COLDWELL BANKER- CAMPBELL REALTOR HOME BUYER GUIDE

CAMPBELL REALTORS

HOME BUYER GUIDE

YOUR EXCITING HOME FINDING ADVENTURE BEGINS Buying a home is one of life’s biggest investments and most exciting adventures. This Home Buyer Guide includes helpful information to get you started: • Your role & obligations in the home buying process • What to know about Commissions & Agency • My role as your partner in this exciting journey • Step by Step – The Home Purchase Process • Writing Offer, Opening Escrow, & Inspections • Coaching you to success all the way to the closing & Possession I would like to be your partner in the process, guiding you along the way to make your experience smooth and successful.

YOUR ROLE & OBLIGATIONS Buying real property is a detailed process, and your satisfaction with your purchase will depend, in part, on how effectively you participate in your role & obligations as the Buyer. USE REASONABLE CARE: Home Buyers are obligated to read all documents provided to them. Buyers also have an affirmative duty to take steps to protect themselves, including discovery of the legal, practical, and technical implications of facts which may affect the desired use of the property. HIRE PROFESSIONAL ASSISTANCE: Buyers should seek assistance from professionals for mortgage services, the investigation of property condition, disclosures & reports. COMMUNICATE TIMELY: Buyers should notify their Agent of any issue which may affect their ability to execute documents, attend important meetings, or complete the transaction scheduled. Timely notification will aid your agent’s efforts in obtaining a satisfactory resolution. I will be there to help, you will not be alone. By working together and using a combination of reasonable care, professional assistance, and excellent communication, your home buying experience will be very positive.

WHAT YOU SHOULD KNOW ABOUT COMMISSIONS & AGENCY COMMISSIONS: With the advent of Veterans Administration (VA) financing after World War II, it became standard practice in the United States and California for the seller to pay the real estate commissions for both the agent representing the buyer and the seller. VA loans were offered with no money down, and since most returning veterans did not have available funds for closing costs, it became customary for sellers to pay the real estate commissions. The practice of home sellers paying commissions has been the standard for over 75 years. Yet, on October 31, 2023, a class action lawsuit was decided in the State of Missouri which may eventually change the practice of seller paid real estate commissions. Until courts or the Department of Real Estate says otherwise, the practice of seller paid commissions continues in California. AGENCY: The simple-rule-of-thumb is not to tell the Listing Agent anything that you would not tell the seller yourself. When in personal contact with the Listing Agent, a very important thing to remember is: “The Listing Agent works for the seller, they are not devoted to your success.” For more information on Commissions & Agency, see Appendix Il and lll at the end of this publication.

YOUR PARTNER IN THE PROCESS When you choose me as your Buyer’s Agent, you’ll have me at your side every step of the way: • Understanding Loan Programs, Down Payments & Closing Costs • The Power of having a Mortgage Pre-Approval cannot be overstated. • Meet with you in person to discuss your needs & desires for your new home. • Home Search: Realtor MLS, Real Estate Websites, & Off Market Homes • View homes together that interest you & meet your criteria. • Making an Offer: Sales Comps, Terms, Condition, Price, Counters, Acceptance • Open Escrow: Inspections, Disclosures, Reports and Negotiation of Repairs/Credits • Closing: Loan Approval, Wiring of Funds, Final Walk-Thru, Closing, Possession I will give you the insights and information you need to have confidence in your decisions.

