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Home Buyers & Sellers

THE BASIC STEPS AT CLOSING

 

Closing the real estate transaction is basically the investigation made or actions taken by either a title agent or title attorney before the actual issuance of the title policy. There are five basic steps that usually followed in somewhat the same order in every real estate transaction. Although it is not the job of the title agent or title attorney to cure defects in or problems with the title to the property or perform escrow or other services outside of closing the transaction, title agents and title attorney help in these matters on a somewhat regular basis.

 

Starting the process

 

A sales contract is signed by the buyer and seller and delivered to the closing agent, usually with a deposit check. The escrow is accepted by the escrow agent, usually by written notation on the contract. The escrow agent starts the closing process by opening a title order. The file begins to be processed. Tax information, loan payoffs, survey (if necessary), homeowner/maintenance fees, inspections/reports, and hazard and other insurances as well as legal papers are ordered. A title search is ordered.

 

Title search and examination

 

This is a search made of the public records. Records searched include deeds, mortgages, paving assessments, liens, wills, divorce settlements and other documents affecting title to the property. Title examination is the examination of the documents found during the title search that affect the title to the property. This is when verification of the legal owner is made and the debts owed against the property are determined. Upon completion of the search and examination, a title commitment/preliminary report is prepared and reviewed and sent out to interested parties.

 

Document preparation and/or request to produce

 

The closing agent reviews the new lender's instructions/requirements, reviews instructions from other parties to the transaction, reviews legal and loan documents, assembles charges, and prepares closing statements and schedules the closing.

 

Settlement/closing the transaction

 

Escrow/settlement agent oversees closing of the transaction. Seller signs the deed and closing affidavit. Buyer signs the new note and mortgage. The old loan is paid off. Seller, real estate professionals, attorneys and other parties present at the closing of the transaction are paid.

 

Post-closing

 

After the signing has been completed, the escrow/settlement agent will forward payment to any prior lender, and pay all parties who performed services in connection with your closing (if they have not been paid). The transaction documents are recorded in the county in which the property is located. Title insurance policies are prepared and sent to the new lender and to you. This all happens without any further actions by the buyer or seller.

 
 

WHY TITLE INSURANCE

Protecting your Home Investment

 

A home is usually the largest single investment any of us will ever make. When you purchase a home, you will purchase several types of insurance coverage to protect your home and personal property. Homeowner's insurance protects against loss from fire, theft, or wind damage. Flood insurance protects against rising water, and a unique coverage known as title insurance protects against hidden title hazards that may threaten your financial investment in your home.

 

Protecting Your Largest Single Investment

 

Title insurance is not as well understood as other types of home insurance, but it is just as important. You see, when purchasing a home, instead of purchasing the actual building or land, you are really purchasing the title to the property - the right to occupy and use the space. That title may be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and even bring financial loss. Title insurance protects against these types of title hazards.

 

Other types of insurance that protect your home focus on possible future events and charge an annual premium. On the other hand, title insurance protects against loss from hazards and defects that already exist in the title and is purchased with a one-time premium.

 

Two Kinds of Title Insurance benefit You in Two Ways
 

There are two basic kinds of title insurance:

  • Lender or mortgagee protection,

  • Owner's coverage.
     

Most lenders require mortgagee title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection. When title insurance is provided, lenders are willing to make mortgage money available in distant locales where they know little about the market.

 

Owner's title insurance lasts as long as you, the policyholder - or your heirs - has an interest in the insured property. This may even be after you have sold the property.

 

Depending on local practices and state law where the property is located, you may pay an additional premium for an owner's policy or you may pay a simultaneous issue charge - usually a smaller amount - for the separate lender coverage. You may even split settlement costs with the seller for the lender or owner's policy.

 

What does Your Premium Really Pay For?

 

An important part of title insurance is its emphasis on risk elimination before insuring. This gives you, the policyholder, the best possible chance for avoiding title claims and loss.

 

Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by a title agent or attorney on behalf of its underwriter to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all "material objections" to the title. Frequently, documents that don't clearly transfer title are found in the "title chain," or history, that is assembled from the records in a search. Here are some examples of documents that can present concerns:

 

  • Deeds, wills and trusts that contain improper wording or incorrect names

  • Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes

  • Easements that allow construction of a road or utility line

  • Pending legal action against the property that could affect a purchaser; or

  • Incorrect notary acknowledgements.

