The Decision to Sell Your Ovvn Home

Sel ling your home yourse lf depends on your personal

preferences and how much time and energy you' re willing

to invest in your home sale.

Industry experts advise against owners selling their

own homes, citing that an experienced real estate sales

professional can find the right buyer, the best price and

often prevents costly and time-consuming problems that

may arise during the t ransac t ion.

Many sellers choose to market their homes themselves and

pay a flat fee to have a professional handle the paperwork.

Some services will negotiate counteroffers, handle

paperwork, contracts and the correspondence between

appraisers, lenders and insurance providers. Some real

estate offices provide marketing assistance, writing up ad

copy and p ricing your property.

Home sellers need to be prepared to do a lot of the work,

like holding their own open house. You will need to be

outgoing and comfortable answering endless questions

about your property. You will need to accept t hat strangers

are going to look in your closets, under your sink and

cabinets, etc.

Patience can also be important when holding out for the

best possible offer. A good eye and a willingness to spend

time staging your home are helpful, too. You can hire

staging consultan ts to give advi ce on how to make your

home look its best. Sometimes an objective set of eyes can

see "curb appeal" that you may have overlooked.

MAKING THE COMMITMENT TO SELL YOUR OWN HOME

The first decision a home sel ler must make is whether, as a

consumer, you should decide if the services of a real estate

professional is worth the cost price. Once the decision is made,

you must consider alternative marketing possibilities and develop a

home selling marketing plan to succeed at selling your own home.

Some homeowners who try to sell their own home fail.

THERE ARE A FEW COMMON REASONS FOR THESE FSBO FAILURES:

The single most common reason owners fa i l to sell their own home

is the owner's sheer lack of commitment to the FSBO stra t egy.

Examining the most common reasons for FSBO failures is a usefu l starting

place for home owners to begin evaluating what type of marketing plan

they want to form ulate to se ll their real estate.

Sometimes, owners "give up" their efforts prematurely before their

strategy has had time to work. Selling a house takes a good plan, a

commitment to that plan, and the patience to let the plan work. Selling

a house usually does not happen "right away" . If you go into the effort

expect ing to call an agent if you do not sell your home right away, why

not just ca ll the agent today and save yourself wasted time, money, and

aggravation? If you are not committed to se lling a home yourself, you

probably should not try.

The second most common explanation for fail ure is a poor plan.

Even the most committed FSBO selle r will not achieve opt imum

results f rom a poor plan. Too many home sellers put an ad in the

newspaper before they do anything else. This is a bad plan because you

will need to determine the right selling price, and be prepared to show the

property. These issues are not overwhelming, but mus t be focused on and

dealt with in advance of inviting a buyer to come see your home.

For Sale by Owner Guid e 3

For Sale by Owner Guide 4

COMMON MISTAKES FSBO SELLERS MAKE

1 Repairs or decorating that may need to be done prior to presenting

your home for sale vs. repairs that are to be done after you find a

buyer are important decisions and may affect your asking price for

the home in addition to requiring contracting and scheduling the

work, which takes time and planning.

2 Are you going to prepare the contract yourself or are you going to

have an attorney prepare it for you? Either way, you need to have a

copy ready for the buyer to sign on the dotted line at a moment's

notice.

3 Select a title or esc row company before putting your home o n the

market so that the company can take del ivery of the contract and the

buyer 's earnest money check. Too many FSBO sellers are simply not

prepared to sell their home and more than a few seriously interes ted

buyers have just gone on down the road while an unprepared FSBO

se l ler was flipping through the yellow pages looking for a lawyer or a

title company when they should have been handing a signed contract

and check to the escrow agent.

4 What is a competitive price for a home? Are you informed enough or

can you do research to obtain enough information to competently

make this d ecis ion or do you need the assistance of a professional

appraiser?

If you price your property too high, it could take forever to sell it. If you

price the home too low, you lose money. You can obtain comparuble

p rices for homes sold in your area recent ly from your local First American

Title office. Also, many appraisers wi ll sell you a competent and objective

"paper appraisa l".

The rea l estate agents keep property in f ront of buyers all the time with

thei r rea l estate agents Co-Op known as M LS: Mult iple Listing Service.

The MLS database is the re for all real estate agents to work on when

someone calls them after seeing the real estate agent's phone number

on a yard signs.