STEP BY STEP Meet with Lender Obtain Full Loan Approval

Meet with me to Discuss your home wants & needs

Search for Homes (MLS - Off Market ~ Online)

Negotiate the Acceptance

Write Offer to Purchase

View homes together

Open Escrow

Wire Deposit Funds

INSPECTION CONTINGENCIES Physical Inspections

Availability of Insurance

Seller & HOA Disclosures

Preliminary Title Report

Natural Hazard Report

Termite/Pest Control Report

Request for Repair

Negotiate Repairs / Credit

Contingency Removal

THE CLOSING STEPS Appraisal

Final Loan Approval

Closing Disclosure

Contingency Removal

Final Walk Through

Sign Loan Documents

Wire Funds to Close

Lender Funds Loan

Recording

Occupant Move Out

Keys & Possession

LOAN PROGRAMS & PRE-APPROVAL The first step in any home search is finding out exactly how much home you can afford and securing the financing to make the purchase. The amount you can borrow depends on many things: loan programs, down payment, credit score, employment, and financial reserves. While you can get a rough estimate through pre-qualification in a matter of 15 minutes, taking the extra step to obtain a full pre-approval by submitting a complete application to your lender will give you some added advantages: • Understand your financial condition & things you can do to improve borrowing power. • Know exactly how much home you can afford before you begin your home search. • Loan pre-approval gives you an advantage when there are multiple offers. • Even if there are no other bidders, your mortgage pre-approval lets the seller know that you’re fully prepared to buy their home… the seller will give you their best price. I urge you to begin the pre-approval process with your trusted lender as soon as possible.

THE PRE-APPROVAL PROCESS Here are some of the documents that you will provide your lender to get the pre-approval process started: Income Current pay stubs, usually for last two months W-2s or 1099s, usually for last two years Tax returns, usually for last two years Assets Bank statements Investments/brokerage firm statements Net worth of businesses owned (if applicable) Debts Credit card statements Auto & Student Loan statements (if applicable) Alimony/child support payments (if applicable) Mortgage information on other properties you own (if applicable)

Your lender will take the information, submit it loan underwriting, and the system will return a pre-approval… or, they may ask for additional information. Obtaining the information requested by underwriters promptly will get you the pre-approval certificate more quickly!

THE ROLE OF THE REALTOR MLS The Listing Agent has the responsibility of uploading accurate information about the property along with the photos to the Realtor Multiple Listing Service (MLS). Then, the listing is shared by the MLS server to other real estate websites. Whether you find a new listing on my website, or a few hours later on Zillow, Realtor.com, or Homes.com… The listing will always be in the Realtor MLS first! I will set up an Automatic MLS Search, so you are immediately notified when there is a New, Back-onMarket, or Price-Reduced listing which meets your parameters. Zillow and other real estate websites do not show homes which fall in these status categories: • HOLD:

Off the market temporarily and will come back on the market.

• EXPIRED:

Did not sell during the scheduled time it was on the market.

• CANCELED:

Removed from the market prior to the listing expiration.

• WITHDRAWN:

Removed from the market but may come back on market.

As an added service, I will screen the off-market listing categories for homes which meet your parameters, then I will reach out to the listing agents and/or homeowners to see if they would consider an offer from you. © 2023 Coldwell Banker – Campbell Realtors – All rights reserved.

THE ROLE OF MY WEBSITE My website has a direct connection to the Realtor MLS and gives you access to property listings in most areas of Southern California. The property data is very current, and the site has been designed for ease-of-use. Q: What is the “first stop” online for your home search? A: My website… You are going to love it! It is fully mobile responsive so you can search on your phone, tablet, or desktop computer. Not only is it an easy way to check out all the available properties in your preferred area, it’s also another way for me to get to know the types of properties that you like. When you sign into the website, and save your searches, I can see which homes you have viewed. Also, I can set up automatic home search links for you where you can quickly see all the homes in your target neighborhood with a quick tap of your figure on your phone, tablet, or desktop.

I FIND OFF-MARKET HOMES It is estimated that 40% of the homeowners in SoCal have a mortgage which is 2.75% or less. These owners are very unlikely to sell in the near term. Experts say the inventory of homes will not reach the Pre-Covid levels for many years. If your plan is to check Zillow for the 10th time today to see if there are any new listings, you need a better way to find a home. We live in an age of information. I can search databases to locate all homes which have the attributes you are looking for: Location, living area, bedrooms, bathrooms, lot size, stories, garage spaces, and more. Then, I will harness technology and proprietary databases to filter the home list to intelligently identify homeowners who are more likely to sell. When you work with me, I identify the Off-Market Homes which are suitable for you to purchase… and I will contact the owners to see if they will sell to you before anyone else has a chance to buy the home.