Through the search and the examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.

 

Hidden Title Hazards - Your Last Defense

 

In spite of all the expertise and dedication that go into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hazards include:

 

  • A forged signature on the deed, which would mean no transfer of ownership to you

  • An unknown heir of a previous owner who is claiming ownership of the property

  • Instruments executed under an expired or a fabricated power of attorney; or

  • Mistakes in the public records.

 

Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims. All for a one-time charge at closing.

 

Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner's title insurance policy.

 

BUYER'S CORNER

Congratulations! You have decided to make your dream of owning a home into a reality.

 

You are going to embark on a journey toward the American dream of becoming the owner of your own home. As with any journey toward a prized goal, you may encounter problems along the way. Stewart Title is here to help you leap the hurdles, navigate the obstacles or smooth the snags that might impede your journey.

 

 

Before you begin, let's look at some important issues that will provide you with the answers and the steps that will make your journey a pleasant and rewarding experience.

  • How much home can you reasonably afford?

  • Choosing the best real estate agent for you

  • Selecting the most advantageous mortgage lender

  • Choosing the right mortgage

  • What is an FHA Loan?

  • Finding the perfect home

  • Making the Offer

  • Closing the Deal

 

How much home can you reasonably afford?

 

Before you begin the search for your dream home, decide how much you can comfortably spend. Mortgage lenders most often will take into consideration all of the following:

  • The size of your down payment

  • Your job stability

  • Existing debts

  • Credit references and,

  • Payment history.

Knowing your credit status and how credit agencies rate your credit also may be a deciding factor, especially when you begin talking to lenders. There are three main credit-reporting agencies that will, for a small fee, send you the most current credit report on file.

Lenders usually use the following two qualifying guidelines to decide how much of a loan you can manage:

  • Your monthly housing expenses - mortgage payment, property taxes, insurance, etc. These expenses should total no more than 28 percent of your monthly gross income.

  • Your monthly living expenses and any long-term debts - utilities, car and school loan, child support, health and car insurance, etc. These expenses should be no more than 36 percent of your monthly gross income.

Choosing the best real estate agent for you

 

Once you've assessed your spending qualifications, you will need to find a real estate professional. As with any major journey, you need a capable, competent guide, one who clearly is able to lead you through the steps that ultimately will bring you to your final destination - your new home.

 

Choose an agent with whom you feel comfortable. One who is responsive to your needs and the needs of your family, one who compliments your personality, and one who is prepared to be with you throughout each step of the home-buying process.

 

A few simple guidelines for finding the 'right' agent are:

  • If you already know the neighborhood in which you would like to live, find an agent within that community.

  • Seek an experienced agent with a known reputation - look at credentials, track records and awards received.

  • Seek someone who is a member of the Board of Realtors®.

  • Find someone who is continuing their education - a Certified Residential Specialist (CRS), Certified Residential Broker (CRB), a graduate of the Realtors Institute (GRI) or an Accredited Buyer's Representative (ABR) - this shows the realtor is interested in the business long-term and is willing to invest in their career.

  • Seekreferrals from your family and/or friends.

  • Interview at least three agents before you make your final decision.

If you are being referred to an agent, here are some questions you will want to ask about him or her:

  • What were they like to deal with?

  • How hard did they work for you?

  • Did they get you a good price?

  • Were there any complications?

  • Did they always tell you the truth?

  • Were they always looking out for you or just interested in getting paid?

  • Would you use their services again?

You've narrowed your choices to the top three professionals. It's time to make the final decision on who will be your guide. Ask these questions of your three finalists:

  • How many buyers have you successfully represented in the last six months?

  • Can I have the names and phone numbers of three to six of your most recent buyer clients?

  • Do you deal mostly with homebuyers or primarily with home sellers?

  • What professional designations do you have?

  • Are you fully automated with your own personal computer, FAX machine, copier, pager, voice mail, etc?

  • What is your commission?Or do you have hourly rates or a set fee?

  • Do you have a list of home inspectors, insurance agents and reputable lenders for me to consider?

  • What clauses will be included in our offer to protect us as buyers?

  • Will you try to sell me one of your listed properties before you show me listings from other real estate companies?

  • Do you have information about For Sale By Owner properties?

