The Buying Process
Buying a house in LA
01. Find a house in desired location.
02. Make an offer in writing. Verbal offers do not exist.
03. With the offer, proof of funds has to be submitted. If all cash offer it must show entire amount. If acquiring a loan a letter of intent from a mortgage broker of pre-qualification of a loan, as well as a statement showing at least the down payment and closing costs amount.
04. Seller may counter offer several times in writing to negotiate terms and price.
05. Accepted offer. “Escrow” is opened. All signed offers and counter offers are submitted to an independent 3rd party company to co-ordinate and oversee signing of loan docs if any, title and deeds. 3% of the purchase price is the usual amount of “earnest money” required, a deposit, which has to arrive in the escrow account within 3 days.
06. Time is of the essence, all time contingencies start when the offer is accepted.
07. History of Title is ordered, examined and approved. This lists owners on title, mortgages and liens of any kind, all of which have to be paid in full at close to give clear title and an insurance policy issued. The report also shows any CC and R’s, rules regulations and or restrictions the home may have set by local home owner associations if any.
08. Physical Inspections contingency- this is usually between 7-15 days.
09. Buyer inspects the home. Buyer’s agent, that’s me, co-ordinates, book, supervise and advise on surveys and inspections, there can be many. These are a buyer’s cost.
10. Results of inspections are analyzed and I advise and recommend if to ask for some repairs to be done by seller and/or credit to be given in form of a price reduction. Seller is not obligated to do either it is instead a negotiation. If buyer is not satisfied they can back out at any point without risk of losing deposit. If satisfied the buyer “drops” contingency.
11. Disclosures from the city and the owner declaring anything known about the property are given to buyer. There are many, buyer has 5 days to examine and question these disclosures, I explain and advise. Once approved this contingency is also dropped.
12. Loan contingency. Usually 21 days. If buyer is obtaining loan they have this time to be approved, if they are not, the buyer can back out without losing deposit, if approved this contingency is dropped. If loan is not given after contingency is dropped, buyer is liable to lose deposit.
13. Appraisal contingency. Standard is 17 days. If acquiring a loan the bank requires an appraisal (valuation) which is buyers cost. This valuation is purely for the bank to verify their loan is covered should it go into default. And because of this homes very rarely come in above the purchase price, If the house comes in below the purchase price the buyer has the right to back out, renegotiate price, or continue.
14. Buyers have dropped all contingencies. Up until this point buyer can back out and deposit will be returned. After all contingencies are dropped should buyer change their mind they are in breach of contract and are liable to lose their deposit to the seller. I advise and protect you during the whole process to ensure this does not happen.
15. “Close” This is completion. Once all conditions are met, repairs if any are finished, funds are wired into Escrow and loan docs signed and close occurs when deed is recorded in the court house. Seller is moved out and buyer gets the keys of the house.
If you have any questions or would like to request further information please contact me.
For UK buyers of a house in Los Angeles we have a guide on what is involved in buying a house in the US compared to the UK: