Carlsbad Home Buyers - What You Need to Know About the Purchase Agreement

By
Real Estate Agent with Solutions Real Estate CA DRE #01490977

 Finger pointing at you, Mr. and Ms. BuyerBuying a Carlsbad home, or a house elsewhere in North County, means using the standard California Residential Purchase Agreement and Joint Escrow Instructions (a.k.a. RPA).

It's an imposing document, especially for first time buyers. The standard document is 8 pages of single-spaced contract language, so for someone who has not done this before it CAN be intimidating.

There are critical decisions that YOU have to make along the way.

But here are some hints to get you through the offer process. However, the intent is NOT to review everything, since you need to do some of the Q and A stuff with your trusted Buyer Agent (you DO have one, don't you? Someone to represent YOUR fiduciary interests?).

There are some KEY DECISIONS you will need to make (but NOT an exhaustive list), so knowing about these in advance will give you some time to ponder the issues, and give some thought to what you might want to do with regard to these matters.

  1. Purchase price- obviously this may be THE MOST IMPORTANT issue you have to decide. Give this a lot of thought. And make sure you talk with your buyer agent to review the comparable sales so you can develop a strategy. This can, and will likely be, a major point of negotiation with the seller.
  2. Initial Deposit- how much are you going to put down as a deposit with the offer, i.e., your good faith down-payment. Not everyone has money but not putting down a deposit will make your offer very weak and a concern to the seller.
  3. Loan Amount- how much are you going to finance? This will depend on your down-payment and how much you are qualified to borrow. If you have not gotten pre-approved, do it NOW!
  4. Balance of the purchase price- if you have other cash you will contribute in addition to the deposit and the loan, you need to indicate that. Some folks only put down the down-payment and the balance is financed.
  5. You need to provide verification of your down-payment and closing costs, in writing, normally within 7 days.
  6. Loan contingency - unless you are a cash buyer, your offer is probably contingent on getting a loan, and you will need to obtain approval of your loan within a specific period, typically this is the standard 17 day contingency period (but negotiable).
  7. Closing date and occupancy - when do you plan to close and obtain occupancy? This can often be a critical date for the seller too. Be prepared to negotiate the time frame.
  8. Costs associated with the purchase - there are a series of questions about costs for which you must decide (or propose) who is paying for what. Some of these are traditionally the seller, some are the buyer's, and some are shared. These include things like the inspection, wood destroying insects inspection and damage remediation, other inspections, natural hazards report, escrow fees (usually split 50/50 but again this is negotiable), transfer taxes, HOA transfer fees, home warranty and more.
  9. Issues relating to statutory disclosures
  10. Items to be included or excluded - things like appliances
  11. Sale of your current home contingency - will not apply if you don't own a home or can buy a new one without selling your current one.
  12. Contingency Period - the standard period during which you much review all the disclosures, have your inspection, obtain your loan and more is 17 days, but is a negotiable time period. You will be expected to remove ALL contingencies by the end of the agree-upon time frame.
  13. Liquidated damages - if you default you may be subject to loss of all or a portion of your deposit. This can be limited to 3% of the purchase price depending on the conditions.
  14. Dispute Resolution - in the event of a dispute, you might agree, with the seller, to go through arbitration in order to resolve the issues.
  15. Miscellaneous Terms and Conditions - maybe it's a short sale, or there are other terms you want to include
  16. Expiration of Offer - how long will you give the seller to consider and respond to your offer. Without a specified date, the default is 3 days.

There you go...a pretty good list of the things you need to consider in the offer process. Not an easy task, and there are some important decisions you will need to make. A qualified, knowledgeable REALTOR is your key to success here.

If I can provide more information or answer any questions, please do not hesitate to contact me by phone or text message at (760) 840-1360 or email me at JDowler@remax.net.

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Rainmaker
76,187
Robert Monk
100% Realty, Inc. - Santa Rosa Beach, FL
Florida Real Estate

Thanks Jeff,

That's very useful information for Real Estate Agents here in Santa Rosa Beach, Florida.

 Robert Monk

Sep 16, 2007 04:24 PM #1
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Hey Robert, thanks. Boy, you are quick - I just posted this.

Jeff

Sep 16, 2007 04:35 PM #2
Rainmaker
558,757
Maggie Dokic | Miami, FL | 305.81.HOUSE (46873)
eXp Realty LLC - Miami, FL
GREEN, CDPE, SFR, Pinecrest | Palmetto Bay |
Jeff, even more important, it's useful information for your home buyers in Carlsbad, CA!  This is a great post for your consumer.  Great job on it.
Sep 16, 2007 07:39 PM #3
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Thank you Maggie. It's a challenging document, especially for new buyers.

Jeff

Sep 16, 2007 11:26 PM #4
Rainer
71,971
Elaine Reese, REALTOR® in central Ohio
Real Living HER, Powell Ohio - Powell, OH
A very good list for buyers to consider. BTW what's a 'trucy' Realtor - I'm not familiar with that term.
Sep 17, 2007 12:48 AM #5
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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Darn that spell chec, it get/s me every time! Thanks, Elaine.

Jeff

Sep 17, 2007 01:30 AM #6
Rainmaker
439,242
Derek and Mariana Wagner
The Artisan Group- Keller Williams Premier Realty - Colorado Springs, CO
The Artisan Group - Colorado Springs REALTORS®
What an awesome and informative post for your clients, Jeff!
Sep 17, 2007 02:43 AM #7
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Thanks, Mariana. I am going to turn it into a marketing piece as part of my First Time Buyer's Kit, and a report they can download from my site.

Jeff

Sep 17, 2007 02:49 AM #8
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert
Jeff, good info.  As a Loan Officer the first thing I go to on the contract is the date for Loan Commitment, that is the one that is most important to me.  I wish I could get 17 days every time.  14 days is usually plenty of time for me, but it is always good to have a little breathing room, because you never know when your going to hit a bump or the Borrower takes to long to get me the documents I need.
Sep 17, 2007 06:03 AM #9
Rainmaker
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Ana Connell
G & C Properties - Burbank, CA
Burbank Real Estate Agent
Great information Jeff!  Very good list of issues that buyers should be aware of.
Sep 17, 2007 06:18 AM #10
Rainer
292,552
Diane Aurit
LKN Realty, LLC - Mooresville, NC
Lake Norman Real Estate
Jeff, great summary!  I miss the CAR contracts terribly but they are very long and for the new buyer a bit overwhelming.  You did a good job of breaking it down to the key points.
Sep 18, 2007 07:49 AM #11
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
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George - now that the market is slowr 17 days is the norm and some folks ask for more. In the buys days it was commonly 10 - 12. Thanks for your thoughts on this issue.

Jeff

Sep 18, 2007 03:57 PM #12
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Ana - thanks. I know when I came to CA 3 years ago I was overwhelmed with the form. So different from back in MA. Thanks for your comments.

Jeff

Sep 18, 2007 03:58 PM #13
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Diane - Thank you. I know I probably spend at least a hour on this form with buyers, even those that have bought before.

Jeff

Sep 18, 2007 04:00 PM #14
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Robert and Lisa Hammerstein -201-315-8618
Keller Williams Valley Realty - Hillsdale, NJ
Bergen County NJ Real Estate
Well done Jeff!  The things we take for granted really should be explained to our customers in a way that takes into account that they don't do it everyday, like we do.  This is a very good explanation!
Sep 19, 2007 09:26 AM #15
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Thanks, Lisa. These sorts of things are pretty intimidating to buyers, especially new ones.

Jeff

Sep 21, 2007 02:46 AM #16
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