  • How will you help me save money?

  • How will you protect my interests, and why should I hire you rather than another agent?

Now, here are some questions to ask yourself after the final interview of real estate agents. The answers to the following questions will increase your chances of choosing the best real estate agent for your and your family.

  • Which one returned your phone calls?

  • Which one asked questions to determine what you want/need in a home?

  • Which one performed a financial analysis to determine how much you can afford?

  • Which one suggested financing methods?

  • Which one seemed most knowledgeable about the community?

  • Which one explained things most clearly?Which one did YOU feel most comfortable with?

Keep in mind, home buyers - you - need to search for a realtor the same way that home sellers do.

 

You see, there are two "sides" to every sale. The seller's side is represented by the listing agent. The buyer's side is represented by the selling agent. The selling agent also is referred to as the buyer's agent. Usually, real estate commissions are paid by the seller. For this reason, the selling agent, although representing the buyer, has certain duties to the seller. If you, as the homebuyer, want to have a real estate agent represent only your interests, you will need to hire and pay commission to your own real estate agent. 

 

These real estate agents are generally referred to as buyer's agents.If you call on a single classified advertisement in a newspaper, an ad in a home selling magazines or a listing on the Internet, you most likely are calling the listing agent.

 

Selecting the most advantageous mortgage lender

 

With your realtor chosen, you now have someone who can guide you through the process of securing a mortgage lender. Your agent will help you understand and choose the type of lender that best fits your financial needs.

 

Each lender is different, so be sure to choose one that will work with you and your specific circumstances. Shop for lenders offering the best deals. Check with several mortgage companies and use one or more reporting services. If there isn't a reporting service covering your area, begin the search at your own bank or savings and loan or through any of the following sources:

 

Independent Mortgage Companies:

Make just over half of all home mortgages, including most VA-guaranteed and FHA-insured loans.

 

Savings Institutions:

Savings and loan associations and savings banks originate close to a quarter of home mortgages. Most are conventional loans - those not guaranteed by the VA or FmHA, or insured by the FHA.

 

Commercial Banks:

Active in residential lending. Banks also are a major supplier of loans for mobile-home buyers.

 

Mortgage Brokers:

Act as intermediaries. A broker keeps tabs on the mortgage market through ties to local, regional and national lenders, and can refer a prospective borrower to a mortgage banker, savings institution or a commercial bank. Brokers don't lend money and can't approve loans.

 

Credit Unions:

Make close to one-third of all first-mortgage loans, but you must be a member.Public Agencies:State and local finance agencies make below-market-rate financing available to eligible low- and moderate-income first-time buyers through the sale of tax-exempt bonds.

 

Employers and Unions:

Don't overlook your employer as a source of assistance. An employer may subsidize the interest or even act as a lender. Unions are another possibility. The AFL-CIO offers what it calls "Union Privilege." Unions that sign on can make first-time home loans available to eligible members for as little as three percent down.

 

Again, remember, your realtor should be able to provide a great deal of assistance in finding just the right lender. The following directory also will help you locate a lender right for you.

 

Lender Directory

 

Choosing the right mortgage

 

The next step in your journey is choosing the right type of mortgage for your individual financial needs. While there are some people who can and do pay cash for a new home, most are like you, and this is where your lender's skills and knowledge will take effect.

 

Pre-qualifying before house hunting puts you ahead of the game. Your research into how much home you can afford has provided you with the knowledge of already knowing the standard of mortgages for which you qualify. Quite simply, you are shopping for a loan from a mortgage lender.

 

First, review the major kinds of mortgages you may encounter. The following list contains the mortgages you are most likely to see. Again, ask questions; your lender will be happy to explain each type of loan arrangement and satisfy all your concerns.

 

Fixed-Rate Mortgage (FRM)

This is the standard mortgage model. It is the oldest and most easily understood type of mortgage. Its primary attraction is that the interest rate and the amount of payment remain fixed for the life of the loan, typically either 15 or 30 years. However, if rates fall, the holder cannot benefit from the new, lower rate except by refinancing.

 

Adjustable-Rate Mortgage (ARM)

With this kind of mortgage, the interest rate you pay rises and falls along with other rates charged throughout the economy. Therefore, you, the borrower, assume the risk of rising rates, and you stand to benefit should rates fall.An essential question to ask about an ARM is whether there are limits on how much your rate can be raised, both at each review and over the whole term of the loan. Without limits, known as "caps," you'll have no way to predict how much your rate (and thus your monthly payments) might change.

