REST Handbook Master

201 Regency Executive Park Drive | Charlotte, NC 28217-3986 | (866) 896-7045

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Real Estate Services Team Handbook |TABLE OF CONTENTS Welcome ..................................................................................................................................................... 3 Meet the Team............................................................................................................................................ 4 Checklists ..................................................................................................................................................... 5 Home Find ..................................................................................................................................................... 5 Home Sale ..................................................................................................................................................... 6 Countdown Calendar .................................................................................................................................... 7

Overview of the REST Program .................................................................................................................. 8 Selling a Home .............................................................................................................................................. 9 8 Reasons You Should Work With REST and Their Realtor ......................................................................... 10 Buying a New Home.................................................................................................................................... 11

Understanding Agency Relationships ...................................................................................................... 13 Who Does the Real Estate Agent Represent?............................................................................................. 14

Buy Smart Program ................................................................................................................................... 18 Determining Your Housing Requirements .................................................................................................. 19 New Construction ....................................................................................................................................... 20 5 Property Tax Questions You Need to Ask ................................................................................................ 20 Your Property Wish List .............................................................................................................................. 21 Considerations When Purchasing a Condo ................................................................................................. 22 10 Questions to Ask the Condo Board ........................................................................................................ 23 Questions to Ask the HOA When Purchasing a Condo ............................................................................... 24 Common Closing Costs for Buyers .............................................................................................................. 25 Who is the Builder?..................................................................................................................................... 26 Making an Offer to Buy ............................................................................................................................... 28

Sell Smart Program ................................................................................................................................... 30 Managed Home Sale Marketing Program .................................................................................................. 30 Closing Documents You Should Keep ......................................................................................................... 32 What Not to Overlook on a Final Walk-Through ........................................................................................ 33 Closing Costs ............................................................................................................................................... 34 The Real Estate Contract............................................................................................................................. 36

Mortgage Assistance................................................................................................................................. 38 5 Factors that Decide Your Credit Score ..................................................................................................... 39 Credit Do’s and Don’ts During the Loan Process ........................................................................................ 40 The Do’s and Don’ts When Applying for a Mortgage ................................................................................. 41 Conventional Purchase Checklists .............................................................................................................. 41 What You Can Do to Improve Your Credit .................................................................................................. 44 The Mortgage Loan Process........................................................................................................................ 45 Your Map to a Successful Closing ............................................................................................................... 46

Insurance ................................................................................................................................................... 48 5 Things to Know About Title Insurance ..................................................................................................... 48 5 Things to Know About Homeowner’s Insurance ..................................................................................... 48

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Real Estate Services Team Handbook Household Goods Move ........................................................................................................................... 49 Moving Checklist for Sellers ........................................................................................................................ 50

Environmental Issues ................................................................................................................................ 51 Glossary of Terms ..................................................................................................................................... 55

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Real Estate Services Team Handbook |WELCOME Welcome! Our Real Estate Services Team is offering you the opportunity to take advantage of many programs, services, and discounts for your personal move that are typically only available through corporate relocation programs. This can help you not only obtain professional guidance regarding real estate needs, but can help you contain costs as well.

Your Real Estate Services Team understands the emotional and financial impact of moving. We will provide you with a menu of services that offer support and guidance throughout the move. The program's goals are to: 1. Be a resource for questions and problems that arise during the move process.

2. Reduce the stress and disruption that the move might cause you and your family. *Note: Do not contact any real estate agents Our full-service Real Estate Services Team program provides you with a Personal Move Manager at no cost who will work closely with you throughout the transaction. They will provide access to: • • • • •

Top, pre-screened, relocation trained agents who are selected for their expertise in your local real estate community.

The Home Sale Program and assist with creating a marketing plan to obtain the optimum price for your home in a timely manner.

“Buy Smart” Program Preferred vendors including mortgage, moving, inspectors and attorneys.

Manage and expedite all phases of the move process.

The Real Estate Services handbook will help to define the role of the service providers, prompt you on the steps associated with selling and buying a home, and explain the “Managed Home Sale” and “Buy Smart” programs in greater detail.

Our service providers will offer special discounts where available, to our Full Service Program participants. Be sure to ask your Personal Move Manager about these offers.

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Real Estate Services Team Handbook |MEET THE TEAM Lois Johnson

Director

With over 24 years of real estate experience including nine years as a full time agent/broker in NJ and 15 years in the Relocation industry at ADP, Lois is at her best when assisting our Associates with buying or selling homes. Jim Carpenter, a recent participant in the Program, had this to say about working with Lois: “The REST Program is ADP’s best kept secret. Let me summarize: outstanding follow up skills, extensive knowledge of the real estate market and always making me feel I was her single focus! Saying it simply, Lois and her team talked me off the ledge on more than one occasion. Bravo for them, their skills, and knowledge of the entire buying and selling process’’. Her interests outside of work include landscape design, house renovations, boating, Scottish Terrier rescue and time with her husband, daughter and Scotties, Spike & Tessie.

Simon Cole

Personal Move Manager

Simon Cole joined the ADP Real Estate Services Team (REST) in 2009. Originally from London, England, he has been in the real estate industry in London and in the US for over 25 years. Assisting ADP clients and associates with their personal moves has been an exciting challenge and has allowed him to use his experience and real estate knowledge to the fullest. He is excited to be part of what he considers to be a vital and unique ADP service and provides support and guidance to participants in these ever changing real estate and mortgage industries. In his free time he plays tennis, coaches soccer and spends time with his wife and twins.

Dawn Smiarowski

Personal Move Manager

Dawn Smiarowski joined the REST Team in May 2013 as a Real Estate Counselor. Born and raised in Westchester County, NY, Dawn is a graduate of Pace University. Dawn’s former career in sales/marketing allowed her to relocate to IL, FL, IN and OH. Dawn has been a licensed Realtor/Broker for 12 years in Charlotte, NC. In her free time, Dawn enjoys time with her husband, Michael and two children at the beach, and personal interests include boating, hiking, cooking and entertaining.

Robert Newhouse

Coordinator

Robert Newhouse joined the REST Team in May of 2013 as our Real Estate Coordinator. His responsibilities include vendor and website management and day-to-day operations. Robert was born and raised in the Carolinas and is a recent graduate of Clemson University. His extensive experience with computers prepared him for the behind-the-scenes work that helps keep the REST Team running smoothly. Robert’s interests outside of work include the great outdoors and instructing skydiving students over the Blue Ridge Mountains.

New Guy?

Personal Move Manager

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Real Estate Services Team Handbook |HOME PURCHASE CHECKLIST Getting Started: □ Complete an intake call with your assigned counselor □ Complete pre-approval through ADP Preferred Mortgage Services □ Receive your real estate agent assignment from your counselor □ Follow up with your counselor after each home-find visit □ Send counselor MLS link to property of interest □ Counselor to review: □ Property details and seller disclosure □ Sold comparable properties to assist in creating a purchase offer □ Keep counselor updated on counter offers received from seller □ Advise counselor of final agreement and terms

After Signing the Contract □ Attorney review, if applicable □ Set up a home inspection □ Send executed contract to mortgage lender and lock in rate if appropriate □ Lender will order appraisal □ Send inspection results to counselor to review and discuss repair request to seller □ Contact mover (ask ADP for a referral) □ Contact insurance provider to get rate quote for homeowner’s insurance (Start with current auto policy holder) □ Read mortgage commitment upon receipt to be sure you have satisfied all conditions □ Schedule walk-through with agent day prior to closing to insure repairs complete and in satisfactory condition □ Send counselor closing statement to review upon receipt □ Get bank check for funds needed at closing □ Attend closing and receive keys to your new home!

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Real Estate Services Team Handbook |HOME SALE CHECKLIST Getting Started: □ Complete an intake call with your assigned counselor □ Counselor to assign two agents to complete: □ 1. Walk through □ 2. Formal Presentation □ Review each agent’s ERC reports with counselor to determine best agent to list your home □ Meet with selected agent to sign listing paperwork (6 month term) and stage property for photo tour □ Counselor to provide bimonthly marketing updates including buyer feedback, price adjustments, and new/pending/sold properties □ Review any offers received with counselor □ Keep counselor updated on counter offers or acceptance of terms

After Signing the Contract □ Attorney review of contract, if applicable □ Review inspection report and any repair requests (if any) with counselor □ Schedule repairs with qualified contractors □ Contact mover (ask ADP for referral) □ Confirm loan commitment issued by required date □ File Change of Address with USPS □ Buyer’s agent will schedule walk-through prior to closing □ Upon receipt review closing statement with counselor □ Get bank check for funds needed at closing (if applicable)

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Real Estate Services Team Handbook |COUNTDOWN CALENDAR 30

Prepare your household inventory and note items to be sold or discarded.

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Arrange for termination of utility services and hook-up in your new location.

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Complete a Change of Address with USPS, and mail change of address cards to friends, family and subscriptions.

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Call clubs and organizations for contacts in your new location.

Cancel/transfer memberships if needed.

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Find out about community organizations and groups in your new location.

RELAX!!!

Call the Chamber of Commerce in your new town and find out about social and cultural groups and childcare.

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Find out about automobile and driver’s registration requirements.

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Have your car checked and have necessary repairs made.

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Notify stock and securities companies about your move. Close bank accounts and safe deposit boxes if necessary.

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Notify insurance companies about your move and have policies updated.

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Have area rugs and clothing cleaned if storagein-transit is necessary.

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Have wall-towall carpeting taken up if you are taking it with you.

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Drain oil and gasoline from power tools and lawn care machinery. Drain water from garden hoses.

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Obtain referrals, medical records, prescriptions, and veterinary from doctors. Obtain copies of children’s school records.

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1

Return library books and hand in library cards.