Reasons to Use a Real Estate Professional

It pays to use a real estate professional because

real estate has b ecome a very complicated business,

and se lli ng (or buying) a home wi l l b e one of the most

important f inancial transactions of your life. From the

moment you consider selling you wil l benefit from choosing

a professional to li st you r hom e, and the combined efforts

will ensure a smooth and p leasant expe rien ce for everyon e

invo lved. Yo ur home may be li sted in the Multiple Li sting

Service, providing you w ith incomparable exposure and

ensuri ng you have as many real estate professiona ls as

possible helping to fi nd a buyer. Additionally, you r agent

kn ows how to specifical ly target advertising and use al l th e

m arketing too ls avai lable to sel l your home expediently

by conducting a var iety of efforts on your behalf. Most

importantly, when it comes to closing escrow, you r

PROFESSIONAL can be invaluable, leading you through the

paperwork and fam iliarizi ng you with insurance, property

disclosures, inspection procedures and so much more.

It 's always a good market in real estate -when you know

what you're doing - and no one knows as mu ch as you r

rea l estate professional ab out today's real estate market.

Helpful Hints for Selling Your Home

WHEN SHOWING YOUR PROPERTY

You do not know the people viewing your home in most cases, so

beware of shady characters . Make sure your va luables are safe, in a

safety deposit box o r another loca t ion com p letely.

MAKE A PROFESSIONAL LISTING FLYER

You may want to include photos, depending upon the curb appeal

of you r home.

For Sale b y Owner Guode 6

FINANCING OPTIONS FLYER

This will give pot ential buyers an idea of what income wi ll be

required by the lender, what the mortgage payments will be,

including the taxes and insurance, what loan programs are

available and t he cu rrent interest rates.

FILLING OUT DOCUMENTS

If you don't understand completely, do not sign! Get a professional.

Some real estate professionals will do it for you for a flat fee or you

may want to work with a real estat e attorn ey. Don 't forget, if you li st

with a real es t ate p rofess ional, this is no longer a concern.

A GUEST REGISTRY

Have every potential buyer sign a guest registry. Keep it handy so

you can re-contact them at a later date if any of the terms change.

Recipe for a Sa I e There are 5 main ing redients that make up the sa le of your home.

1 LOCATION

2 CONDITION

3 PRICE

4 TERMS

s THE MARKET

We usually cannot move a home! To coin the favorite phrase of appraisers:

"Location, Location, Location". The pricing of your property must reflect its location.

T he upkeep and presentation of your p roperty is crucial t o obtain the highest value for

your home in any g iven ma rket at any g iven time. The pricing of your property must

refle ct its condition.

Price is the number o ne factor in the sale of a home. A property is really only worth

what one person is wi lling to pay another to ga in ownership of it. Price must be direct

relationship to the other four ingredients and it is the most important of all!

The more terms available on your property the m o re potential purchasers you reach.

The pricing of your property must reflect th e kinds of terms available t o pu rchase it.

Interest rates, co mpetition, and the econo my all m ake up and influence t he state of the

market when you se ll your home. The pricing of your property must refl ect the current

status of the market.

When all of the above ingredients are in agreement .. . then we have a sale ! If j ust one of t hem is out of line, it will take

a longer time to sell, and ... the more ingredients t here are out of line ... the longer it will ta ke before you can begin

packing and moving to your new ho me.

For Sale by Owner Gu1de 7

pI ann in 9 to s e II A homeowner's checklist to prepare your home.

So you're planning to sell your home. You have decided on a price, based on current market values, but your home may sell faster and bring a higher price if it shows well.

Potential buyers will get the best impression if your home is clean. neat, uncluttered, in good repair, light, airy, fragrant, and quiet. This checklist will help you get your home ready

to show. Here are a few general guidelines:

CLEAN EVERYTHING . Cleanliness signals to a buyer that the home has been well cared for and is most likely in good repair. A messy or dirty home will cause prospective buyers to notice every flaw.

UNCLUTTER YOUR HOME BEFORE YOU SHOW IT. Have a garage sale. Empty closets. Throw away what you can't sel l. The less "stuff" in and around a home, the roomier it will seem.

LET THE LIGHT IN. Raise the shades. Open the blinds. Pull back the curtains. Put brighter bulbs in all the lamps (but not bright enough to cause a glare). Bright, open rooms feel larger and more inviting. Dark rooms feel small and gloomy.