 

Convertible Option

FRM and ARM represent the primary options available to homebuyers today. The convertible mortgage represents something of a compromise between the two. It is designed for those who want the advantages of the ARM, but also want to limit the risk of rising rates.Under this arrangement, the buyer starts out with an ARM, but has the option of converting to an FRM at specified points during the loan term. You may want to ask the lender these questions: When can you convert? How often can you consider the option? Are there any up-front fees involved? Will you have to pay more for an ARM with the conversion feature than for an ARM without it? Are there additional fees due if and when you decide to convert? Find out the lender's conversion rate. Graduated Payment Mortgage (GPM)A fixed-rate GPM starts out with low payments, usually below that of a fixed-rate and possibly that of an ARM, but rise gradually (usually over five to ten years), then level off for the remaining years of the loan.

 

Growing-Equity Mortgage (GEM)

This option is designed for borrowers who want to pay off their mortgage as soon as possible. Therefore, the interest rate remains fixed, but the amount of the monthly payment increases according to a prearranged schedule, with the higher payments going to reduce the principal balance. This mortgage can be appealing to someone who is expecting regular income growth and wants to build equity quickly.Fifteen-Year MortgageLike the GEM, the fifteen-year mortgage enables borrowers to repay their loan more quickly, which means they build equity faster and pay less interest over the life of the mortgage.

 

Biweekly Mortgage

Another option for people who want to repay their loans sooner is the biweekly mortgage. Instead of making a single mortgage payment each month, borrowers who choose this option make two equal payments monthly.

 

Federal Housing Administration Insured Loans (FHA)

FHA, also known as the Federal Housing Administration, operates under the control of the Department of Housing and Urban Development (HUD) and has the primary responsibility for administering the government home loan insurance program. This program allows buyers who might otherwise not qualify for a home loan to obtain one because the risk is removed from the lender by FHA.

 

What is an FHA Loan?

 

In 1937, under an act of Congress, the Federal Housing Administration was established to provide American families with a unique opportunity to become homeowners. Formerly, a homebuyer's options were limited only to short term loans ranging from one to five years in term. Borrowers had to put as much as 40 to 50 percent down on the property and pay off the entire loan balance by the end of the term. FHA revolutionized the mortgage industry at the time by offering the 30-year mortgage and made the possibility of home ownership available to Americans nationwide. Throughout the years, a variety of programs have spawned from this revolution to make that American dream of home ownership easier, more affordable and attainable to Americans.

 

There are several notable FHA home loan programs available.

  • Standard fixed rate (FHA 203b)

  • FHA adjustable rate mortgage (FHA 251)

  • FHA 2-1 buydown (FHA 203b, FHA 251)

  • Energy Efficient Mortgages Program

Payment Problems

 

Should one fail to pay, FHA insures mortgage loans made by approved lending institutions. The FHA insures a variety of mortgages, including FRMs, ARMs, GEMs and GPMs. Down payments are low - 5 percent or less. The FHA doesn't set the interest rate on loans it insures, so you'll need to shop around for the best rate.

 

The FHA limits the amount it will insure to whichever is less: 95 percent of the local average home price or 75 percent of the loan limit set by the Federal Home Loan Mortgage Corporation, a large buyer and reseller of mortgages.

 

Veterans Administration Guaranteed Loans (VA)

 

VA loans have most of the advantages of FHA loans, and then some, but they also have eligibility restrictions. They are available only to veterans of the armed services, those currently in the service and their spouses. VA loans are typically half a percent or more below market rates, and they can be obtained with no money down.

 

Finding the perfect home

 

You are now ready and armed with your pre-qualification or pre-approval to find the home of your dreams. Your journey has brought you this far and now your real estate agent will provide you with as many homes as you care to see.

 

However, do you know what kind of home you are looking for? Do you know what neighborhood in which you wish to live? What kind of schools will your children be attending? Is shopping important to you or are you looking for that home on the golf course or near the water? Would you be comfortable in a condominium, a townhouse or even a pre-fabricated home? All these questions and more regarding amenities and specific features will be among those your real estate agent will ask. She will be much more capable of finding the right home for you if she knows as much about your requirements, needs and desires as possible.

 

To help your real estate agent with this process, make three lists - a need list, a do-not-want list and a dream list. Factor in your current housing needs, likes, dislikes and possible future changes in your life and lifestyle, such as more children, less children, parents moving in or out and other major life changing factors.

 

Your needs list may include:

  • Number of bedrooms

  • Number of bathrooms

  • Bath in the master bedroom

  • Separate dining room

  • Garage

  • Basement

While your do-not-want list may include:

  • Small bathrooms

  • No counter space

  • No windows in kitchen/bathroom

  • Tiny yard

  • Insufficient closet space

  • No garage

For your dream list, write down all of the features you would love to have in your home, which may include:

  • Fireplace

  • Swimming pool with Jacuzzi

  • Greenhouse

  • Breakfast nook

  • Two stories

  • Skylights
     

Making the Offer

 

You may already have an idea of where you want to live, but if you don't, here are few things to think about:

  • Look at the surrounding houses in the neighborhood. Are the homes and yards well kept? The condition of these homes will affect the value of the home you buy.

  • Is it visually appealing? Explore the lot thoroughly. Does it offer adequate privacy? Will you maintain the ground or hire someone? Do you like the landscaping or would you design your own? When looking into the back yard, are you greeted with the sight of a transformer, radio broadcasting tower, gas station, bus stop or ball field where night games are played?

  • What kind of area is it in? How close are shopping facilities, banks, churches, hospitals, schools, parks and movie theatres? And, of course you'll want to know what, if any, crime rate is associated with the neighborhood. Go to the local police station and ask for records of robberies, break-ins, vandalism, assaults and drug-related problems in the neighborhood. Is crime increasing or decreasing?

  • What is the traffic like and how will it affect your commute to and from work? Heavy traffic also produces noise and air pollution.

  • Is the home in an area that floods when it rains. How fast does the water drain from the streets and yard? Slope and the soil's ability to absorb water will determine where and how fast water drains away from the house. You can check out local flood information through Stewart's Flood Information Division to find out if the house is in a flood plain.

What ever you do, don't be afraid to ask questions. Your real estate agent will be very happy to provide you with as much information as possible. Remember, this is potentially the largest purchase you will ever make - ask questions until you are satisfied with the answers.

 

Here are a few other things you will want to consider in the selection of your dream home:

  • Don't fall in love with the first home you see. New listings come onto the market all the time. The best deal may still be 'just around the corner'. The more homes you see, the more you'll learn about what you want and what each house has to offer.

  • Don't choose a house because you like the interior decorating - a well furnished home isn't always the most structurally sound. Check out the actual structure of the home. Keep in mind, the furnishings will be leaving with the current owner.

  • Go through the house with a fine-tooth comb. Open cabinets, turn on every switch, notice details, move furniture away from the walls, look in the attic, turn on faucets and flush the commodes. Look for water spots on walls and ceilings - you don't want to find out after you've bought the house that the roof is leaking.

  • Don't be pushed into making a selection. Make your decision only when you've seen enough to pick the best one
     

Closing the Deal

 

You've finally found the home of your dreams. You're ready to put your money where your mouth is - but wait - before you sign on the dotted line, before you spend the money your lender has provided and before you start thinking about interior and exterior design, find out a few things first. Those things may help you negotiate a better, lower price than what the owner is asking.

 

Find out the selling prices of similar properties to use as a guideline to set your sales price. These comparable properties should:

  • Have sold no more than six months earlier

  • Be around the same age and condition

  • Have close to the same number of bathrooms, bedrooms and square footage

  • Be in a similar location and on a similar lot

  • If you still don't feel comfortable setting a price, consider having a professional appraisal done. Appraisers look at what the home is worth today and how the neighborhood may affect future property value. They provide a realistic figure for the true market value of the property

Once you, your real estate agent and the owner have come to an agreement on the sale price of the house - Put it in Writing.

 

Don't reveal your strategy and don't make oral offers. You know you want this house, but don't hand over your money until you are sure the seller is legally capable of conveying a good title and meeting other conditions. Yet the seller doesn't want to surrender the deed until you've paid for the property.

 

Now what?

 

With your real estate agent's assistance, offer the seller a written contract setting out the commitments and promises that you and the seller need to agree on and fulfill in order to make the sale. A well-drawn contract should protect all parties.

 

The first contract you submit should be comprehensive and include everything of any importance. Keep in mind, once the seller accepts the contract, it may be too late to add or change anything. In some states, there may be standard real estate contracts. However, you should make sure that your contract includes at least the following:

  • The offering price

  • Down payment

  • Legal description of the property

  • Method of conveying the title

  • Fees to be paid and who will pay them

  • Amount of deposit

  • Conditions under which the seller and buyer can void the contract

  • The settlement dateFinancing arrangements

  • A list of appliances, furnishings and personal property being sold with the home
     

Earnest Money

 

After you have come up with an offer price, the next step is to determine how large a deposit you want to make with your offer. You want the "earnest money deposit" to be large enough to show the seller you are serious, but not so large you are placing significant funds at risk.

 

One recommendation is to make sure your deposit is less than two percent of your offered price. The reason for this is that if your deposit is larger than that, the lender will pay particular attention to how you came up with the funds. You might have to provide a copy of a canceled check along with a bank statement showing you had the money to begin with. Normally, this is not a problem, but if you have a short escrow period or are barely coming up with your down payment, it could pose an inconvenience.

 

Another reason to limit your deposit is "just in case." Although significant problems are the exception and not the rule, they do occur. "Just in case" there is a nasty or prolonged dispute between you and the seller, the less money you have tied up in a deposit, the fewer funds you have placed at risk.

 

As with practically everything in real estate, there are exceptions to this rule, too. During a hot market, there may be multiple offers on the property that interests you. A large deposit may impress a seller enough so they will accept your offer instead of someone else's, even when your unknown competitor is offering the same price or slightly higher.

 

Since large deposits do impress sellers, you may also find that by making a large deposit you can convince the seller to accept a lower offer. More money up front may save you money later.

 

When it comes to buying your new home, everything is negotiable. Your real estate agent can be very helpful with this process. A partial list of what's negotiable when purchasing your new home may include:

  • Price

  • Financing

  • Closing costs (except where specified by financing or law)

  • Occupancy (When can you get the key and move in?)

  • Painting (Will the seller repaint a portion of or the entire house?)

  • Repairs (Will the seller repair the roof, plumbing, windows, etc., and what kind and quality of repairs will be made?)

  • Yard (Will the seller remove unwanted trees, bushes - put in desired landscaping?)

  • Fixtures (Which lights, fans, appliances, etc. stay and which go?)

  • Wall coverings (Do the drapes stay or go?)

  • Furniture (Will the seller include certain pieces?)

  • Prepaid taxes and insurance (Will the seller credit you with these?)

Negotiation gives you - the buyer - incredible power in making a favorable transaction. As in any negotiation, be prepared to do some give and take. Let your real estate agent help you and work with you and the seller to come to the best possible terms for everyone.

 

As an added precaution, you also should have a professional inspector go through the house to look for potential problems. Even though you have made a complete walk-through, asked the right questions and discussed the offer with your real estate agent, a professional may see things that would be easy for you to overlook. Even if they are not things the seller is expected to repair, at least you will have foreknowledge of any potential problems.

 

Once you receive the inspection, you will want to allow yourself sufficient time to review and approve the report. If you do not approve the report, you may negotiate with the sellers on which repairs should be performed and who should pay for those repairs. Otherwise, you can cancel the purchase without penalty, provided you have included timetables in your offer. Allow a maximum of ten to fifteen days to receive the report and five days to review it.

 

One more thing, it is absolutely essential that you include a closing date as part of your offer. This way both you and the seller can make plans for moving and the seller can make plans for buying his or her next home. This also allows the time needed to renegotiate after reviewing the professional inspection report.

 

Though most transactions actually do close on the right date, remain flexible to avoid delays that may create difficult problems.

 

For example, if you are renting and need to give the landlord notice that you are moving out, you may want to allow some flexibility in your time line. Otherwise, if your purchase closes a few days late you could find yourself staying in a motel with your belongings packed in a moving van somewhere while you pay storage costs.

 

You're almost at the end of your journey. Soon, your dream will be a reality and you can begin living in the home of your choice. And, now that you and your seller have come to a mutual agreement, you are ready to sign the contract and put down your earnest money (money indicating the seriousness of your offer). There are all kinds of people and services involved behind the scenes to make this happen before you put the key in the lock.