VIEW HOMES TOGETHER WHICH INTEREST YOU When you see a property you like, we will go look at the inside together. We may look at several homes in a day or a weekend. Perhaps you will see a home you really like in the first few showings… but do not get discouraged if it takes longer. If present, the Listing Agent will be listening to what you say (remember agency relationship). The less you interact with the Seller’s Agent, the better. When possible, let me set up private showing for you. Be aware that some homes have security cameras with audio. Do not say anything inside the home that you would not want the seller to hear… they might be listening. Eventually you will find something that compares very favorably against the other homes you have seen, and it will be time to move forward to the next important step.

MAKING AN OFFER TO PURCHASE There are many factors that influence the market value of a home. I will give you the insight and information you need to make an offer. Some initial factors to consider when writing an offer include: • Why is the homeowner selling? • How long the home has been on the market? • Has the price has been reduced, when and how much? • Other items included in sale (furniture, TVs, electronics, spa, etc.)? • What do recent similar neighborhood sales indicate regarding the value? • Are there are multiple offers… is there a deadline for submitting an offer? • What terms can we offer that cost us little but can give our offer an advantage: Short or long escrow, rent back for seller, etc. Once the offer is written, I will present it to the seller’s agent. The seller can accept, reject, or counter your offer to start the negotiation process. If all goes well, the negotiations with conclude with price and terms being agreeable to you and then the escrow can be opened. © 2023 Coldwell Banker – Campbell Realtors – All rights reserved.

ESCROW OPENING & INSPECTIONS Once your offer has been accepted, the escrow process begins. Here are some of the typical steps involved. Deposit – The standard California Association of Realtors purchase agreement form calls for the buyer to wire the earnest money deposit to the escrow company within 3 business days of acceptance. Inspections – Most property sales are contingent on the results of a home inspection, which is paid for by the buyer. The inspection typically occurs within 10 days of offer acceptance and includes a review of the home’s exterior elements like the roof, stucco, windows, and drainage, as well as kitchen and bathroom fixtures and appliances, and finally mechanical systems like heating and cooling, plumbing and electrical. Insurance – Verify availability and cost of homeowners insurance. Determine if extra coverage for flood, fire, earthquake coverage is required or desirable. Disclosures & HOA Documents – The seller is required by best practices and statute to disclose known defects in the home, and there will be a packet of disclosure forms provided to you for review. If the home is part of a Homeowners Association, you will also receive a packet of information from the association management company. The Preliminary Title Report – will verify the seller’s ownership of the property and ensure that there are no claims against the title of the property which would prevent its sale to you. The report will also identify easements, CC&Rs, and there will be a plat map showing the measurements of the lot. The Natural Hazard Report – will indicate if the property is in a flood zone, earthquake zone, fire responsibility zone, etc. It will also provide a list of bond measures approved by the state, municipalities, and voters which apply to the property tax bill for the home. The Structural Pest Control (termite) Report – will indicate if there is any active infestation of termites or dry rot in the structure and will propose methods (and cost) of repairing damage and/or eradicating the pests. Request for Repair – There is no perfect house, and the inspector will often also note items where are purely cosmetic. If we find items of concern, we will follow the normal process of submitting a “Buyer’s Request for Repair”. Over a day or two, we will negotiate for repair or a credit for the items. If we arrive at an impasse with the seller, you can cancel escrow and obtain a refund of your deposit. Removal Contingencies Except Loan & Appraisal – Once the all the reports have been reviewed to your satisfaction and the Request For Repair negotiations have been completed, the next step is to remove all contingencies except for the loan & appraisal, and move toward the final steps of the escrow.

