conventional development, sometimes with improvements clustered between open, common areas. Users may be residential, commercial or industrial. Point: An amount equal to 1 percent of the loan principal. Lenders charge loan points to increase their yield on a mortgage. Points are considered prepaid interest. Prepayment Penalty: A fee charged to a borrower who pays a loan before it is due. Private Mortgage Insurance (PMI): Insurance written by a private company protecting the lender against loss if the borrower defaults on the mortgage. Generally required for loans exceeding 80% LTV. Purchase Agreement: A written document in which the purchaser agrees to buy certain real estate and the seller agrees to sell under stated terms and conditions. Also called a sales contract earnest money contract, or agreement for sale. R Realtor: A real estate broker or associate active in a local real estate board affiliated with the National Association of Realtors. Regulation Z: The set of rules governing consumer lending issued by the Federal Reserve Board of Governors in accordance with the Consumer Protection Act. T Tenancy in Common: A type of ownership of property by two or more persons with no right of survivorship. Title Insurance Policy: A policy that protects the purchaser, mortgagee or other party against losses concerning title to the property and matters such as easements, encroachments and liens. Transfer Tax: A tax charged by counties at the time of most sales and transfers of real property. The transfer tax in San Francisco varies by sales price, and it is customarily paid by the seller (with important exceptions). V VA Loan: A loan that is partially guaranteed by the Veterans Administration and made by a private lender. Z Zephyr Real Estate: The best real estate company in the San Francisco Bay Area.