 

First, you'll want to close the deal. The road to closing is short, with only six major steps. These steps generally are handled at your title company office. Participants at this meeting are you, the buyer, the seller, your attorneys - if you have them, your real estate agent, escrow agents and anyone else who may have an interest in the transfer of title.

 

And of course, the final step - moving in! Congratulations - you have now accomplished the American dream of owning your own home! Live long and prosper!

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SELLER'S CORNER

Getting Ready to Sell
 

The first step in getting your home ready to sell is to de-personalize it. A house can be a place to eat, sleep, park your car and put all your stuff, including other family members. A home is where you feel comfortable, warm, safe and protected. A home is where you live.
 

De-personalizing your home allows potential buyers to perceive your house as their potential home. Removing family elements, such as photos, sports trophies, collectible items, knick-knacks and souvenirs allows the buyers to picture it with their stuff, thereby putting their mark on the home. You might want to store these prized family items in an air-conditioned storage. 

Clutter removal
 

Part of preparing a house for sale is removing the clutter. Through the years, you’ve amassed a significantly large quantity of stuff. Remember when you first looked at your new home? You opened the cabinets, pulled the drawers and opened closet doors. Your buyers will be doing the same thing, so getting rid of the extra stuff that has gathered over the years will help your house look ready for its next owner.
 

Areas especially vulnerable to attacks of opening and examining include the kitchen – clean out the pantries, cupboards and shelves – keep trashcans hidden and emptied.
 

Closets – Closets are great places for accumulating stuff. Extra clothes, shoes and accessories that may not have seen daylight for some time can all be boxed and placed in storage. Cleaning this space out also makes your closets look bigger – a huge item on any buyer’s list.
 

Furniture Clutter – A room can look overcrowded if you have it full of furniture. That big over-stuffed sofa or your favorite worn, but comfortable recliner may need to find a temporary home when showing your house to prospective buyers. Again, remember, the buyers want to envision their own favorite pieces in the house. You may want to tour some builder’s models to see how they place furniture in the model homes. You can then get an idea of how to place your own furniture to provide the maximum effect – getting an offer.
 

Storage Areas – These are favorite places for stuff to gather. Basements, garages, attics and sheds attract whatever doesn’t go into the living room, bedrooms, closets or kitchen. Things like Uncle Henry’s old bowling ball, Aunt Hilda’s sketches of her parakeet or even your Elvis-is-alive-and-well poster. This might be the perfect time to have that garage sale you’ve been putting off. Cleaning up and cleaning out will dramatically enhance your selling efforts. Plumbing and Fixtures – check all fixtures to make sure they turn easy and that faucets do not leak. The fixtures should look as shiny and new as possible.
 

Ceilings, walls and painting – Check your walls and ceilings for water stains. Sometimes old leaks leave stains, even after the leak has been repaired. If you should find a leak, of course have it repaired. Painting can be your best investment when selling your house. A neutral color – beige, cream, ivory or standard off-white will allow your buyers to picture your house with their color schemes. The lighter color also adds brightness to the rooms and makes them appear more spacious.
 

Carpet and flooring – Unless your carpet appears old and worn, or is definitely an outdated style, hiring a good carpet cleaner may be all you need. If you choose to replace the carpet, find something inexpensive in a fairly neutral color.

 

Windows and doors – Check all windows and doors to make sure they open easily and without noise. Oil all the hinges to ensure that each opens smoothly. Check your windows for cracked or broken windowpanes. Of course, this would be a good time to clean them allowing your rooms to be bright. As potential buyers go from room to room, someone will open each door and you want to do everything necessary to create a positive impression.

Odor Control – For those who smoke, you might want to minimize smoking indoors while trying to sell your home. You also could purchase an ozone spray that helps to remove odors with out creating a masking odor.

Pets create odors that you may have become used to, but are immediately noticeable to those with more finely tuned olfactory senses. If you are a cat owner, be sure to empty the kitty litter box on a daily basis. There also are products that you can sprinkle in a layer below the kitty litter that helps to control odor. For those with dogs, keep the dog outdoors as much as possible. You might also try sprinkling carpet freshener on the carpet on a periodic basis.