THE CLOSING While you were working on the inspections, your lender, escrow, and title company were very busy. With the inspection contingencies removed, it is now time to focus on the last few items remaining before you get possession of the property. Appraisal – As a standard part of the mortgage process, your lender ordered an appraisal report. If the appraised value comes in below the contract price, we may attempt to negotiate with the seller to reduce the price. Final Loan Approval – After submission of updated financial statements or other items requested by lender, the lender will give final loan approval. Closing Disclosure – The lender will issue a document known as the Closing Disclosure (CD) about five days before the loan documents are issued. Final walk-through – If it’s requested in the contract, you’ll be given the chance to look at the home to make sure it’s in the same condition as when you signed the sales agreement. Signing Loan Documents – The escrow officer will request a meeting for you to sign the loan documents and any final applicable amendments. Wiring of Funds to Close – The escrow officer will provide wiring instructions for you to take to your bank so you can wire the funds necessary to cover the downpayment and closing costs. Loan Funding – The lender will wire the funds for the loan to escrow. Recording – The title company will arrange the recording of the grant deed, which transfers title of the home to you at the County Recorder’s Office. Confirmation – For morning recordings, the title company will provide confirmation of the recording by about noon… for afternoon (special) recordings we will hear by about 5pm. When they notify us of the confirmation of the recording, we say the transaction is “closed”. Possession – You will get the keys and possession of the home per what was agreed in the purchase agreement. If the house is vacant, you will often get possession immediately after confirmation. If the seller is still in possession at close, typically they will move and give you the keys within 3 days.

LET’S GET STARTED Your home-buying needs are one of a kind… Would you like me to help you? • I am committed to your complete satisfaction, and will represent your interests with the utmost care, honesty, integrity, and discretion. • Using the unmatched resources, tools, & skills of our brokerage, I will help you find the best available home for your needs at the price & terms which meet your desired budget. • With the help of experts, I will assist you with inspections & due diligence on the property to identify hidden defects… and negotiate repair or resolution for items found. • I will follow up with escrow, title, & the lender to close the sale in a smooth, timely manner. • During the home buying process, I will provide proven, powerful, and personal service. • I answer my phone and respond to text & email messages promptly.

If you are ready, I am ready… Let’s get started!

Appendix l

Appendix ll The recent verdict in the Sitzer/Burnett v. National Association of REALTORS® (“NAR”) lawsuit has left Sellers, Buyers, and REALTORS® with many questions. In November 2023, the California Association of Realtors addressed some of the most common questions regarding the litigation and what it means for the real estate industry and our marketplace. What is the NAR lawsuit about, and what was the jury’s verdict? The lawsuit is a class action antitrust lawsuit filed in the federal court in Missouri. The plaintiff class includes home sellers in Missouri who sold their properties between April 29, 2015, and June 30, 2022 using one of four local multiple listing services (“MLSs”), where commission was offered from the listing agent to the buyer’s agent. In 2019, the plaintiffs sued NAR and four large brokerages. Plaintiffs claim that the defendants conspired to keep real estate commission rates high in violation of antitrust law, and NAR’s cooperative compensation rule (MLS rule requiring listing brokers to offer compensation to the buyer’s agent through the MLS) caused the sellers to pay too much in real estate commissions. On October 31, 2023, after an 11-day trial, the jury decided against the defendants. Q: Is there a possibility for a class action lawsuit in California? A: Although it’s possible, there are factors that would probably make it more challenging to file a similar California action, including California laws that confirm the pro-consumer and competitive benefits of MLSs, and the wide variety of broker business models that give consumers many choices which promotes robust competition in the California real estate market. Q: Will buyer representation agreements become mandatory under California law? A: We don’t know whether there will be future proposed legislation that requires California licensees to use buyer representation agreements. The California Association of Realtors strongly recommends the use of a written buyer representation agreement such as C.A.R. Standard Form BRBC. Q: Are buyers’ agents allowed to have a conversation with their clients about the offer of compensation to buyers’ brokers on listed properties to help buyers decide whether to pursue a certain property or not? A: Yes, the buyer’s agent should discuss the available properties their clients may be interested in, and should also disclose the compensation (if any) that is being offered to the buyer’s broker. Q: What if a buyer doesn’t have enough money to pay for a buyer’s agent? A: Buyers may have opportunities to structure their broker’s compensation in the transaction. This would need to be negotiated between the buyer and seller. Otherwise, some buyers may choose to forgo representation if they can’t afford it. While the court case in Missouri may eventually result in changes to the way commissions are paid in California, presently nothing has visibly changed about the way sellers pay buyer agent commissions in our marketplace. The amount of the commission offered to the buyer’s agent is decided by the Seller in consultation with the Listing Agent, and commission offered is published in the Realtor MLS.