Make travel plans and reservations for your move.

Reconfirm travel reservations for your move.

Begin packing.

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Pay outstanding bills.

READ A BOOK!!!

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Notify your manager of your new address and phone numbers.

Close charge accounts at local stores.

Arrange for transportation of plants and pets.

Notify your attorney about updating legal documents.

DATE NIGHT: SEE A MOVIE!!!

VISIT FRIENDS!!!

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Start using up frozen food.

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Pick up laundry, dry cleaning, and items in storage.

Start packing suit cases.

TAKE A DRIVE!!!

Empty and defrost refrigerator and freezer.

Remove fixtures, curtains, and items you plan to take with you.

Prepare “Do Not Move” cartons. Plan travel games, activities, and snacks for children..

Have a garage

sale.

Have appliances serviced.

Prepare a floor plan of your new home to assist the movers in unpacking. Dispose of flammable materials.

Clean home for buyer walk through.

Prepare “Pack Last, Open First” cartons and last minute items.

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Real Estate Services Team Handbook |OVERVIEW OF THE REAL ESTATE SERVICES TEAM (REST) PROGRAM The Real Estate Services Team provides you counseling services and access to preferred vendors to help you save time and money.

This book provides information exclusively to those using REST. You may also investigate our SelfService program located on our website. This information may be accessed as a secondary source in conjunction with our Real Estate Services Team or as a primary resource for interested associates and select clients. Lois is not sure if it’s appropriate.

Eligibility These programs are extended to all ADP associates, Total Source, Major Account Companies Service clients and worksite employees and immediate family members.

• Note: Do not contact any real estate agents. Your Personal Move Manager will assign a top local agent from the REST Program.

Buying/Selling/Financing Process/Moving The Real Estate Services Team (REST) offers a comprehensive package that coordinates all aspects of your move. We offer the following services through your Personal Move Manager: • • •

Professional advice and guidance on home sale and home find; Negotiated discounts where available; Pre-Screen access to service providers.

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Real Estate Services Team Handbook |SELLING A HOME The Managed Home Sale Program is a program designed to assist in marketing your home. Your Personal Move Manager’s role during this program is to: • Provide you with two professional real estate agent assignments from competing companies with strong local market share to provide pricing/marketing analysis (BPO- broker price opinion).

• Review BPO and assist in making agent selection to list home.

• Review agent marketing strategy • Review market conditions and generate sales ideas • Provide bi monthly market updates • Review all purchase offers • Review home inspection report issues • Monitor the sale until closing Your “Preferred” real estate agent will provide the following services: • Complete a Brokers Price Opinion (BPO) • Recommend any important improvements or repairs that will enhance marketability • Develop a marketing strategy • Provide bi weekly reports to your Personal Move Manager • Implement advertising campaigns • Create a brochure highlighting the features of your home • Implement open houses, if customary for the area • Present all offers to you and your Personal Move Manager • Negotiate all offers on your behalf

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Real Estate Services Team Handbook |8 REASONS WHY YOU SHOULD WORK WITH REST AND THEIR REALTOR Not all real estate practitioners are REALTORS®. The term REALTOR® is a registered trademark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics. Here's why it pays to work with a REALTOR®.

1. Navigate a complicated process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multipage settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.

2. Information and opinions. REALTORS® can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

3. Help finding the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR® to find all available properties.

4. Negotiating skills. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.

6. Someone who speaks the language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate language.

7. Experience. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. Even if you have done it before, laws and regulations change. REALTORS®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.

8. Objective voice. A home often symbolizes family, rest, and security — it’s not just four walls and a roof.

Because of this, homebuying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they’ll every make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.

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Real Estate Services Team Handbook |Buying a New Home Your home is likely the greatest purchase you will make in a lifetime.

The Buy Smart Program is designed to support you in making a wise purchase decision.

Your Personal Move Manager’s role during this program is to: • Counsel you on all aspects of home find and purchase • Select top full-time local real estate agents who are knowledgeable in your desired area • Review your purchase offer • Review any problems that may arise with the home inspection Your “Preferred” real estate agent will provide the following services: • Provide you with an area tour of the communities that fit your needs • Provide you and your Personal Move Manager with a statistical snapshot of active, pending, and recently sold homes comparable to the home you are considering for purchase • Advise you of local and state requirements • Assist you in evaluating and preparing a contract offer for the purchase of the selected property The Buy Smart Program will also provide you with additional services. Please see our preferred provider page for a listing of the following: • Attorneys and title contacts available through our network or closing agents.

• Preferred home inspection company. See our preferred provider list or visit http://www.ashi.org.

• Preferred mortgage lenders.

• Preferred insurance vendors.

• Preferred movers.

Shipping Your Household Goods The Real Estate Services Team provides negotiated discount rates on interstate moves using movers that have a proven track record of dependability and good service. For local moves, check you’re your Personal Move Manager that may be able to provide you with a list of preferred movers in your local area.

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Real Estate Services Team Handbook Financing Your Home Purchase The Mortgage Consultant: If you are purchasing a home, you have the option to use an ADP preferred Mortgage Lender.

Mortgage Lender: If you choose to use this service, you will work with a dedicated Mortgage Consultant who will;  Provide an overview of the ADP Benefit including capped lender fees at $100.00.

• Explain and offer various financing options that may fit your needs.

• Provide competitive, discounted rates with no points or origination fees.

• Provide you with a mortgage pre approval.

IMPORTANT: If you choose to attend any open house or new construction prior to agent assignment, please let the onsite agent know you have representation through your company’s Real Estate Service Program.

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Real Estate Services Team Handbook | UNDERSTANDING AGENCY RELATIONSHIPS It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction. Ask what type of agency relationship your agent has with you: Seller's Representative (also known as a Listing Agent or Seller’s Agent) A seller's agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is created by a listing contract.

Buyer's Representative (also known as a Buyer’s Agent) A buyer’s agent is hired by prospective buyers to represent them in a real estate transaction. The buyer's rep works in the buyer's best interest throughout the transaction and owes fiduciary duties to the buyer. The buyer can pay the licensee directly through a negotiated fee, or the buyer's rep may be paid by the seller or through a commission split with the seller’s agent.

Subagent A subagent owes the same fiduciary duties to the agent's customer as the agent does. Subagency usually arises when a cooperating sales associate from another brokerage, who is not the buyer’s agent, shows property to a buyer. In such a case, the subagent works with the buyer as a customer but owes fiduciary duties to the listing broker and the seller. Although a subagent cannot assist the buyer in any way that would be detrimental to the seller, a buyer-customer can expect to be treated honestly by the subagent. It is important that subagents fully explain their duties to buyers.

Disclosed Dual Agent Dual agency is a relationship in which the brokerage firm represents both the buyer and the seller in the same real estate transaction. Dual agency relationships do not carry with them all of the traditional fiduciary duties to clients. Instead, dual agents owe limited fiduciary duties. Because of the potential for conflicts of interest in a dual-agency relationship, it's vital that all parties give their informed consent. In many states, this consent must be in writing. Disclosed dual agency, in which both the buyer and the seller are told that the agent is representing both of them, is legal in most states.

Designated Agent (also known as an Appointed Agent) This is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as an agent of the seller and which will act as an agent of the buyer. Designated agency avoids the problem of creating a dual-agency relationship for licensees at the brokerage. The designated agents give their clients full representation, with all of the attendant fiduciary duties. The broker still has the responsibility of supervising both groups of licensees.

Nonagency Relationship (also known as a Transaction Broker or Facilitator) Some states permit a real estate licensee to have a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as to the duties owed to the consumer and the name used to describe them. Very generally, the duties owed to the consumer in a nonagency relationship are less than the complete, traditional fiduciary duties of an agency relationship.

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Real Estate Services Team Handbook |WHO DOES THE REAL ESTATE AGENT REPRESENT? Agency Relationships An agency relationship is created when one person, known as the client, delegates the responsibility to represent their interests in a business transaction to another person, known as the agent, and that person accepts the delegation of such responsibility.

Real estate agents are licensed by the state in which they work to represent member of the public in the purchase, sale or leasing of real property. The real estate agent’s responsibilities may be defined by specific state laws relating to agency, and for the general principals of agency law, and those real estate agents who are members of the National Association of Realtors, the REALTORS Code of Ethics.

An agency relationship is one of trust and confidence between the client and the agent and is also called a fiduciary relationship. In a fiduciary relationship, the agent owes the client the following fiduciary duties: • Loyalty • Obedience • Confidentiality • Disclosure • Accounting • Reasonable care and diligence Seller Agency: All Agent’s Represent the Seller Home Seller: Chooses Listing Broker Signs Listing Agreement Listing Broker: Markets Home negotiates for Seller, Negotiates for Seller Sub-Agent: Shows Home to Buyers, Negotiates for Seller Buyer: Choose Home Negotiates for His Herself Historically, throughout the country, real estate agents have been representing only sellers in real estate transactions even when working with buyers.

This was accomplished through the Multiple Listing systems using a process known as subagency. In sub-agency the broker who lists the property for sale, known as the listing broker, offers brokers and sales agents of other companies, known as cooperating brokers, the opportunity to work for the listing broker’s client, the seller, as sub-agents with the same fiduciary responsibilities to the seller as the listing broker has. The primary reason for offering subagency is for the cooperating brokers to help the listing broker find a buyer for the seller’s home. Although the buyer has access to a real estate agent in

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Real Estate Services Team Handbook the transaction, they have no true representation because as sub-agents, the cooperating brokers owe fiduciary responsibilities to the listing broker’s client, the seller, only.

The system has been used for many years and works fairly well as long as the buyer is aware that the agent working with them represents the seller and does not share confidential information with the agent or look to the agent for guidance and assistance in determining the best price to pay for a home and the agent is aware that they represent the seller and does not share confidential information about the seller with the buyer or advise the buyer on a price to pay for the home other than the seller’s list price. Simply put if you do not have a buyer agency agreement, your agent is acting for the seller.

Buyer Agency: Each Side is Equally Represented Home Seller: Chooses Listing Broker Signs Listing Agreement Listing Broker: Markets Home negotiates for Seller, Negotiates for Seller Buyer Agent: Helps Buyer find Home, Negotiates for buyer Buyer: Chooses Buyer Broker, Signs Buyer Agreement, Chooses Home In recent years, real estate agents have come to realize that they have considerable knowledge and experience that is of great assistance to buyers in finding and deciding on a home to purchase as well as the best price to pay and have begun to offer buyer agency representation services. In many areas of the country Buyer Agency has become so prevalent that the traditional sub-agency system is no longer used.

When a buyer is represented by a real estate agent, the agent owes the same fiduciary duties of Loyalty, Obedience, Confidentiality, Disclosure, Accounting and Reasonable Care and Diligence to the buyer who is their client. In a buyer agency relationship, the buyer can freely discuss the value of properties, negotiating strategies and personal finances with their agent. The buyer’s agent can provide their buyer client with their opinion of the condition of the property, the impact of improvements on value, the seller’s motivation for seller and a variety of other information that a seller’s agent cannot provide to a buyer.

A buyer’s agent has a fiduciary duty to make every reasonable effort to locate the property described by their buyer client, including searching for homes that may be available for sale but not listed with a real estate company. Although a seller’s agent working with a buyer customer will work hard to find the perfect property for their customer, they have some limitations because of the fiduciary duties owed to their client the seller. Please discuss buyer agency with your real estate agent and your attorney prior to buying a home.

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Real Estate Services Team Handbook Dual Agency: Each Side is Equally Represented with the Same Brokerage BROKER Home Seller: Chooses Listing Broker, Signs Listing Agreement, Agrees to Dual Agency Listing Agent: Markets Home, Negotiates for Seller Buyer Agent: Helps Buyer find home, Negotiates for Buyer Buyer: Chooses Buyer Broker, Signs Buyer Agreement, Chooses Home, Agrees to Dual Agency Many times a buyer who is being represented by a broker as a buyer’s agent will become interested in the home of a seller who is represented by the same broker as a seller’s agent. In this situation the broker has an agency relationship with two clients who have opposing goals in the same transaction (buyer and seller) which is known as dual agency.

Some states will allow a broker to work as a dual agent in a real estate transaction with the informed written consent of both parties to the transaction. Both clients must agree to release the broker from the fiduciary duty of Loyalty and the broker must agree to treat the interests of both clients equally and may not “advocate” for the interests of either client over the other. Both clients must agree to modify the fiduciary duties of confidentiality and disclosure, which are in conflict in a dual agency relationship, and the Broker must agree not to disclose any information that could create a negotiating advantage for either client without permission from both clients. Please discuss Dual Agency with your real estate agent and your attorney prior to buying or selling a home.

DESIGNATED/STATUTORY AGENCY A special form of Dual Agency allowed by law in some states: In the situation where a buyer is being represented by a broker as a buyer’s agent becomes interested in the home of a seller who is being represented by the same broker as a seller’s agent, some states have written laws that allow the broker to ‘designate‘ an individual sales agent within the company to represent the seller’s interests in the transaction exclusively and a second individual sales agent to represent the buyer’s interests exclusively. In a designated agency situation, while the broker retains the role of a dual agent overseeing the transaction and must treat the interests of both parties equally, each designated agent may work to promote the best interests of the party they have been designated to represent in the transaction giving each party the benefit of an ‘advocate’ to work for their interests in the transaction.

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Real Estate Services Team Handbook TRANSACTION BROKER A non-agency relationship Many states allow real estate agents to work with buyers and for sellers in a non-agency relationship known as Transaction Broker. A transaction broker works simply to bring together buyers and sellers and to facilitate the transaction between the two parties. While they do have the legal responsibility of a general duty of fair dealing to both parties to the transaction, because they are not representing either party as an agent, they do not have any fiduciary responsibilities to either party in the transaction. Please discuss transaction brokerage with your real estate agent and your attorney prior to buying or selling a home. Your ADP counselor will be able to explain these various agency relationships to you.

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Real Estate Services Team Handbook |BUY SMART PROGRAM The goal of the ‘Buy Smart’ is to educate the participant on the home finding process and make the purchase transaction go as smoothly and stress free as possible for you and your family. Your Personal Move Manager’s mission is to assist you. REST seeks to maintain stringent quality control over their services by monitoring your satisfaction. You should keep in close contact with your Personal Move Manager during the home-finding process so that you can receive maximum support.

The Real Estate Services Team (REST) realizes that finding a new residence is one of the most important personal decisions you will make. To help you and your family make an informed choice and a smooth transition, REST provides you access to a variety of services that will help you to BUY SMART when selecting your new residence.

BUY SMART This is a term that is used today to mean an educated and wise decision in purchasing a new home.

Through the real estate services network, information gathering, area tours when moving to a new location, and the Buy Smart program, we provide you with the tools necessary to make educated and informed decisions. Please be sure to take advantage of all aspects of this program.

Evaluation Stage During your initiation call with your Personal Move Manager, you and/or your spouse will address some of your specific real estate requirements. Issues regarding type of housing, size of residence, travel time to work, schools, and any other personal requirements should be addressed during this call.

The Personal Move Manager will recommend highly successful real estate agents with proven track records. Should you have an agent that you feel is extremely qualified, feel free to ask your Personal Move Manager to interview them for possible inclusion in the Program.

“Being new to the real estate market as a first-time buyer, I was not quite prepared for what I encountered and all the steps it takes to buy a home. Everything I needed was provided to me.”

– Chris

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Real Estate Services Team Handbook |DETERMINING YOUR HOUSING REQUIREMENTS The three most important factors in selecting a home are LOCATION LOCATION and LOCATION! You can renovate the home, but you can’t change the location! Even your dream home may become a nightmare if the schools don’t fill the children’s needs, you don’t like the most convenient grocery stores, the drive to work is unnecessarily difficult, or the neighborhood doesn’t fit your lifestyle.

Don’t just consider the space, investigate the place!

Home Find Considerations  Here are some questions you may want to consider  Talk to neighbors. What do they like most about the community? Schools?  What is the zoning? Consider the overall area surrounding the home, not just the street of a particular home. Is rezoning a possibility? Could surrounding property be rezoned without you knowing? Could the existing road be widened?  What is the school system, and how highly is it rated? What elementary, middle, and high school is assigned to this home? This is a major consideration and can affect resale value. How convenient is the school bus route? We suggest you visit with the school principal and tour the facility. Ask about per-pupil expenditures, academic rating, class size, and extracurricular activities.  What about public safety in the area? How far is it to the fire station? Police station? Local hospital?

Does the community offer 911 service or central dispatch for fire, police, and ambulance?  What are the property taxes? What services to the taxes cover? How do the taxes compare with the other local community tax rates?  What shopping is available in the area? Grocery stores? Discount stores? Retail stores? Mall?  What medical services are available?  Desired house of worship in close proximity?  Does the neighborhood suit your lifestyle? Does it include an HOA (Homeowner’s Association)?  How close is entertainment including movie theaters, sports facilities, restaurants, and so on?

These questions are personal and cannot be, in most cases, answered by your agent and will need your own individual research.

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Real Estate Services Team Handbook |NEW CONSTRUCTION Consider the following before deciding to purchase new construction:

Delivery Time Many times the developer will run into delays that are outside their control. Permits, certificates from local governmental agencies, labor difficulties, and weather conditions are a few of the areas that might create a dely. Ask yourself if you are financially and emotionally ready to accept some of these common delays, and be sure to have a plan in place if they come into play.

Cancellation If you want to cancel the contract and look for a new home, what penalty will you pay? This issue should be determined in the initial contract with the builder. Your closing date should be set up as a TIME IS OF THE ESSENCE closing.

Advertising and Promotion Carefully read all advertising materials and claims made by your builder. Keep copies of all agreements, brochures, and advertisements. Be certain you are getting the quality materials contracted for, and ask for all accompanying warranties.

Mortgage Financing Beware of special financing terms by the builder! If the builder is providing a finance package to you, find out how long you have to receive a commitment. The builder typically charges lender fees. Additional items that may be hidden fees to consider are landscaping, alarm systems, irrigation systems, driveway paving, and property enhancements. Inquire whether there are charges for change orders.

|5 PROPERTY TAX QUESTIONS YOU NEED TO ASK 1. What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller’s tax bill to help you determine this information.

2. How often are properties reassessed, and when was the last reassessment done? In general, taxes jump most significantly when a property is reassessed.

3. Will the sale of the property trigger a tax increase? The assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.

4. Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate.

5. Does the current tax bill reflect any special exemptions that I might not qualify for? For example, many tax districts offer reductions to those 65 or over.

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Real Estate Services Team Handbook |YOUR PROPERTY WISH LIST What does your future home look like? Where is it located? As you hunt down your dream home, consult this list to evaluate properties and keep your priorities top of mind. □ Neighborhoods  Talk to neighbors  Zoning or re-zoning of future or current plans  Is there an HOA? □ Schools  What school systems do you want to be near?  Consider school report cards □ Transportation How close must the home be to these amenities:  Work (time and distance)  Public transportation  Airport  Expressway  Neighborhood shopping  Schools  Other (medical, house of worship, etc) □ Home Style  What architectural style(s) of homes do you prefer?  Do you want to buy a home, condominium, or townhome?  Would you like a one-story or two-story home?  How many bedrooms must your new home have?  How many bathrooms must your new home have?  Schools □ Home Condition  Do you prefer a new home or an existing home?  If you’re looking for an existing home, how old of a home would you consider?  How much repair or renovation would you be willing to do?  Do you have special needs that your home must meet? □ Property Taxes  Services covered  Comparisons with neighboring communities

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Real Estate Services Team Handbook |CONSIDERATIONS WHEN PURCHASING A CONDO Condominiums and townhouses offer an affordable option to single-family homes in most areas. But consider these facts before you buy.  

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Storage. Some condos have storage lockers, but usually there are no attics or basements to store belongings.

Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you hate yard work, this may be the perfect option for you.

Amenities. Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home.

Maintenance. Many condos have onsite maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home.

Security. Many condos have keyed entries and or even door attendants. Plus, you’ll be closer to other people in case of an emergency.

Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees agreed to by the condo board, whether or not you’re interested in the amenity or not.

Resale. The ease of selling your unit is more dependent on what else is for sale in your building, since units are usually fairly similar. Single-family homes usually are more individual.

Condo rules. Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.

Neighbors. You’re much closer to your neighbors in a condo or townhome. If possible, try to meet your closest prospective neighbors before making a decision

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Real Estate Services Team Handbook |10 QUESTIONS TO ASK THE CONDO BOARD Before you buy, contact the condo board with the following questions. In the process, you’ll learn how responsive — and organized — its members are. You’ll also be alerted to potential problems with the property.

1. What percentage of units is owner-occupied? What percentage is tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can’t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.

3. How much does the association keep in reserve? Plus, find out how that money is being invested.

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does and doesn’t the assessment cover? Does the assessment include common-area maintenance, recreational facilities, trash collection, and snow removal?

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board’s fiscal policy.

7. How much turnover occurs in the building? This will tell you if residents are generally happy with the building. According to research by the NATIONAL ASSOCIATION OF REALTORS®, owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a building with five or more units stay for a median of four years.

8. Is the condo building in litigation? This is never a good sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer’s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren’t in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you’re buying, may require separate assessments.

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Real Estate Services Team Handbook |QUESTIONS TO ASK THE HOA WHEN PURCHASING A CONDO Gone are the days when you can get offers accepted on a condominium and then shop for a loan. The financing contingency period needs to be devoted to approving the complex, not the borrower.

Some of the questions you should ask are:                   

What is this project defined as? Existing, Conversion, or New Construction?

Are ALL units and common elements in the project 100% completed?

Is the project subject to additional phasing?

Are the units owned in Fee Simple or Leasehold?

Are the homeowners in control of the HOA instead of the developer?

On new construction projects, are at least 90% of the total units in the project been conveyed or under contract to purchasers other than the developer as primary residences and/or 2 nd homes?

On Existing/Established projects, are at least 51% of the units owner occupied and/or 2nd homes?

Are more than 10% of the units owned by one entity or investor?

Is more than 20% of the project used for commercial space?

Are more than 15% of the total units greater than 30 days delinquent in the HOA fees owed?

Is 10% of the HOA annual budged income designated for replacement reserves?

Is at least 60% of the reserve account funded?

Are adequate funds budgeted for insurance deductible?

Does the project have an insurance policy with 100% replacement cost on all common elements, recreational facilities, or property?

Is the project tin a flood zone? If yes, is flood insurance in place?

In projects with more than 20 units is there a Fidelity bond coverage?

Is the HOA involved with any litigation, mediation, arbitration, or other dispute resolution process pending or anticipated?

Is HOA suing developer for construction defects or other property deficiencies? If a lawsuit has been settled, is sufficient money available to correct all the problems?

Are there any pending special assessments?

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Real Estate Services Team Handbook |COMMON CLOSING COSTS FOR BUYERS You’ll likely be responsible for a variety of fees and expenses that you and the seller will have to pay at the time of closing. Your lender must provide a good-faith estimate of all settlement costs. The title company or other entity conducting the closing will tell you the required amount for: Lender Fees (Capped at $100 through REST Preferred Lenders) • Down payment • Loan origination • Points, or loan discount fees, which you pay to receive a lower interest rate • Home inspection • Appraisal • Credit report • Private mortgage insurance premium Closing Costs • Insurance escrow for homeowner’s insurance, if being paid as part of the mortgage • Property tax escrow, if being paid as part of the mortgage. Lenders keep funds for taxes and insurance in escrow accounts as they are paid with the mortgage, then pay the insurance or taxes for you.

• Deed recording • Title insurance policy premiums • Land survey • Notary fees • Prorations for your share of costs, such as utility bills and property taxes A Note About Prorations: Because such costs are usually paid on either a monthly or yearly basis, you might have to pay a bill for services used by the sellers before they moved. Proration is a way for the sellers to pay you back or for you to pay them for bills they may have paid in advance. For example, the gas company usually sends a bill each month for the gas used during the previous month. But assume you buy the home on the 6th of the month. You would owe the gas company for only the days from the 6th to the end for the month. The seller would owe for the first five days. The bill would be prorated for the number of days in the month, and then each person would be responsible for the days of his or her ownership.

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Real Estate Services Team Handbook |WHO IS THE BUILDER? It is very important to educate yourself about the builder/developer. Your real estate agent, local attorney, and other people who have had homes built by the builder will be great resources. The following are some questions to consider:            

What kind of reputation does the builder have?

What is the builder’s BBB rating?

Does the builder complete construction in a timely fashion?

If post-construction problems arose, was the builder responsive?

Has the builder/developer completed other homes or developments? Where? Timeliness?

Have any complaints been field against the builder/developer? If so, what was the disposition of the complaints?

Is there any litigation pending? Have any liens or judgments been filed?

Is there individual responsibility for liability or is this a corporation? If it is a corporation, who are the principals and will they consider taking personal responsibility?

If you are purchasing in a development, are there phases of completion? Which phase will your home be built in?

Does the builder require that your down payment be used to help fund the home? If so, how is the money secured in case the builder goes into bankruptcy?

Is there a warranty, and how does it work?

Association and amenities – are improvements (pool, clubhouse, tennis) in?

Contract Considerations Generally a builder requires that you use his/her contract, which is heavily weighted in favor of the builder. It is very important that you seek legal counsel to review all aspects of the contract prior to signing. The following is a list of suggested provisions to be negotiated in to the Contract of Sale. Please note that these are only guidelines and are not intended to replace legal counsel. 

Escrow Ask that you earnest money be placed in an escrow account handled by a third party, preferably your attorney.

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Closing Date Specifically stipulate that the closing is “time is of the essence.” Remedies for the builder’s default on delivering the product should be spelled out. Consider including a remedy if the mortgage rates rise significantly.

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Real Estate Services Team Handbook 

Mortgage Contingency As a prudent purchaser, you might wish to specify a maximum mortgage amount, maximum interest rate, maximum term, and payment you can financially accept.

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Appraisal Contingency Need verbiage

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Inspection Contingency It is recommended to have at least two independent home inspections as well as the inspections carried out by the builder during construction. The first inspection is pre dry wall and the second inspection is once the home is completed and a punch list is drawn up noting deficiencies and repairs to be completed by the final walk through on the day of closing.

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Real Estate Services Team Handbook |MAKING AN OFFER TO BUY Once you have found the home that best suits your needs and you want to make an offer, call your Personal Move Manager. The following guidelines have proved beneficial in the process: If possible, wait until you old home I sunder contract so that the purchase is contingent on ___ not selling your home. This can impact negotiating with the seller.

Obtain a Broker Price Opinion (BPO) from your agent on the home you wish to purchase. The BPO should include recent comparable information on closed any pending sales and other comparable properties currently listed for sale. Your Personal Move Manager will review the BPO with you and strategize your offer/price negotiations.

Request a disclosure form to be filled out by the homeowner if not required by the state. After closing, the seller generally does not have responsibility for conditions you failed to discover.

Contact your Personal Move Manager to review the contingencies that may be added to your contract such as inspections (including radon, structural, asbestos, toxic substances, termites, and oil tanks), attorney review, and disclosure contingency addendums. The contingencies suggested are for your protection. In some states it is customary to employ an attorney before you enter into a contract. In other states it is customary to have the contract subject to approval of your attorney, and in other states the contract is binding once signed by both parties. These issues should be discussed with your agent prior to making an offer.

Consider the overall condition of the home. If you contemplate making needed repairs as identified in the home inspections, the price you pay should reflect the condition of the home.

You may be able to negotiate that the seller pay a closing cost concession and provide or pay for a home warranty on the property. Your lender will provide you with the maximum allowance for closing cost concessions. The home warranty will give you some insurance that specified items in the house will be in good working order for the first year of ownership. If something does break, the warranty will cover ta portion of the repair cost. Most, if not all, warranties require the homeowner/buyer to pay a trip charge for each repair occurrence.

Other Factors to Consider When Negotiating a Purchase Offer:  Seller Concessions (i.e. seller paid closing costs, furniture, draperies, appliances, pool equipment)  Closing Date  Earnest Money

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Real Estate Services Team Handbook    

Updates/Repairs Home Warranty Due Diligence Money and Period Attorney Review Period (if applicable)

BPO (Broker Price Opinion) Prior to making an offer on a property, you should ask the real estate agent to do a Broker Price Opinion, similar to what is done when you sell your home. This BPO will demonstrate what homes have sold for over the last 180 days in the neighborhood in which you are purchasing. You should drive past these homes and evaluate them in order to develop a sense of the market value of the subject property.

When you do present an offer, include a contingency in the contract that the home must appraise for full contract price. Once your offer or Agreement to Purchas is accepted by the seller, immediately contact your Personal Move Manager and Mortgage lender. The lender will arrange for an appraisal to be done on the property. You should request a copy of the appraisal be sent to you as soon as possible.

