Buying a Home in San Diego

Welcome to San Diego, America's Finest City, and the land of loads of paperwork! If you have done your homework, you know that there will be a lot of paperwork when you buy your San Diego home. I'm not exaggerating. I've had clients from other states tell me that San Diego (or California, in general) has more than twice the amount of paperwork than they're used to having when buying a home in their home states. While I can't necessarily explain to you why we have so much more, I can review with you most of the paperwork you will see during your San Diego home purchase experience. Below you will find links to blog posts that review many different types of disclosures, contracts, and reports. Most of these posts I have yet to write (but I summarize several in this post), so feel free to sign up for my rss feed to be notified as soon as I write a new post. I always write my posts from a buyer's perspective, because I only represent buyers. My recommendation is that buyers read and learn about the forms they will sign in a real estate transaction, and also that buyers hire an exclusive buyer agent who is familiar with all the forms and specializes in using the forms to protect the buyers' best interests at all times. Click on any link below to read a complete review of each form or contract.

Disclosure Regarding Real Estate Agency Relationship - This is the first form you should ever see and sign from a real estate agent in San Diego. An agent is supposed to have you read and sign this form before acting as your agent in any way, especially before signing a listing agreement, buyer representation agreement, or any sort of purchase contract (but many argue that this form should also be signed before answering real estate questions or showing property to a buyer). You will see different versions of this form several times throughout your purchase transaction.

Disclosure and Consent for More Than One Buyer or Seller (to be explained in detail in a future post) - This form would usually accompany a buyer representation agreement. It's a disclosure that pretty much tells you that you are not the only client of the real estate brokerage you hired.

Buyer Representation Agreement - Exclusive (to be explained in detail in a future post) - This is the agreement you will sign when you hire Globella or another real estate brokerage to represent you on your home purchase. It outlines many things including the agent's duties and obligations to you, your duties and obligations to your agent, compensation, length of the agreement, etc.

Buyer's Inspection Advisory (to be explained in detail in a future post) -  The Buyer's Inspection Advisory would normally accompany the Buyer Representation Agreement or Residential Purchase Agreement. It's a disclosure that outlines the importance of performing professional inspections on the subject property and suggests a long list of inspections that can be performed. Working with me as your exclusive buyer agent can be more expensive than working with another agent. Although performing inspections is optional in California, I require my clients to hire an inspector when they purchase a property. I don't want any surprises after close of escrow.

REO Advisory Form (to be explained in detail in a future post) - This is a disclosure form from the California Association of REALTORS®. We want buyers to be fully aware of everything they need to know when buying a bank-owned (foreclosure) property. This is a must-read form. You will only see this form if you buy a foreclosure listing.

Statewide Buyer and Seller Advisory (to be explained in detail in a future post) - This form explains the real estate process in great detail. It's a must-read form for any buyer. You will see this form when you sign an offer to purchase.

Residential Purchase Agreement (to be explained in detail in a future post) - The residential purchase agreement is the instrument written by the California Association of REALTORS® that is used in most real estate purchase transactions. I recommend my clients to only use this contract for purchases, but there are scenarios when a buyer may not have a choice in the matter (for example, when buying a bank-owned foreclosure or purchasing in a new home community). A buyer should absolutely be familiar with this contract.

Counter Offers (to be explained in detail in a future post) - The counter offer form will only be used if a seller decides to counter a buyer's offer (rather than accept the offer or deny the offer).

Wood Destroying Pest Inspection and Allocation of Cost Addendum (to be explained in detail in a future post) - This form is an optional form that can accompany the Residential Purchase Agreement. The form is used to further clarify who will pay for repairs recommended from a structural pest control company.

Short Sale Addendum (to be explained in detail in a future post) - The short sale addendum will be used if you write an offer on a short sale listing. The short sale addendum allows the buyer to set an expiration date, clarifies how the buyer's deposit check will be handled, clarifies when certain time periods begin, etc., etc. This is a very important form that must be filled out correctly when writing an offer on a short sale.

Contingency Removal (to be explained in detail in a future post) -

Agent Visual Inspection Disclosure (to be explained in detail in a future post) -

Buyer's Inspection Elections (to be explained in detail in a future post) -

For Your Protection: Get a Home Inspection (to be explained in detail in a future post) -

Lead-Based Paint and Lead-Based Paint Hazards (to be explained in detail in a future post) -

Market Conditions Advisory (to be explained in detail in a future post) -

Megan's Law Database Disclosure (to be explained in detail in a future post) -

Real Estate Transfer Disclosure Statement

Seller Property Questionnaire

Property Inspection Report

Request for Repair

Appraisal Report

Local Area Disclosures

Natural Hazards Disclosure Report

Home Warranty

Notice of Your 'Supplemental' Property Tax Bill

Water Heater and Smoke Detector Statement of Compliance

Verification of Property Condition

Withdrawal of Offer

Cancellation of Contract, Release of Deposit, and Joint Escrow Instructions (all above to be explained in detail in future posts) -

As you can see, we have a lot to cover! If you have preferences about which form or contract I write about next, send me an email or leave a comment on this post.

This post does not contain every piece of paper you will ever see in a San Diego real estate transaction. The real estate market is always changing. There are new disclosures and forms that the California Association of REALTORS® puts out in different real estate climates. Different real estate companies may also have their own forms or disclosures they want you to sign. Banks tend to use their own purchase contracts and disclosure forms when selling foreclosure properties or short sales. A buyer should know that a real estate agent can give real estate advice but cannot give legal advice. If you seek legal advice, my suggestion is that you contact an attorney. The San Diego Association of REALTORS® (SDAR) provides a phone number and a link for San Diego real estate attorney referrals. Click here to view that information on SDAR's website. Nothing in this post was intended to be legal advice in any way. The content in this post is simply for informational purposes only.