Appendix IIl

WHAT IS THE ROLE OF A BUYER’S AGENT? The role of the Buyer’s Agent starts with fiduciary care. To put it simply, negotiating with a home seller can be compared to a couple strangers playing a one-on-one game of poker. Each of you has an expert card player standing behind to give valuable advice. Think of those two experts as the Buyer’s Agent and the Seller’s Agent… and the card game is the negotiation of your home purchase. In a game of poker, you would never “show the other player your cards”, and you definitely should not show the other player’s expert (Seller’s Agent) your cards either. The Buyer’s Agent is your expert, and he/she will tell you how to best play your cards to achieve the best possible result. However, the role of the two agents is not to cheat the other side… The poker game must be played fair & square. In legal terms we would say: The Buyer’s Agent is an agent acting only for the Buyer and has a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Buyer. If the home is listed by another brokerage, my role will be as an Exclusive Buyer’s Agent.

WHAT IS THE ROLE OF A SELLER’S AGENT? Simply said… The Listing Agent works for the seller, they are not devoted to your success. The Seller’s Agent might be very friendly, and it is certainly important that they understand you are a qualified buyer. Meaning, it is OK to tell them you are Pre-Qualified by a lender and you have sufficient funds in your bank account for the down payment… or to pay cash if that is your intention. But, that is about where the sharing of information (your cards) should stop. Let’s look at the Role of the Seller’s Agent in the poker game example as previously discussed. The Seller’s Agent is the expert poker player advising the seller. They are working diligently to get the highest price for the seller. So, do not show the Seller’s Agent your cards: “What you would be willing to pay for the property” or “Any serious motivation you have to buy the property (schools, immediate need for housing, relatives who live closeby, etc.)”. In legal terms we would say: The Seller’s Agent is an agent acting only for a Seller who has a fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller. The role of the Seller’s Agent will be as an Exclusive Seller’s Agent. Per Civil Code section 2079.13(j), (k), and (l). When you enter into a discussion with a real estate agent regarding a real estate transaction, you should from the outset understand what type of agency relationship or representation you wish to have with the agent in the transaction. The California Association of Realtors Disclosure Regarding Agency Relationships form explains agency relationships in detail, and there is a sample copy on the next two pages.

SELLER PAYMENT TO BUYER'S BROKER (C.A.R. Form SPBB, 6/23)