This appraisal gives you some reassurance that you are not overpaying for the home. By having a contingency in your contract, you are entitled to obtain this appraisal. If the appraised price is less than the negotiated purchase price, you have the following options: 1. Walk away from the contract without penalty 2. Renegotiate the contract 3. Accept the contract as it stands Inspection Although inspections my not be required by law, we suggest that you include a home inspection contingency and clauses for radon, asbestos, and oil tanks. This will ensure that you are testing for the basic soundness of any home. Your attorney can guide you if you suspect other problems or are required by law to do any other inspections. You may contact your Personal Move Manager for further information. Please refer to the section entitled “Environmental Issues” for a list of some “red flag” issues.

Your Personal Move Manager can provide guidance on these items. Very often you can negotiate with the homeowner to make necessary repairs prior to closing.

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Real Estate Services Team Handbook |SELL SMART PROGRAM The first step in the home sale process is to contact your Personal Move Manager. At this point, you should NOT contact a real estate agent or list your home.

Your Personal Move Manager will provide the following services: •

Recommend two top relocation trained real estate agents in your area. These agents will provide you with a broker price opinion (BPO) of your property, which includes the list price, most likely sales price, marketing strategy and commission.

If you have an agent that you would like to use, contact your Personal Move Manager who will qualify the agent and explain the guidelines of this program.

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With the guidance of your Personal Move Manager, you will select the best real estate agent to list your home.

The list price for your home should be no more than 5% above the averaged sale price recommended by the two agents. If there is a discrepancy of more than 5%, a third agent will be contacted to prepare a BPO. We suggest that you base your list price on the average of the two closest estimate sales prices. Your Personal Move Manager will provide guidance on list price and notify the agents as to whom you have selected to market the property.

According to recent studies, buyers are attracted to homes that have been freshly painted, are uncluttered, and offer a neutral decor. Most homeowners personalize their homes during ownership. Be sure to discuss proper preparation and staging with your Personal Move Manager and your real estate agent.

Your Personal Move Manager in conjunction with your agent will discuss with you home staging opportunities.

As part of the BPO process, the real estate agents evaluate repairs and improvements that may enhance marketability and perhaps bring a higher sale price. Discuss the repairs and perceived value with your Personal Move Manager.

Your Personal Move Manager will monitor and review revisions to the marketing strategy as required. As a good rule of thumb, it is advisable to list your home for no greater than 5% above the average sale price of the two BPOs. Should the home not sell within 30 days, an adjustment in either price or incentives should be made. The first 60 days of marketing your home is a critical period. Homes that stay on the market for a long time become shop-worn and decline in value the longer they are on market.

“In our particular case, we had issues with the sale of our home. We got help every step of the way, every day. We were offered not only tangible, money-saving advice, such as listings of mortgage companies with low rates, but intangible help as well.” - Lorenza

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Real Estate Services Team Handbook •

Aside from sale price and close date, purchase offer contracts are often subject to contingencies that must be met by the buyer. These include: mortgage, home inspections, title work, and can be discussed with your Personal Move Manager. Inspection issues, if not handled correctly, can become a stumbling block in the sale process. Your Personal Move Manager can play a vital role in helping you understand your options regarding buyer demands.

When you receive an offer, call your Personal Move Manager and she/he will review the offer in conjunction with your agent and counter offer (if applicable) can be presented.

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Real Estate Services Team Handbook |CLOSING DOCUMENTS YOU SHOULD KEEP On closing day, expect to sign a lot of documents and walk away with a big stack of papers. Here’s a list of the most important documents you should file away for future reference.       

HUD-1 Settlement Statement. Itemizes all the costs — commissions, loan fees, points, and hazard insurance —associated with the closing. You’ll need it for income tax purposes if you paid points.

Truth in Lending Statement. Summarizes the terms of your mortgage loan, including the annual percentage rate and recision period.

Mortgage and Note. Spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.

Deed. Transfers ownership to you.

Affidavits. Binding statements by either party. For example, the sellers will often sign an affidavit stating that they haven’t incurred any liens.

Riders. Amendments to the sales contract that affect your rights. Example: The sellers won’t move out until two weeks after closing but will pay rent to the buyers during that period.

Insurance Policies. Provide a record and proof of your coverage.

Sources: Credit Union National Association; Mortgage Bankers Association; Home-Buyer’s Guide (Real Estate Center at Texas A&M, 2000).

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Real Estate Services Team Handbook |WHAT NOT TO OVERLOOK ON A FINAL WALK-THROUGH It’s guaranteed to be hectic right before closing, but you should always make time for a final walkthrough. Your goal is to make sure that your home is in the same condition you expected it would be.

Ideally, the sellers already have moved out. This is your last chance to check that appliances are in working condition and that agreed-upon repairs have been made. Here’s a detailed list of what not to overlook for on your final walk-through.

Make sure that:            

Repairs you’ve requested have been made. Obtain copies of paid bills and warranties.

There are no major changes to the property since you last viewed it.

All items that were included in the sale price — draperies, lighting fixtures, etc. — are still there.

Screens and storm windows are in place or stored.

All appliances are operating, such as the dishwasher, washer and dryer, oven, etc.

Intercom, doorbell, and alarm are operational.

Hot water heater is working.

No plants or shrubs have been removed from the yard.

Heating and air conditioning system is working Garage door opener and other remotes are available.

Instruction books and warranties on appliances and fixtures are available.

All personal items of the sellers and all debris have been removed. Check the basement, attic, and every room, closet, and crawlspace.

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Real Estate Services Team Handbook |CLOSING COSTS The closing costs on a home are usually broken down into four parts: closing costs, discounts, real estate commission, and pre-paid items. Listed below, with a brief explanation, are the costs associated with a closing: APPRAISAL FEE: A cost typically owned by the buyer. An appraisal of the property is necessary to show the lender an estimate of value for lending purposes.

ASSESSMENTS: Charges for unpaid improvements from the country or city, i.e., sidewalks, sewer lines, annual homeowner’s association, etc. You often see assessments in condominiums or newly developed areas and should be paid in full by seller prior to closing.

ATTORNEY FEE: A cost typically borne by the buyer for legal representation and title search on the property.

Often there will be two legal fees, buyer attorney and the bank attorney. The buyer pays both fees. The seller has the option to hire an attorney to review their contract and represent them at closing.

CREDIT REPORT: A buyer’s cost. The Mortgage Company runs a credit report to check the credit worthiness of the applicant.

INSPECTION: It is recommended having your own inspection of the home done to assure yourself that the structural components, electrical, plumbing, air conditioning, and heating systems are functioning properly.

ORIGINATION FEE: Mortgage companies charge you, the borrower, a fee for obtaining a loan. ADP preferred lenders cap the lender /origination fees at $100.00.

DISCOUNT POINTS: Points are a one-time charge by the lender, referred to in terms of a percent of the loan amount. (ie. 1 Point = 1% of mortgage amount.) Discount points are based on the loan amount; not the sales price of the house. Points can be paid by buyer to reduce loan interest rate.

RECORDING CHARGES: The cost to record mortgage loan documents and the deed at the county courthouse is typically a buyer’s cost.

SALES COMMISSION: The listing agreement between the home seller and the real estate broker states the compensation (commission) for the services provided by the real estate brokers. The commission is typically a percentage of the selling price of the home.

SURVEY: A survey is a buyer’s cost and is ordered to verify that the measurements stated in the deed are accurate and reflect recorded or unrecorded easements or restrictions on the property.

STAMPS: This is a tax imposed by municipalities, country or state, on the deed and mortgage loan agreement upon sale or when a new mortgage is obtained. State law may determine who pays these costs.

TERMITE INSPECTION: The bank will require a termite letter or termite bond stating there is no active infestation or wood damage. The buyer usually pays the cost.

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Real Estate Services Team Handbook PREPAID ITEMS Prepaid items are usually paid for the buyer. Listed below are some common charges: ESCROW ACCOUNT: Also known as a reserve account or impound account, the Mortgage Company requires that an additional amount be collected each month for payment of real estate taxes and hazard insurance.

FLOOD INSURANCE: For homes located in a hundred-year flood plain (as designated by the federal Government), a special flood insurance policy must be purchased.

HAZARD INSURANCE: Some mortgage companies require that you prepay your homeowner’s policy for the first year and place two months’ premium into an escrow account for next year’s insurance premium.

INTEREST: Most mortgage companies require the borrower to pay interest on the loan through the last day of the month, that the loan closing takes place. Typically, loan payments are not made in advance, but rather in arrears. For example, if your loan closes on September 15“, you will be charged interest through September 30th. Your first monthly payment will come due November 1st . The November 1st payment is paying interest for the month of October.

PRIVATE MORTGAGE: Not to be confused with mortgage life insurance that pays off the mortgage in the event of the borrower’s death; Private Mortgage Insurance (PMI) is insurance against a loss by a lender in the event of default by a borrower. The premium is paid by the borrower and is included in the mortgage payment. This insurance is usually required if you are putting less than 20% down on the purchase of the home.

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Real Estate Services Team Handbook |THE REAL ESTATE CONTRACT Often, a real estate contract will be written in standard form. We are recommending that you consider the following contract contingencies to be negotiated in the Contract of Sale.

Please note that these are only guidelines and are not intended to replace legal counsel.

1. Attorney Review – We recommend, even in states where attorneys are not traditionally used, hiring a professional to review your contract. Remember that you never have a problem until after a problem arises.

At that time, it is often too late to ask an attorney for assistance.

2. Appraisal – We strongly recommend that all contracts be subject to home appraising for full

contract price. Remember, the bank’s appraisal is only being used to verify that the loan to value ratio is within their guidelines. Therefore, if you are putting down 25% and the home appraises 4% below what you paid, there is a good chance that the bank will approve the loan. You want to assure yourself that you are not overpaying for the home.

3. Home Inspection – It is critical that you hire a professional to inspect your home, even if it is new construction. Your home inspection contingency should give you the ability to walk away from a home if there are any significant repair issues.

4. Homeowner Disclosure Statement – Who better to tell you about the home than the homeowner?

Many real estate companies attach a disclosure statement to the home sale agreement attesting ot the condition of the property. IF you do not receive this as part of the sale, request that the seller fill out the disclosure forms that follow.

In the following pages there are some sample contingency clauses that you may want to consider adding to your purchase contract. Please get advice from your attorney regarding these contract considerations.

APPRAISAL CONTINGENCY: This offer is contingent upon ordering and receiving an appraisal on the property.

The purchase price of the home must be equal to or less than the value of the appraisal. Otherwise, the Buyer has the right to renegotiate or withdraw from this contract without penalty.

ATTORNEY REVIEW Study by Attorney: Buyer or Seller may choose to have an attorney study this Contract. If an attorney is consulted, the attorney must complete his or her review of the Contract within a three/(3) day period.

This Contract will be legally binding at the end of this three/(3) day period unless an attorney for Buyer or Seller reviews and disproves of this Contract.

Counting the Time: You count three/(3) days from the date of delivery of the signed Contract to Buyer and Seller. You do not count Saturdays, Sundays, or Legal Holidays, buyer and Eller may agree in writing to extend the three/(3) day period for attorney review.

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Real Estate Services Team Handbook NOTICE OF DISAPPROVAL: If an attorney for Buyer or Seller reviews and disapproves of this Contract, the attorney must notify the REALTOR(S) and the other party named in this Contract within the three/(3) day period.

Otherwise, this Contract will be legally binding as written. The attorney must send the notice of disapproval to the REALTOR(S) and to the other party by certified mail, by telegram, or by delivering it personally. The telegram or certified letter will be effective upon sending. The personal delivery will be effective upon delivery to the REALTOR’s office and to the other party. The attorney may also, but need not, inform the REALTORS or the other party of any suggested revision(s) in the Contract that would make it satisfactory.

HOME INSPECTION: In the event that the buyer’s inspection of the property reveals any items or conditions that are not satisfactory to the buyer, the buyer in lieu of submitting an amendment requesting that the seller make repairs, may, within the same period, declare the purchase and sale agreement null and void by giving written notice to seller or broker, in which event all earnest money will be returned to the buyer.

CONTINGENCY PERIODS: All of the Buyer’s contingency periods referenced in the Contract shall commence upon the completion of the attorney review period.

EASEMENTS: Seller represents that any easements or restrictions on the property relate solely to the use, occupancy, and service to the property, and not for benefit of an adjacent property.

FLOOD HAZARD: Buyer has the right to conduct a flood hazard inspection of the property. If this inspection reveals that the property is in a flood hazard area, Buyer may void this agreement and obtain the immediate return of all deposit monies.

HAZARDOUS ENVIRONMENTAL CONDITIONS: Seller represents that they have not caused or permitted to exist any hazardous environmental conditions on the property and that they have no such knowledge of such environmental condition thereon. Seller represents that there are no underground oil tanks on the property.

INVASIVE TESTING DAMAGE: Should the Buyer or a party retained by the Buyer conduct any invasive testing or inspections on the property which result in damage to the property, the Buyer will be responsible for the damage and agrees to repair the property to its pre-tested condition. This clause will only apply in the event the Buyer does not purchase the property.

LEAKS/WATER INFILTRATION: Seller warrants that the roof and basement are free of leaks and water infiltration.

LOSS OR DAMAGE TO PROPERTY: In the event that the replacement of the loss or damage to the property exceeds 25% of the purchase price, the Buyer shall have the option to void this agreement and to obtain the return of all deposit monies.

RADON INSPECTION: The written reports shall be furnished to the Seller within four/(4) days of the Buyer receiving the reports. The Seller shall deem radon levels that exceed four picocuries per liter in the living areas and basement an “environmental condition” requiring remediation.

SERVICE CONTRACTS: Seller shall assign to Buyer any service contracts and warranties affecting or relating to the property to be conveyed at the time of closing.

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Real Estate Services Team Handbook |MORTGAGE ASSISTANCE When it is time for you to secure a mortgage, our preferred lenders may be advantageous for you. Some of the advantages they provide are: 1. Loan pre-approval, which strengthens your negotiating power in the purchase of a new home.

2. Competitive rates based on your individual credit score and history.

3. Capped Lender fees at $100.00. (includes but not limited to appraisal, credit report, processing/underwriting fees, tax and flood certifications.

You will find information about the preferred mortgage lenders in the pages that follow. At the onset of your home-find search, you should call one or two of the preferred lenders in order to get pre-approved, as well as to learn about the various programs that are available to you. At this time, request from the lender, a closing cost worksheet (GFE) and review with your Personal Move Manager will be able to review those with you.

Remember, there is no obligation to use these services.

Add Mortgage info from GR but make generic.

Flow Chart Do’s and don’ts Sample of GFE

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Real Estate Services Team Handbook |FIVE FACTORS THAT DECIDE YOUR CREDIT SCORE Credit scores range between 300 and 850, with scores above 620 considered desirable for obtaining a mortgage.

The following factors affect your score: 1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late?

Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp, and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

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Real Estate Services Team Handbook |CREDIT DOS AND DON’TS DURING THE LOAN PROCESS* Good credit is critical to obtain the best interest rate and terms on a mortgage.

DO stay current on existing accounts. One 30-day notice can cost you.

DO continue to use your credit as normal. Changing your pattern will raise a red flag and lower your credit score.

DO call your mortgage professional before making any address or credit changes.

DON’T apply for new credit. Every time you have your credit pulled by a potential creditor or lender you can lose points from our credit score. This includes co-signing for a loan.

DON’T max out credit cards. Try to keep your credit card balances 30% below their limit during the loan process.

If you pay down balances, do it across the board.

DON’T consolidate your debt. When you consolidate all of your debt onto one or two credit cards it will appear that you are “maxed out” on that card, and you will be penalized.

DON’T close credit card accounts. If you close a credit card account, it may appear that your debt ratio has gone up. Closing a card will affect other factors in the score, including credit history.

DON’T pay off collections or “charge-offs.” If you want to pay them off, do it through escrow at closing.

|THE DO’S AND DON’TS WHEN APPLYING FOR A MORTGAGE* DOs  Do keep paying bills on time  Do let your mortgage professional know of any significant changes (job, new expenses, etc)  Do get your mortgage professional all documentation requested on a timely basis  Do tell your mortgage company of large new deposits in bank accounts  Do keep a paper trail of any new deposits/transfers into bank accounts that are not payroll related  Do use funds for closing from only the assets accounts that have been verified by the mortgage company DON’Ts  Change your employment status by switching jobs, becoming self-employed or quitting your job  Buy a new vehicle or make other large purchases (furniture, appliances) on credit  Use credit cards excessively and increasing credit card balances  Make large deposits without first checking with your loan officer

*

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Real Estate Services Team Handbook |CONVENTIOANAL PURCHASE CHECKLISTS* Income Documentation: □ Pay Stubs - 2 of your MOST RECENT paystubs that clearly show your name, company name, current address, month and year to date income totals □ W-2s – 2 most recent copies □ Personal Tax Returns - 2 most recent FULL returns with ALL schedules. If the current tax return has not been filed, please provide the following: o Tax Extension Form – last year’s form with proof of payment due (if applicable) o Personal Tax Return – FULL copy of last year’s return with all schedules. □ Business Tax Returns - 2 most recent FULL returns with ALL schedules including any and all K1’s. All tax returns provided must be signed on the bottom of page 1 where indicated. □ Proof of Self Employment - this can include one of the following options: o A copy of your business license o A letter from your CPA confirming that they have prepared your self-employed taxes for at least the previous 2 years. □ Proof of Employment - a copy of you new employment contract or offer letter □ Social Security Awards - the most recent copy of this letter □ Pension Letter – must identify the end date (if applicable) of this income source and clearly show at least a 3 year continuance □ Leases – documentation for all properties purchased in the past year □ Divorce Documentation - Divorcee Decree or Settlement Agreement, if applicable □ Proof of Child Support – if applicable □ A brief current year-to-date profit and loss statement □ A copy of your diploma, degree, or transcripts form

*

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Real Estate Services Team Handbook Asset Documentation: □ Bank Statements – 2 most recent statements from all of the following existing accounts: o Checking

⃝

Money Market

o Savings

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IRA/401k/Retirement

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Investment/Mutual Funds/Stocks

These must be FULL monthly or quarterly statements and include ALL PAGES. Transaction histories or screen shots are NOT acceptable. Statements must clearly indicate full account number, your full name, and the name of the bank. The funds you use for closing MUST be sourced from the account statements you provide. □ Signed Letter of Explanation – a typed and signed letter detailing the source of any deposits of $500.00 or more (direct deposits from your employer do NOT need to be explained in this letter) and a copy of all deposited checks of $500.00 or more. This only applies to teller and ATM deposits of $500.00 or more. If the statements show funds transferred from another account you own, you will need to provide a copy of the statements in which the funds originated. □ Earnest Money Checks – copy of all CLEARED checks. The images must be of the checks AFTER they have cleared your account. Please send copies as soon as the checks clear.

Home Owners Documentation: Please provide documentation for ALL homes that you already own. □ Fully Executed Contract – copy from the sale of your current residence, if applicable □ Mortgage Statement – most recent copy □ Real Estate Tax Bill – most recent copy □ Home Owner’s Insurance Statement - most recent copy. If no policy is in place yet, please provide an insurance quote at this time. Before closing you will need to provide a paid in full receipt for the first 12 months of coverage. □ Condo Association Dues - most recent copy; may include an invoice from the management company, a payment coupon, or official correspondence from the HOA verifying specific unit dues.

*

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Real Estate Services Team Handbook Miscellaneous: □ Credit Inquiries Letter – please type and sign a letter of explanation that addresses the purpose and outcome of the any inquiries that appear on your credit report. Your loan officer will need to know WHY you applied for credit and whether the credit resulted in new credit and new debt □ Bankruptcy Documentation – if your credit report indicates that there has been a bankruptcy, please provide a letter explaining the circumstances which led to the need to file bankruptcy.

Copies of bankruptcy documents, schedules, recorded bankruptcy discharge documents will also need to be provided. □ Missing Credit Line/Mortgage – if this is not reporting on your credit report, please provide the bank name, account number, and phone number of the 1st mortgage, 2nd mortgage, and home equity line of credit, if applicable □ SSA Authorization – completed form to verify social security number □ Personal Documentation – copies of social security card, driver’s license, and permanent resident card

*

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Real Estate Services Team Handbook |WHAT YOU CAN DO TO IMPROVE YOUR CREDIT Credit scores, along with your overall income and debt, are big factors in determining whether you’ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following: 1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.

2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.

3. Don’t charge your credit cards to the maximum limit.

4. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.

5. Don’t order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your debt.

6. Don’t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.

7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.

8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

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Real Estate Services Team Handbook |THE MORTGAGE LOAN PROCESS* Step 1: Meet with a Lender for Pre-Approval The most important step before shopping for a new home is to make sure that you qualify for the financing you need. Completing this process early is necessary and will help you favorably negotiate certain contract items, the most important of which is your “Due Diligence Period.”

The Pre-Approval process will only take, on average, 30-60 minutes over the phone. Have the following documents nearby when you call:   

Pay Stubs – two most recent copies W-2s/Tax Return – copies from the last two years Bank Statements – recent copies

The loan officer will discuss your income, credit, employment, and financial situation for down payment and assess payment options, interest rates, and closing costs.

Step 2: Find a Home and Make an Offer Working with your real estate professional find the home you want to make an offer on. Your real estate professional will work closely with your lender to issue a pre-approval letter to submit with your offer and to determine reasonable time frames for the “Due Diligence Period” required in your contract.

Step 3: Contract Accepted – The Clock Starts Ticking Meet with your lender immediately to sign all loan documents and disclosures to ensure timely underwriting and loan approval before the end of your “Due Diligence Period.” Items your lender may need are:      

   

A check for any fees required for appraisal, credit reports, flood zone certification or other required fees.

REST Preferred mortgage lenders cap these lender fees at $100.

Copies of current paystubs covering the most recent 30 days of earnings on your job Copies of W-2 forms for the last two years Copy of the award letter indicating the amount received from any social security or pension income Copies of your complete Federal Tax Returns for the most recent two years (all schedules and pages) Copies of all assets statements (checking/savings, cd’s, market accounts, stocks, bonds, mutual funds, IRA’s, 401k’s, etc) for the recent two months and all pages to each statement are needed with daily activity and balances.

Copies of documentation showing current taxes, insurance, and any HOA/condo dues for any real estate properties you currently own.

Copy of you divorce decree and/or marital separation agreement, if applicable.

Copy of veteran’s DD214 discharge papers if applying for a VA loan.

Job relocations will require a letter from your employer stating your transfer date, job title, and salary information.

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Real Estate Services Team Handbook 

Special situations may dictate that other information is required, so please communicate well with your mortgage professional at all times.

Step 4: Loan Commitment Once your loan has been approved, a formal “Loan Commitment” will be issued. This is the lender’s commitment to lend you money at the agreed upon loan terms. The Loan Commitment may have certain “conditions” attached to it, and it is very important that you work quickly with your lender to satisfy these “conditions.”

Step 5: Closing Prior to closing you will receive a copy of your closing statement detailing your fees, charges ,and the final amount of money you need to bring to closing. “Certified Funds” such as a cashier’s check from the bank made payable to the title company or a wire transfer directly to the title company are required. Make sure to get instructions from the title or escrow officer in advance to initiate the transfer at least 2 days prior to closing. If you have to make arrangements to move money around from one account to another do not delay. Make sure to leave yourself enough time to secure available funds and to bring photo identification, such as a driver’s license.

Step 6: Congratulations, You’re a Homeowner!

*

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Real Estate Services Team Handbook |YOUR MAP TO A SUCCESSFUL CLOSING

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Real Estate Services Team Handbook |5 THINGS TO KNOW ABOUT TITLE INSURANCE Title insurance protects the holder from any losses sustained from defects in the title. It is required by all mortgage lenders. Here are five other things you should know about title insurance.

1. It protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.

2. It is a one-time cost usually based on the price of the property.

3. It is usually paid for by the sellers, although this can vary depending on your state and local customs.

4. There are both lender title policies, which protect the lender, and owner title policies, which protect you.

The lender will probably require a lender policy. It is strongly recommended that you also purchase owner coverage.

5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.

|5 THINGS TO KNOW ABOUT HOMEOWNER’S INSURANCE 1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately.

2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3. Know the replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

4. Know the actual cash value. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

5. Know the liability. Generally your homeowner’s insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

6.

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Real Estate Services Team Handbook |HOUSEHOLD GOODS MOVE When it is time for you to move your household goods, contact one or two preferred moving vendors to obtain estimates.

1. Consultation: The moving vendor will answer your questions on estimates, insurance issues, moving dates, packing, moving day, and claims resolution.

2. Carrier Selection: Your Personal Move Manager may recommend carriers that are screened for their level of service. Local moving can be extremely competitive and the costs can vary widely. To ensure that you receive the best value we always suggest that you get at least two other estimates from reliable local carriers.

3. Estimate Analysis: Your Personal Move Manager will review your estimates and advise if they are comparable. In addition, he or she may suggest possible areas for cost savings as well as levels of insurance protection.

INSERT MOVING TESTIMONIAL

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Real Estate Services Team Handbook |MOVING CHECKLIST FOR SELLERS □ Provide the post office with your forwarding address two to four weeks ahead of the move. □ Notify your credit card companies, magazine subscriptions, and bank of your change of address. □ Create a list of friends, relatives, and business colleagues who need to be notified about your move. □ Arrange to disconnect utilities and have them connected at your new home. □ Cancel the newspaper, or change the address so it will arrive at your new home. □ Check insurance coverage for the items you are moving. Usually movers only cover what they pack. □ Clean out appliances and prepare them for moving, if applicable □ Note the weight of the goods you will have moved, since long-distance moves are usually billed according to weight. Watch for movers that use excessive padding to add weight. □ Check with your condo or co-op about any restrictions on using the elevator or particular exits for moving. □ Have a “first open” box with the things you will need most, such as toilet paper, soap, trash bags, scissors, hammer, screwdriver, pencils and paper, cups and plates, water, snacks, and toothpaste. □ Keep any financial documents and tax returns with you during the move, not with the mover or in storage.

Plus, if you’re moving out of town, be sure to: □ Get copies of medical and dental records and prescriptions for your family and pets. □ Get copies of children’s school records for transfer. □ Ask friends for introductions to anyone they know in your new neighborhood. □ Consider special car needs for pets when traveling. □ Let a friend or relative know your route. □ Empty your safety deposit box. □ Put plants in boxes with holes for air circulation if you are moving in cold weather.

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Real Estate Services Team Handbook |ENVIRONMENTAL ISSUES With the increasing concern about environmental issues and the proliferation of regulations affecting residential property, you should be aware of these issues and requirements as they relate to the purchase of your new home.

There are several environmental issues related to home sale and purchase. For further information on environmental issues, visit http://www.epa.gov/.

Radon Radon is a colorless, odorless, and tasteless gas that occurs throughout the environment. The radon that is present in soil or in well water may be a source of radon in the home. Radon may enter your home through cracks in concrete, floor drains, sump pump openings, and any other entrances from the soil to your home. It may also seep into the ground water and then into the drinking or washing water in your home.

Radon gas breaks down into radioactive particles that remain in the air. The inhalation of radon over a period of many years has been associated with lung cancer. The EPA has developed guidelines that set forth the acceptable level of indoor radon.

REST suggests that you have your new home tested for the presence of this pollutant. A simple test is performed at the time of your home inspection. Please ask your real estate agent to include a radon contingency clause in your purchase offer.

If elevated radon levels based on EPA guidelines are found in your prospective home, you may consider requiring the seller remediate with a licensed or recognized state-approved radon mitigator. If you are building a new house, at the time of construction you may specify that the builder prepare the foundation of the home for possible radon remediation at a later date. Many states today require that this be done. Even with brand new construction, it is wise to conduct a radon test upon completion of the building. URL High Tension Wires Aside from being unsightly and potentially adversely affecting the resale value of a home, high tension wires emit Electro Magnetic Fields (EMFs) up to a certain distance. Though evidence is currently inconclusive as to whether constant exposure to levels of EMFs is harmful, some studies indicate that it is a possibility and suggest that further study is necessary. We recommend that you be prudent when evaluating this issue.

Lead Lead is a toxic element that, when ingested or inhaled, may cause harmful damage to the central nervous system, the brain, the kidneys and the red blood cells. Infants, children, and pregnant women are more vulnerable to lead exposure.

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Real Estate Services Team Handbook Lead may be present in drinking water, paint, the dust within a home and soil around the home. The combination of copper pipes connected with lead-based solder is found in many homes and may result in high levels of lead in water.