LET FRESH AIR IN . Get rid of odors that may be unfamiliar or unpleasant. People are most ohen offended by odors from tobacco, pets, cooking, and musty or sour laundry. Fresh flowers and potpourri can be used to your advantage. Other smells that attract posi tive attention include fresh baked bread and cinnamon.

For Sale by Owner GUide 8

FIX ANYTHING THAT IS BROKEN . This includes plumbing, electrical systems, switches, windows, 1V antennas, screens, doors, and fences; if it can't be fixed, replace it or get r id of it (no window screens are better than broken ones).

A buyer may make a much lower offer if your house is in disrepair and will probably still insist that everything be fixed before taking occupancy. You're better off if you leave potential buyers no reason to offer less than you are asking.

SEND PETS AWAY or secure them away from the house when prospective buyers are coming. You never know if people will be annoyed or intimidated by your pets or even allergic to them. And you never want a prospective buyer to have to avoid animal droppings.

SEND THE KIDS TO GRANDMA'S or take them on a walk around the block. Children can be noisy and distracting to someone interested in looking at a home.

PAl NT. There's nothing that improves the value of a home for a lower cost than a fresh coat of paint. And it's so often easier to paint a room than it is to scrub it. Stick with neutral colors - off-white is the safest. Be sure to avoid black, violet, and pink.

KEE P NOISE DOWN. Si lence is a restful sound that offends no one. Turn off the 1V and radio. Soft instru mental music is fine but avoid vocals. If necessary, close the windows to eliminate any street noise.

FIX SQUEAKY FLOORBOARDS. Don't run any noisy equipment like a vacuum cleaner or table saw whi le people are looking at your home, and if possible, ask your neighbors to avoid irksome noises.

This checklist wi ll help you get your home ready to show

./ EXTERIOR

Clean around service areas/trash cans

Haul away rubbish

Straighten woodpile

Repair leaky faucets

Clean up pet droppings

Pamt or varnish doors

Polish door hardware

Make sure doorbell/knocker works

Paint or replace street numbers on house

Make sure septic tank is odor free

Clean oil stains from dnveway/street

Patch/reseal driveway of necessary

Replace, repair, and/or paint any damages:

Plaster

Wood siding

Trom

Rain guners

Shutters

Doors

Window frames

Glazing

Screens

Hardware

Fences/gates

Outdoor lighting

Landscaping

Mow/edge lawn regularly

Aerate/feed lawn

Overseed bare spots m lawn

Water lawn regularly

Remove/replace dead plants

Prune overgrown/diseased/damaged shrubs

Prune or remove shrubs/trees blocking view

from windows (unless view is undesirable)

Stake up any sagging trees/shrubs

Keep flower beds free of weeds

Trim around base of trees/walls/fences

Repair or remove any broken or damaged landscape accessories such as:

Fences

Walls Gazebos

Fountains

Trellises

./

./

./

./

Trellises

Planters

Other

Replace any broken stepping stones

Adjust any sprinkler system; repair any broken/leaky heads

Install fences or shrubs to hode any unsightly views

CLEAN/WASH

Siding

Windows

Screen

Outdoor BBO

ACunot

Pool/Spa

PUT LIGHT BULBS IN:

Porch Lights

Carport

Garage

CLOSETS

Keep closets clean and free of clutter

Throw out or pack away non-essentials

Adjust/repair sliding doors

Lubrocate sliding door hardware

Paint. if needed

ALL ROOMS, Clean especially around:

Doors

Windows

Light switches

Baseboards

Chaor raols

Wash lace curtains and have draperies

cleaned if necessary

Remove or pull back dark curtains

Lubricate window slides (soap for wood

silicon or a candle stump for metal)

Make sure doors open smoothly

Clean ceiling light fixtures

Check for cobwebs on all corners

Fix any scratches in wooden floors

Replace worn/broken flooring

Remove or replace worn carpet

Use area rugs where needed

Empty wastebaskets

Make the beds

Fluff the pillows

./ KITCHEN

Keep d ishes and food ou t of sight

Clean appliances

Clean range hood. including light bulbs

Clean behind appliances

Keep floor clean

Clean light fixture

Make sure all electrical outlets work

Eliminate cooking odors

Deodorize garbage d osposal. d ishwasher. and refrigerator

Repair faucets

Put fresh shelf paper on cabo nets

Organize cupboards

Clean out under sink

Replace garbage disposal gasket to reduce noise

./ BATHROOMS, Keep them spotlessly clean:

Shine mirrors

Keep wastebaskets empty and clean

Clean out cabinets and remove non-essentials

Keep fresh. clean towels on towel racks

Clean shower door - of sloding door, keep

track well lubricated

Remove soap residue, mildew and mold

from sink/tub/shower

Remove stains from porcelain sink tub toilet

Replace torn/moldy shower curta on

Clean tile grout

Make sure toilet flushes properly- replace mechanism if necessary

Clean exhaust fan/heater - replace of broken or noisy

./ GARAGE/CARPORT/ SHED

lnstall 100-watt light bulb

Keep area clean/uncluttered

Hang up/put away tools

Clear away any cobwebs

Remove oil/paint stains from floor

Adjust tension rod to eliminate sag from overhead garage door

Lubricate/adjustlrepaor garage

door opener

Paint if needed

./ LAUNDRY AREA

Clean out area behind washer/dryer

Eliminate any mildew odors

./ BASEMENT

Eliminate any signs of dampness

Check for and eliminate cracks

./ HEATING/ AIR CONDITIONING UNIT

Vacuum

Replace filter

Clean intake vent

Remove any stored items

./ Make sure the temperature on your home os comfortable - keep it cooler on the summer and warmer in the wonter. If ot's cooler out· side and you have a fireplace. a nice fire will make your home seem cozy and inviting.

./ Provo de an exhaustive written lost of the features of your home.

./ Know the distance to schools and shopping centers.

For Sale by Owner Guode 9

Congratulations, You Found a Buyer and Signed a Contract

Now it's time to open escrow. You need to provide the title and escrow company w ith

a copy of the fully signed purchase contract.

Please be aware that the escrow company cannot prepare or advise you on the contract or addendums. The escrow company also cannot negotia te any

terms between buyer, seller or lender in the transaction.

Understanding the Escro\N Process

An escrow is a process wherein the buyer and sel ler deposit written

instructions, documents, and funds with a neutral third party until certain

conditions are fulfilled. It ena bles the parti es to the escrow to deal with

each other without risk , provides an accounting of al l the funds deposited

in the escrow, and provides the buyer and the seller with a settlement

statement . In a real estate transaction, the buyer does not pay the seller

directly for the property. The buyer deposits the funds to an escrow

holder. Th e escrow holder, acting as a neutral thi rd party, verifies that a

title insurance policy can be issued pursuant to the terms of the contract.

Then, the escrow holder arranges for the documents transferring title

to the property to the buyer to be recorded, for the issuance of the title

pol icy, pays any liens and all the costs associated with the sale that are

chargeab le to the buyer and seller, and disburses the sa les proceeds

to the seller. If the buyer gets a new loan, th en the lender's money is

deposited into the escrow and the lender's security documents are

recorded at the same time as the deed .

For Sale b y Owner Guide 11

Working with Lenders

PRE-QUALIFICATION OF ALL PROSPECTIVE BUYERS

A lender should p re-qua lify each potent ial buye r.

EFFICIENT FOLLOW-UP AND TEAMWORK

Once the transaction has been negotiated, the lender will

work hand-in-hand with the other real estate professionals in

order to make sure the loa n is approved and funded in a ti m ely

manner. Experience and knowledge are critical to get ting t he

job d one right.

QUALIFICATION

What is involved in the qualification process? The lender will

begin the process by completing an estimate statement of

fees and costs to determine the loan amount and by verifying

the information provided on the applicat ion concerning

credit h istory, employment sta t us and financia l situation. The

borrower wi ll be req uested to p rovide copies of recent fina ncia l

information and documents.

Having established preliminary qualification, the lender o rders

a title search, property appraisal and cred it report. Usually,

t he borrower pays fo r the cred it report and property appraisal,

which is used to determine t he value of t he property and,

u ltimately, t he am ou nt a lender is wil ling t o lend. The len d e r

will requ ire title insura nce to assure the priority of the new

loan. Lenders insurance is provided by the tit le company afte r

the title search is completed and is general ly paid for by the

borrower as a part of the final closing costs.

For Sale by Owner Guide 12

<

WHY DO YOU NEED A TITLE SEARCH?

The title search wi ll d isclose t he current condition of the tit le,

according to pub lic records. The lender will be interested in

how and in whom title is vested, any special conditions or

restrictions affecting the use of the property and existence of

voluntary liens (existing loans) and/or involuntary liens (liens

and judgment s) . The search wi ll also show the current status

of taxes and assessments and the conditions under which title

insurance w il l be issued.