Before reading this post, be sure to read the first post I wrote about the "Disclosure Regarding Real Estate Agency Relationship" Form - click here.  

The "Disclosure Regarding Real Estate Agency Relationship" Form (also called the "DA Form") is a two-page form that California has designed to educate home buyers and sellers about how agency works (to be read and signed by buyers and sellers before hiring an agent). The first page of the form has been reviewed and explained in my previous post entitled "Learn All About the Disclosure Regarding Real Estate Agency Relationship Form - A FORM YOU MUST SIGN BEFORE WORKING WITH AN AGENT."

The second page of the form holds the Civil Code section that explains in further detail the purpose and meaning of the disclosure form. I doubt that even 5% of buyers and sellers ever read the second page. That's not a good thing. The real estate process in California requires a lot of paperwork, and I urge each of my clients to always read what they are signing. Ultimately, the buyer is responsible for looking out for his/her best interest, and each buyer should always read the whole disclosure form (and all other real estate paperwork) when he/she is signing the paperwork.

By doing your research ahead of time, you can read through the paperwork and get familiar with many of the forms you will be seeing throughout your San Diego home purchase. That being said, I will attempt to break down and review the second page of the DA Form here in this blog post, especially noting some items that a buyer should be aware of.

Below, I have pasted the top paragraph containing definitions of the real estate terms used in the Civil Code and on Page One of the disclosure form. A home buyer should understand all of these terms and definitions, but I have highlighted a few to point out and clarify my opinion.

In my opinion, buyers should educate themselves on what an Agent is and what an Associate Licensee is. As you can read above, if you sign a buyer representation agreement with an Associate Licensee (or, in common language, with a real estate agent) who works for a brokerage (all California real estate agents must either be a Broker or work for a Broker), you are signing an agreement to be represented by the Broker of that company. If you decide to purchase a home that is listed with that same company, you will be in a dual agency situation. Your broker will be representing both you and the Seller in the same transaction, and this limits the role of that Broker in how he/she can advise you and represent your best interests in the transaction (in other words, there is a conflict of interest, because the Broker is already representing the Seller).

Below, you see the next few paragraphs of the Civil Code. Read through it yourself. In general, this section discusses when a real estate agent is required to supply this form to a Buyer or Seller. The highlighted portion discusses specifically when a Buyer Agent is required to supply the Buyer with this form. The document here states that it must be supplied to the Buyer prior to execution of the Buyer's offer to purchase. However, many Buyers today sign exclusive representation agreements with their agents. These agreements are often signed several days, weeks, or months before writing an offer to purchase. It only makes sense that a Buyer should have the opportunity to read this disclosure before committing to sign an agreement with an agent. I don't know why this form leaves out that obvious situation, but I hope the California Association of Realtors fixes it soon.

Below, I share the next couple of paragraphs (we're almost done, I promise!). This section mainly deals with reminding that an agent must disclose to the Buyer and to the Seller exactly who he/she is representing in the transaction (the Buyer only, the Seller only, or Dual Agent representing both the Buyer and the Seller). There is also a reminder highlighted at the bottom that no Seller Agent may act as an agent for the Buyer only. In other words, an agent/broker/company may only act as a an agent of the BUYER ONLY if that agent/broker/company is truly an agent of the BUYER ONLY (and doesn't also represent the Seller). This is just another reminder that if a brokerage represents a Seller, that brokerage must not claim to be the Buyer's exclusive agent (even if different associate licensees are involved with each client).

Here is the last piece of the page.  If your brain has already turned to mush, bookmark this page and come back to read this last section later. If a lightbulb hasn't gone off in your head by now you need to read this last section with a clear mind. This section lists several interesting reminders about agency. I am not going to review them all (just as I have skipped reviewing many sentences throughout this entire post). As a reminder to you, this post is not designed to be legal advice. I am not a lawyer. I am a real estate agent, a REALTOR® (member of the National Association of REALTORS®, the California Association of REALTORS®, and the San Diego Association of REALTORS®), a California Broker, an exclusive buyer agent, a member of the National Association of Exclusive Buyer Agents, an Accredited Buyer Representive (special designation for agents that have completed special courses and requirements to be designated an ABR), etc. BUT I AM NOT A LAWYER. If you are looking for legal advice, call a lawyer.

Wow! Now that I got that out of the way... check out the highlighted section below. Read it, and then read it again. Does it make any sense to you to hire an agent to help you purchase a home who could possibly end up being a dual agent? Do you want an agent who has to hide behind forms and be careful about what he/she can/cannot disclose to you about the seller's motivations... OR do you want an agent who is 100% working for you to help you obtain the best price and terms possible, who is able to share with you any information he/she finds out about the property, seller, etc. to help you make an informed decision?

Here is what IS NOT written in this disclosure form (but is recognized in other California Association of REALTORS® forms such as the "Buyer Representation Agreement - Exclusive," which will be written about and reviewed in a future post on this blog): Buyers have an option to work with a Company/Broker that never represents Sellers. It's called Exclusive Buyer Agency. This is the only way a San Diego home buyer can be certain to avoid a dual agency situation. I hope this post was helpful to you. I hope you now have a better understanding of the form that you will sign first when working with a real estate agent in San Diego. This is just the tip of the iceberg, so check back often for more posts on similar topics. I am committing with this blog to write about important topics for buyers only. If you are a prospective San Diego home buyer, I hope you enjoy the blog!