How long is Escrow?

First off, what is escrow?  The escrow company is the neutral third party in a Real Estate Purchase.  They hold money and executed documents in trust until they are ready to transfer or record.

In California the escrow process usually takes about 30 days.  I’ve seen some as quick as 10 days and right now I’m involved in a sale that is taking 60 days.  Typically the buyer asks for the time period in the Residential Purchase agreement (RPA) that the lender and buyer’s agent have advised that this transaction will take.  The seller can counter a different time period.  After any negotiation both parties agree on a time period and the clock starts ticking.

On day one the contract is agreed on and signed by all parties. The listing agent, usually, will contact the escrow company, receive a number and “open escrow.”  Once escrow is open the buyer has until the end of day three to get the deposit into escrow. Deposit amount is usually one to three percent of the purchase price. The most convenient way is to use a wire transfer from the buyer’s bank directly in the the escrow trust account.  The buyer will be provided with instruction on how to do this.  Or if preferred the buyer or agent may deliver a check to escrow.

Then the buyer begins inspections, appraisal and any other due diligence as well as making a formal loan application. At day 17 (or another mutually agreed on day) the buyer is expected to release all contingencies but the loan.  At day 21 (or another mutually agreed on day) the buyer releases the loan contingency.  This is the buyer’s commitment to go forward and complete the purchase.  If the buyer does not complete the purchase after giving up contingencies, there may be penalties including the forfeiture of the earnest money or deposit.

The lender will order loan documents to be delivered to escrow and make an appointment with the buyer to come in and sign with a notary present.  If necessary the buyer may sign with a mobile notary at home or their work location.  The seller will have already signed the Grant Deed over to the buyer sometime during the escrow period and escrow will deliver for recording at the appropriate time to record the new title in the buyer’s name.

The buyer is entitled to a final walkthrough a  few days before closing to see if the property is in substantially the same condition as originally and to inspect repairs, if any.

One to two business days after signing and the deposit of any additional funds (downpayment, closing costs) from the buyer the loan will fund and then in LA county the title is recorded the following day.  Other counties may have different timelines.  Recording is usually day 30 of escrow.

The date the buyer takes possession of their new home is negotiated in the RPA.  Generally it’s the end of the day on the day of recording, but depending on the needs of both parties it may be a few days after the recording.  Your realtor may use terms something like COE plus 3.  That means Close of Escrow plus an additional three days.

After recording the escrow officer will balance the file and deliver the proceeds to the seller.

Congratulations, you’ve just completed escrow.

 

For more info: http://www.dre.ca.gov/files/pdf/Escrow_Info_Consumers.pdf

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Does your house have termites?

ImageYou’re getting ready to buy a home and wondering if it has termites?  The simple answer in Southern California – yes.  Termites are insects that eat wood and they can do a lot of damage.  When writing an offer for a home you can attach form WPA (Wood Destroying Pest Addendum.) Using this form you can specify who should pay for an inspection and which party should pay for the repairs that the inspector finds necessary.  Ask your Realtor® to advise you on what is customary in your area and what she realistically thinks will work in your particular situation. Your lender may require a certificate of completion.

 The report is divided into two sections.  Section 1 notes active wood destroying pests and damage to be repaired.  Section 2 notes conditions that could lead to section 1.  Fumigation with a tent is not always needed.  Sometimes the inspector will recommend spot treatment and replacement of damaged wood. If fumigation is recommended be sure to follow the safety instructions given to you.

 (CAR Form WPA)  E.  Seller shall Deliver to Buyer, prior to Close Of Escrow, with a written pest control certification (“Certification”) showing that no infestation or infection is found or that required corrective work is completed. If paragraph 2A does not refer to a specific registered Structural Pest Control company and Seller obtains more than one Wood Pest Report pursuant to this Addendum, Seller may choose which Wood Pest Report to use as the basis of the Certification provided that Seller Delivers to Buyer all Wood Pest Reports obtained by Seller before Buyer removes any contingency for Wood Pest inspection.

 

Structural pest control is the control of household pests (including but not limited to rodents, vermin and insects) and wood-destroying pests and organisms or such other pests which may invade households or structures, including railroad cars, ships, docks, trucks, airplanes, or the contents thereof. The practice of structural pest control includes the engaging in, offering to engage in, advertising for, soliciting, or the performance of any of the following: identification of infestations or infections; the making of an inspection for the purpose of identifying or attempting to identify infestations or infections of household or other structures by such pests or organisms; the making of inspection reports; recommendations, estimates, and bids, whether oral or written, with respect to such infestation or infections; and the making of contracts, or the submitting of bids for, or the performance of any work including the making of structural repairs or replacements, or the use of pesticides, insecticides, rodenticides, fumigants, or allied chemicals or substances, or mechanical devices for the purpose of eliminating, exterminating, controlling or preventing infestations or infections of such pests, or organisms.

 

http://www.pestboard.ca.gov/index.shtml

Aside

It’s too darn hot!  This week with record temperatures we are reminded that we live in a desert here in southern California.  Is a green lawn really the wisest choice?  We live in a semi-arid region and our imported water supplies have been permanently reduced; we must use our remaining supplies more efficiently.

We can turn the lawns into beautiful gardens of native drought resistant plants very easily and there are many resources to help – including financial incentives.

http://www.lblawntogarden.com/
http://www.californianativeplants.com/index.php/resources/kill-your-lawn
http://www.bewaterwise.com/Gardensoft/garden_list.aspx?project=350UMAO2Image

Rev: 11/5/15 — Los Angeles Times reports that homeowners may have to pay taxes on Lawn Replacement rebate.  For the average rebate of $3000 at a tax rate of 28% that’s $840.  As long as you know about that upfront and plan for it, it still makes sense.

When can you safely discard old documents?

We all have piles and boxes of paper filling closets and the garage.  How long do we actually have to keep them?Image

This is from the IRS*: 

Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making computations if you file an amended return.

  1. You owe additional tax and situations (2), (3), and (4), below, do not apply to you; keep records for 3 years.
  2. You do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep records for 6 years.
  3. You file a fraudulent return; keep records indefinitely.
  4. You do not file a return; keep records indefinitely.
  5. You file a claim for credit or refund* after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.
  6. You file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.
  7. Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Now that you know what you have to keep, it’s time to get rid of the rest.  Come to the Keller Williams Shred Day event on April 26th and safely dispose of those old papers.  Make some room in your closet for new shoes!

 

*http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-long-should-I-keep-records

Video

How to sell your home as quickly as possible for more money

Keller Williams research shows that homes priced at market value sell in half the time for more money than homes that are priced above market value. To price your home right you need a market evaluation. Check here for a free market evaluation of your home. http://susan.automatichomesearch.com/sell.php?ppc=craigslist:seller#AwMYswiuc