With the title search, f inancial and personal qualification and

property appraisa l completed, t he lender will p repare loan

documents to be executed by the borrower upon loan approval.

WHAT ARE LOAN DOCUMENTS?

Loan documents wil l include the fo rma lization of t he terms and

conditions of the loan, a p romisso ry note and deed of trust

and va rious state and federal disclosure documents. They also

provide a breakdown of the financial accounting of the loan,

including fees and charges.

The Appraisal

The appraisa l process consists of several steps.

The following are t he majo r steps in t he seq uence

normally fo llo wed by app raisers :

Research the subject property as to size, bedrooms, baths, year

b uil t, lot size and square footage.

Gather data of recent sa les in the subject's neighb orhood .

The appraiser needs to locate at least 3, preferab ly more,

similar-s ized homes t hat have sold and closed escrow in the

neighborhood. The hom es should be with in one m ile of the

subject p roperty and sold w ith in the past 6 mo nt hs. These

homes are considered t he "Comparable Pro p erti es", o r

"Camps" for short.

Fie ld inspection consists o f two part s: Fi rst, t he inspect ion of

the sub ject property; and second, t he exteri o r insp ect ion of the

compara b le properties that have been selected to estimat e the

value of the subjec t p roperty.

The subject inspectio n cons ists of taking p hotos of the st ree t

scene, fro nt and rea r o f t he ho me that may include por t ions of t he

yard. The appraiser will make an inter ior inspection fo r condition

noting any items that would detract from or add to the val ue of the

home. He will also draw a floor plan of the home whi le doing t he

insp ection. The inspection of the comp arab le p rop erti es is lim ited

to an exterio r inspection.

For feat ures that cannot be seen f ro m the street, the appraiser has

repor ts f rom Multiple Listing Services (M LS), county public records

and appraisal files alo ng w ith ot he r sources to help det ermine t he

cond it io n and amenit ies of t he comparab le.

Afte r the fie ld inspection has been completed, t he appraiser

must determine wh ich compara b le properties most resembl e the

subject , maki ng slight adjustments in va lue fo r any d ifferences

b etwee n them. After making t he requi red adjustments, the

appraiser w ill go throug h the reconciliat ion process with t hree

comparable properties t o determine a final estimated va lue.

A n appraise r wi ll call in adva nce to set up an appo intment. At

that t im e, offer to supp ly any informat ion about the home's size,

number of bedrooms, bathroo ms, pool, enclosed patio, etc. The

more t hat is known about the p rop e rty prior to the inspection,

t he b etter the apprai ser can fo cu s o n resea rching t he m ost simil ar

com p arable. "Doing your homework " w ill maximize your chances

of having a good appraisal.

Wh ile your home is being inspect ed, do not follow the appra iser

from room-to- room causing d istraction. Instead , allow the inspect ion

to go smooth ly. In the event the appraiser has any questions, b e

close by to answer them. The t ime to mention t he th ings you t hink

are important is either before or followi ng the inspection.

For Sale by Owner Guide 13

Your Escrow Professional May:

Open escrow and deposit good f aith funds into an escrow account

Conduct a tit le search t o d ete rm ine t he ownership an d t it le st atus of the rea l p rop e rt y

Review the pre liminary report and begin the process of working with you and the title officer to eliminate the t itle exceptions the buyer and the buyer's new lender are not w illing to take subject to. Th is includes ordering a payoff demand from your existing lender.

Coordinate with the buyer's lender on the prepa ration of the Clos ing Disclosure (CD)

Pro rate fees, such as real prope rty taxes, per the contract and prepare the sett lemen t statement

Set sepa rate appoin t me nts allo w ing th e buyer and se ller to sign docum ents and deposit funds

Review documents and ensure all conditions are fulfilled and certain legal requirements are met

Request funds from buyer and buyer's new lender

When all funds are deposited and conditions met, record documents with the County Recorder to transfer the real property to the buyer

After reco rding is conf irm ed, close escrow and d isbu rse funds, incl ud ing p roceeds, loan payoffs, tax payments , and more

Prepare and send final documents to all pa r ties

For Sale by Owner GUide 14

J

The Life Of An Escro\N

THE BUYER

Chooses a Real Estate Agent

Gets pre-approval letter from Lender and provides

to Real Estate Agent.