The following terms and conditions are hereby incorporated in and made a part of the Purchase Agreement, OR Other , dated , (“Agreement”) on property known as (“Property”) in which is referred to as (“Buyer”), and is referred to as (“Seller”). INSTRUCTIONS: ● Only use this form if: (i) Buyer and Buyer's Agent have ALREADY ENTERED INTO A BUYER REPRESENTATION AGREEMENT (C.A.R. Form BRBC); AND (ii) Buyer has an obligation to pay Buyer's Broker compensation pursuant to the representation agreement after first deducting any amount that Buyer's Broker will be receiving from Seller's broker through the MLS or other agreement (C.A.R. Form CBC); AND (iii) Buyer is asking Seller to pay Buyer's Broker all or a portion of the balance due Buyer's Broker under the representation agreement. This amount shall be entered into paragraph 3. ● Seller may accept, reject or counter this term, as with any other term in Buyer's offer. Notice: The amount or rate of real estate commissions is not fixed by law. They are set by each Broker individually and may be negotiable between Seller and Broker (real estate commissions include all compensation and fees to Broker). 1. BUYER REPRESENTATION AGREEMENT WITH COMPENSATION: Buyer has entered into a written agreement to compensate Buyer's Broker % of the purchase price OR, if checked $ for purchase of the Property. 2. COMPENSATION FROM SELLER'S BROKER TO BUYER'S BROKER: As of the date this Seller Payment for Buyer's Broker document is signed by Buyer, and pursuant to the MLS (or ), Seller's Broker has agreed to pay Buyer's Broker % of the purchase price OR, if checked $ upon completion of the transaction. 3. SELLER PAYMENT TO BUYER'S BROKER (SHALL NOT BE GREATER THAN THE AMOUNT IN PARAGRAPH 1 MINUS THE AMOUNT IN PARAGRAPH 2): Seller agrees to pay Buyer's Broker % of the purchase price OR, if checked $ (insert a percentage or an amount which is no greater than the applicable percentage or amount in paragraph 1 less the applicable percentage or amount in paragraph 2). 4. Buyer authorizes escrow holder, upon request, to deliver to Seller a copy of the portion of the written agreement between Buyer and Buyer's Broker identifying the amount of compensation Buyer has agreed to pay Buyer's Broker. 5. If Buyer's Broker is the same as Seller's Broker, then the amount specified in the MLS shall apply in the manner specified in paragraph 2 and 3. Additionally, if Broker has agreed in a listing agreement to a reduced amount of compensation in the event of dual agency, the amount of compensation specified in the MLS will still apply to offset the compensation that Buyer has agreed to pay Buyer's Broker. By signing below, Buyer and Seller each acknowledge that they have read, understand, accept, and have received a Copy of this Seller Payment for Buyer's Broker. Buyer

Date

Buyer

Date

Seller

Date

Seller

Date

© 2023, California Association of REALTORS®, Inc. United States copyright law (Title 17 U.S. Code) forbids the unauthorized distribution, display and reproduction of this form, or any portion thereof, by photocopy machine or any other means, including facsimile or computerized formats. THIS FORM HAS BEEN APPROVED BY THE CALIFORNIA ASSOCIATION OF REALTORS®. NO REPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ACCURACY OF ANY PROVISION IN ANY SPECIFIC TRANSACTION. A REAL ESTATE BROKER IS THE PERSON QUALIFIED TO ADVISE ON REAL ESTATE TRANSACTIONS. IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL. This form is made available to real estate professionals through an agreement with or purchase from the California Association of REALTORS®. It is not intended to identify the user as a REALTOR®. REALTOR® is a registered collective membership mark which may be used only by members of the NATIONAL ASSOCIATION OF REALTORS® who subscribe to its Code of Ethics. Published and Distributed by: REAL ESTATE BUSINESS SERVICES, LLC. a subsidiary of the CALIFORNIA ASSOCIATION OF REALTORS® 525 South Virgil Avenue, Los Angeles, California 90020

SPBB 6/23 (PAGE 1 OF 1)

SELLER PAYMENT TO BUYER'S BROKER (SPBB PAGE 1 OF 1) Phone: 714.960.6384109 Coldwell Banker, 1720 Pacific Coast Hwy Ste 101 Huntington Beach, CA 92648 Produced with Lone Wolf Transactions (zipForm Edition) 717 N Harwood St, Suite 2200, Dallas, TX 75201 Scot Campbell

Fax: 714.536.5394 www.lwolf.com

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