Lead-based paint was used in approximately two-thirds of houses built in the U.S. before 1940; one-third of the houses built from 1940-1960; and in a smaller portion of homes built since 1960.

Many states are beginning to introduce laws regulating lead in dwellings. Please discuss this with your real estate agent and attorney before purchasing a home.

Asbestos Asbestos, which is strong, durable, an excellent fire retardant, and an efficient insulator, may be found in flooring, ceiling tiles, insulation for heating and electrical systems, and in roof or outdoor house shingles.

Home health risks arise when asbestos-containing materials crumble, flake, or deteriorate. This is referred to as friable. When this occurs, the asbestos fibers are released into the air and may be inhaled.

When purchasing a home, your home inspector should alert you to any potential asbestos problem. Please make a point of asking the inspector if he/she sees any asbestos and the status of its condition. In addition, if the roof or exterior shingles are made with asbestos, any removal or replacement of shingles must be performed by a professional. This can be quite costly. You should consider all of these factors when analyzing a proper purchase price for the home.

Ground Water Contamination Half of all Americans and 95% of rural Americans use ground water for drinking water. In certain locations, ground water has been contaminated.

The only way to know whether or not the water is contaminated is to test. When you purchase a home, if there is a well, you should test the water. If the house does not have a well, you may want to check with your local township to determine where the water is coming from and if there are any problems.

Underground Storage Tanks Since much of our country depends upon ground water for drinking water, leaks may contaminate this vital resource as well as the surrounding soil. Some states require that these tanks be tested.

When you make an offer to purchase a home, include a Seller disclosure statement, where current homeowner should be asked if there is an underground storage tank. If you decide to purchase this home, we recommend that you require the current homeowner to remove the tank and certify that the soil is clean. In the Clause section, you will find a sample contingency clause requesting that underground storage tanks be tested.

If you are purchasing a condominium or cooperative, find out if there is an underground storage tank and if there has been recent testing. Please note that owners of condominiums and cooperatives are responsible for any required clean-ups from a leaky, underground storage tank. This usually takes the form of an assessment on the individual unit; costs could be significant.

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Real Estate Services Team Handbook Formaldehyde (UFFI - urea-formaldehyde foam insulation) Formaldehyde is an ingredient in foam that was used for insulation until the early 1980s.

Formaldehyde has been shown to cause cancer in animals. Higher-than-normal levels in the home may trigger asthma attacks in susceptible individuals. Other health risks include skin rashes, watery eyes, burning in the eyes, throat, and nose, and breathing difficulties.

When you make an offer to purchase a home, you should have a contingency regarding the presence of UFFI. (See Sample Clauses.) Your home inspector should be able to advise you if the house contains UFFI. If there are high levels of formaldehyde, you should require removal or remediation by the current homeowner.

Synthetic Stucco/Louisiana Pacific Synthetic stucco is an external insulation finishing system that is applied and fastened over foam board.

Louisiana Pacific siding is a composite, wood product consisting of wood chips that are pressed together. It looks very much like natural siding. The problem with these two types of siding is their long-term effect on a home's wooden structure. Synthetic stucco insulates homes so tightly that it does not allow moisture to escape. When the stucco cracks, water permeates its surface, and the wooden structure begins to rot. Louisiana Pacific siding allows water to penetrate around joints and window seams, which causes trapped moisture and eventual rot.

Both of these types of siding have caused serious repair problems yielding extremely high costs.

Your home inspection company can alert you in cases where there is a possibility that these sidings exist. Please discuss with the inspector and/or your Personal Move Manager the possible financial ramifications associated with owning a home with these types of siding.

Composite Siding There are many other types of composite siding that are considered defective and often in need of significant repairs. Your home inspector can determine the type and condition of the siding and will be able to discuss future liabilities with you.

Toxic Mold Due to potential health and financial implications, there has been a great deal of concern regarding the presence of mold in residential housing. Although most strains of mold are considered harmless, a few types of mold, including Stachybotris Chartarum (‘toxic black mold’), have been associated with respiratory and other serious physical ailments. As mold flourishes in moist environments, it is important for homeowners to identify and eliminate conducive conditions. A thorough home inspection is the first step in determining if conducive conditions exist. If a mold problem is detected, the prospective purchaser may have a certified company and/or industrial hygienist conduct a further inspection, including collection and examination of air samples. If the problem cannot be easily remedied, you may choose to cancel the purchase as future resale and insurability may be compromised.

In some states such as California and Texas, some insurance companies are no longer providing coverage to purchasers if the previous homeowner filed a claim involving mold or water damage. Although many sources

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Real Estate Services Team Handbook believe the mold controversy may be overblown, many real estate professionals feel it is an environmental issue that must be addressed.

Aluminum Wiring “Aluminum wiring used in some homes from the mid 1960s to the early 1970s is a potential fire hazard.

According to the U.S. Consumer Product Safety Commission, fires and even deaths are reportedly caused by this hazard. Problems due to expansion can cause overheating at connections between the wire and devices, switches and outlets, or at splices. CPSC research shows that homes wired with aluminum wire manufactured before 1972 are 55 times more likely to have one or more connections reach ‘Fire Hazard Conditions’ than are homes wired with copper. ‘Post 1972’ aluminum wire is also a concern. Introduction of the aluminum wire alloys in 1972 time frame did not solve most of the connection failure problems. Aluminum wiring is still permitted and used for certain applications, including residential service entrance wiring and single-purpose higher amperage circuits such as 240V air conditioning or electric range circuits.” – Taken from Inspect-NY, an ASHI member home inspection company. Website: http://www.inspect-ny.com/.

Polybutylene Piping “Polybutylene is a form of plastic resin that was used extensively in the manufacture of water supply piping form 1978 until 1995. Due to the low cost of the material and ease of installation, polybutylene piping systems were viewed as ‘the pipe of the future’ and were used as a substitute for traditional copper piping. It is most commonly found in the ‘Sun Belt’ where residential construction was heavy through the 1980s and early-to-mid 1990s, but it is also very common in the Mid-Atlantic and Pacific Northwest states.

“While scientific evidence is scarce, it is believed that oxidants in the public water supplies, such as chlorine, react with the polybutylene piping and acetal fittings causing them to scale and flake and become brittle. Microfractures result and the basic structural integrity of the system is reduced. Thus, the system becomes weak and may fail without warning causing damage to the building structure and personal property. It is believed that other factors may also contribute to the failure of polybutylene systems, such as improper installation, but it is virtually impossible to detect installation problems throughout an entire system.” – Taken from http://www.plumbing911.com/.

Add Chinese Drywall

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Real Estate Services Team Handbook |GLOSSARY OF TERMS THE REAL ESTATE SERVICES TEAM (REST) – Program designed to offer guidance, assistance and discounts for all personal moves COMPOSITE SIDING – This is a term to explain a wood product consisting of wood chips that are pressed together. There are numerous types of this siding, including but not limited to, Louisiana Pacific, Hardy Board, and Masonite. This type of siding requires extensive maintenance and has a short life span.

CONTRACT CONTINGENCY – A requirement that must be fulfilled in order for the contract to be accepted. See also ‘Contingency’.

SELL SMART, MANAGED HOME SALE MARKETING PROGRAM – This is a marketing strategy that helps you sell your home quickly and at an optimum price.

APPRAISAL – Performed on a home to validate if the purchase price is accurate.

PERSONAL MOVE MANAGER – An ADP associate or consultant who is trained to assist you in selling and purchasing a home, as well as managing the complex real estate process.

SYNTHETIC STUCCO – An external insulation finishing system that is applied and fastened over foam board. In a large number of situations, this type of finish has been applied improperly and has caused significant damage to a home’s wood structure.

BROKER – A person licensed in the real estate industry who assists consumers in the process of selling and buying real estate (may also be called “sales associate” or “agent”).

CERTIFICATE OF OCCUPANCY – A statement issued by a local government authority stating that a property meets qualifying requirements and is suitable for habitation. This certificate ensures that local, county, and state code requirements for such things as plumbing, heating, electrical, and structural inspections have been met.

CLOSING – Usually a meeting between or among parties to the contract of sale, their attorneys, and others who have an interest in the sale, such as representatives of the company issuing title insurance, if applicable. When all the details have been settled and the terms of contract complied with, the seller signs and delivers the deed to the buyer; and the buyer in turn authorizes payment of the proceeds of the sale to the seller.

CONTINGENCY – The insertion of language into a contract of sale which requires that the stated event, such as obtaining mortgage financing or inspections, must occur before the contract becomes binding on the party protected by the contingency.

CONTRACT OF SALE – An agreement between buyer(s) and seller(s) of real property setting forth the price and the terms of the sale.

EQUITY – The amount of money due the Seller calculated by subtracting the balance due on the mortgage and/or other liens from the sale price of the home.

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Real Estate Services Team Handbook ESCROW – The delivery of money and/or documents associated with a real estate sale to a neutral party for delivery, exchange or execution at the closing or some other specified time.

INSPECTION – Any report and associated fee from an outside technician or expert rendering an opinion on the condition of a property. These reports might include termite, well, septic, plumbing, heating, electrical, structural, roof, radon, and geotechnical exploration.

LISTING AGREEMENT – An agreement between a seller and a broker of real property to secure a buyer for the property at a certain price and terms in return for a fee or commission.

MORTGAGE – A pledge of the real estate as security for money loaned to the buyer of a home to pay the price agreed to in a contract of sale at closing. The mortgage, which becomes a lien on the property, almost always has priority over all the other liens.

REFERRAL FEE – A fee paid at the closing of a real estate transaction, if the transaction was the result of a referral or lead placed from one licensed real estate practitioner to another.

REST assured you have a professional on your side! ®