Makes o ffer to purchase. Upon acceptance. opens escrow and

deposits earnest money.

Finalizes loan application wit h Lender. Receives a

Loan Estimate from Lender.

Completes and returns opening package from First

American Title.

Schedules inspections and evaluates findings.

Reviews ti tle commitment/ preliminary report.

Provides all requested paperwork to Lender (bank

statements, tax returns, etc.) All invoices and final

approvals should be to the lender no later than 10 days prior to loan consum mation.

Lender (or Escrow Officer) p repares CD and delivers to Buyer at least 3 d ays prior to

loan consummation.

Escrow offi cer o r real estate agent contacts the buyer to schedule signing

appointment.

Buyer consummates loan, executes settlement

document s, & deposits funds via w ire t ransfer.

Documents are recorded and the keys are delivered!

For Sale by Owner Guide 16

THE SELLER

Chooses a Real Estate Agent

Accept s Buyer's o ffer to purchase.

Completes and returns o p ening package fro m First

American Title, including information such as

forward ing address, payoff lender contact information

and loan numbers.

Orders any work for inspections and/or repairs to be do ne as required by the purchase agreement.

Escrow o fficer o r real estate agent contac t s the seller to schedule signing

appo intment.

Documents are recorded and all p roceeds from sale

are received.

THE ESCROW OFFICER

Upon receipt of order and earnest money deposit, ord ers t it le examination.

Requests necessary information from buyers and sellers via opening packages.

Reviews title commitment I pre lim inary report .

Upon receipt of opening packages, orders d emands for payoffs. Contac ts b uyer or seller when additional information is required

for the t itle commitment/ pre liminary report.

All demands. invoices, and fees must b e collected and sent to lender at

least 10 days prior to loan consu mmation.

Coordinates with lender on the p reparation o f the CD.

Reviews all documents, d em and s. and instructions and prepares sett lement statements and any other

required documents.

Schedules signing appointment and mforms buyer of funds due

at settlement.

Once loan is consummated, sends funding package to

lender for review.

Prepares recording instructions and submits

docs for recording.

Documents are recorded and funds are disbursed. Issues final settlement statement.

THE LENDER

Accepts Buyer's applicat ion and begins the qua lification

process. Provides Buyer with Loan Estimate.

Orders and review s ti tle commitment I prelim inary repor t, property appraisal, credit repo rt, employment

and funds verification.

Collects information such as title commitment

I preliminary report, appraisal, credit report, employment and funds

verification. Review s and requests additional in formation for final loan

approval.

Underwriting reviews loan package for approval.

Coordinates w ith Escrow Office r on the preparation o f the Closing D isc losure,

which i s delivered to Buyer at least 3 days prior to loan

consummation.

Delivers loan documents to escrow.

Up on review of signed loan documents, authorizes loan

funding.

Understanding Title Insurance The Title Industry & T it le Insurance 1n Brief

Prio r to the d evelopment of the title industry

in the late 1800s, a home-buyer received a

grantor's warranty, attorney's t itle opinion, or

abstractor's certificate as assurance of home

ownership. The buyer relied on the financial

integrity of the gra ntor, attorney, or abstractor

for protection. Today, home-buyers look primari ly

to title insurance to provide this protection.

Tit le insurance companies are regulated by

state statute. They are required to post financial

guarantees to ensu re that any claims w il l be

paid in a timely fashion. They also must maintain

th eir own "title p lants" which house duplicates

of recorded deeds, mortgages, p lats, and other

pertinent county property records.

WHAT IS TITLE INSURANCE?

Titl e insurance provides cove ra ge for certain losses due to defec ts in the title that , for

the most pa rt, occurred prior to your ownership. Title insurance protects against d efects

such as prior fraud or forgery that m ight go undetected until after closing and possibly

jeopard ize your ownership and investment .

WHY IS TITLE INSURANCE NEEDED?

Title insurance insures buyers against the risk that they d id not acquire marketable title

from the seller. It is primarily designed to reduce risk or loss caused by defects in t itle from

th e past. A loan policy of ti tle insurance p ro tects the interest of the mortgage lender, whi le

an owner's policy protects the equit y of you, the buyer, for as long as you or your heirs (in

certain pol icies) own the rea l property.

WHEN IS THE PREMIUM DUE?

The owner's policy is pa id for only once, at the close of escrow. Who pays for the owner's

policy and loan policy varies depending on loca l customs.

For Sale by Owner Gu1de 17

Terms You Should Knovv APPRAISAL

An estimate of value of proper ty resul t ing from analysis of facts about the property; <Jn opinion of value.

ANNUAL PERCENTAGE RATE (APR)

The borrower's costs o f the loan term expressed as a rate. Th1s 1S not the1r mterest rate.

BENEFICIARY

The recip1ent of benefits. often from a deed of trust; usually the lender.

CLOSING DISCLOSURE (CD)

Closin g Disclosure form designed to provide d isclosures that wdl be helpful to borrowers in understanding all of the costs of the transaction. This form wdl be g1ven to the consumer three (3) business days before closing.

CLOSE OF ESCROW

Generally the date the buyer becomes the legal owner and ti tle msurance becomes effective.

COMPARABLE SALES

Sales that have s,m,Jar characteristics as the subJeCt real property, used for ana lys1s m the appraisal. Commonly called "comps

CONSUMMATION

Occurs when the borrower becomes contractually obligated to the cred1tor on the loan. not. for example. when the borrower becomes contractually obligated to a seller on a real estate transaction The point in time when a borrower becomes contractually obligated to the crednor on the loan depends on applicable State law. Consummat1on 1s not the same as close of escrow or settlement.

DEED OF TRUST

An instrument used in many states in place o f a mortgage.

For Sale by Owner Guide 18

DEED RESTRICTIONS

Limitations in the deed to a parcel of real property that dictate certain uses tha t may or may no t be made of the real prop ert y.

DISBURSEMENT DATE

The date the amounts are to be disbursed to a buyer and seller m a purchase transac tion or the date funds are to be paid to the borrower or a thlfd party in J transaCtiOn that IS not a purchase transaction

EARNEST MONEY DEPOSIT

Down payment made by a purchaser of real property as ev1dence of good fdlth; a deposit or partial payment

EASEMENT

A right. privilege or interest limited to a spec1f1c purpose that one party has in the land of another.

ENDORSEMENT

As to a t itle insurance policy, a rider or att achment forming a part of the msurance policy expandmg or l1miting coverage

HAZARD INSURANCE

Real estate msurance protectmg agamst fire. some natural causes, vanda lism, etc .. depending upon the policy. Buyer o ft en adds liabili ty insurance and extended coverage for personal property.

IMPOUNDS

A trust type of account establ1shed by lenders for the accumulation of borrower's funds to meet penodic payments o f taxes. mortgnge insurance premiums and/or future 1nsurance policy prem1ums. required to protect their security

LEGAL DESCRIPTION

A descript1on of land recogn1zed by law, based on government 5urveys. spell1ng out the exact boundaries of the enti re parcel of land. It should so thoroughly ident ify a parcel of land tha t i t cannot be confused with any other

LIEN

A form of encumbrance that usually makes a specific parcel of real p roperty the security for the payment of a debt or d1scharge of an obligation. For example. judgments. taxes. mortgages. deeds of t rust.

LOAN ESTIMATE (LE)

Form des1gned to prov1de d1sclosures that wdl be helrf lll to borrowers in understanding the key fea tures. costs and risks of the mortgage loan for wh1ch they are applying. lnn,al disclosure to be g iven to the borrower three (3) business days after application

MORTGAGE

The instrument by which real property is pledged as security for repayment of a loan.

PIT I

A payment that 1ncludes Pnnc1pal. Interest. Taxes. and Insurance.

POWER OF ATTORNEY

A written Instrument whereby a pnnc1pal g1ves authority to an agent. The agent acting under such a grant 1s somet1mes called an "Attorney-in-Fact."

RECORDING

Filing documents affecting real property wnh the appropriate government agency as a matter of public record.

SETTLEMENT STATEMENT

Provides a complete b reakdown of costs involved in a real estate transaction.

TRIO

TILA-RESPA Integrated Disclosures

Congratulations on Your Sale!

FIRST AMERICAN TITLE is p leased to have been chosen to hand le t he escrow

process fo r you as yo u prepa re to se ll yo ur property.

Your escrow officer and the assistant will be more than happy to answer any of you r questi ons o r concerns about the

escrow process during th e transaction , so please feel free t o cal l our office any tim e. We look forward to seeing you soon.

For Sale by Owner Guide 19