Assessing the exterior of the house
 

Cleaned out closets and cabinets, washed windows, new paint on the walls and freshly cleaned carpets, along with shiny, new faucets and replaced light bulbs – the inside of your home sparkles as it entices potential buyers to take a look. But we’re not quite finished. Before the buyer steps over the threshold, will they need to walk through the un-mown grass, step over the kid’s bicycles or dodge the game of kick ball being played on your front lawn?

 

Take a walk across the street and take a good look at your house. Look at the houses nearby to see how they compare to yours. If yours already looks better, then you are several steps ahead of the game. Landscaping -- Is your landscaping at least average for the neighborhood? If not, buy a few bushes and plant them. If you have an area for flowers, buy mature colorful flowers and plant them. Flowers add a splash of vibrancy and color, creating a favorable first impression.

 

Your lawn should be evenly cut, freshly edged, well watered and free of brown spots. If there are problems with your lawn, you should probably take care of them before working on the inside of your home. This is because certain areas may need to be re-sodded, and you want to give it a chance to grow so that areas with new sod are not immediately apparent. Plus, you might want to give fertilizer enough time to be effective.

Always rake up loose leaves and grass cuttings.
 

House Exterior – The big decision is whether to paint or not to paint. When you look at your house from across the street, does it look tired and faded? If so, a paint job may be in order. It often is a very good investment and really spruces up the appearance of a house, adding dollars to offers from potential homebuyers.

 

Choose a color that fits well in your neighborhood. Of course, the color also depends on the style of your house, too. For some reason, different shades of yellow seem to bring out the best response in home buyers, whether it is in the trim or the basic color of the house.
 

As for the roof, if you know your house has a leaky roof, replace it. If you do not replace a leaky roof, you are going to have to disclose it and the buyer will want a new roof, anyway. Otherwise, wait and see what the home inspector says. Why spend money unnecessarily?
 

The Back Yard – The back yard should be clean and neat. If you have a pool or spa, keep it freshly maintained and always clean. Dog owners – be sure to consistently keep the area clear of debris.
 

Front Door and Entryway – Your front door should be especially nice, since it is the entryway into the house. Polish the door fixture so it gleams. If the door needs refinishing or repainting, make sure to get that done. Remove anything with a personal nature, plaques, doormats, name plates, etc. The idea is again, to let your potential buyer visualize the home as his.
 

Make sure the lock works easily and the key fits properly. When a home buyer comes to visit your home, the agent uses the key from the lock box to unlock the door. A sticky lock can cause a sticky situation’
 

Why hire a real estate agent?
 

Selecting an agent is one of the most pivotal decisions when selling your home. It is important to seek advice about this important financial transaction from someone who sells houses for a living.

Working with professional real estate agents is beneficial for several reasons:
 

  • They will help establish a fair asking price for your house.

  • They will promote your house to other agents and list your property in multiple listing services so your house will receive maximum exposure.

  • They will create, pay for and place advertising for you.

  • They will schedule appointments to show your house to prospective buyers even when you are not there.

  • They can weed out buyers who will not qualify for a mortgage.

  • They can refer you to sources for insurance, inspections, legal counsel and financing.

  • They will help negotiate with the buyer.
     

Which real estate agent should you choose?

Since you will be working closely with an agent, choose an agent with whom you feel comfortable. One who is responsive to your needs and the needs of your family, one who compliments your personality, and one who is prepared to be with you throughout each step of the home-selling process.
 

  • Get referrals from trustworthy family and friends.

  • Seek an experienced agent with a known reputation – look at credentials, track records and awards received.

  • Select someone who is a member of the National Association of REALTORS®.

  • Interview at least three agents.

  • Find someone who is continuing their education – a Certified Residential Specialist (CRS), Certified Residential Broker (CRB) or a Graduate of the REALTORS® Institute (GRI) – this shows the real estate agent has a long-term interest in the business and is willing to invest in their career
     

These questions, asked of family and friends who have dealt with a specific real estate agent, will help you learn

What you need to know about agents:

 

  • What were they like to deal with?

  • How hard did they work for you?

  • Did they get you a good price?

  • Were there any complications?

  • Did they always tell the truth?

  • Were they always looking out for you or just interested in getting paid?

  • Would you use their services again?
     

After interviewing a few agents, ask yourself the following questions to narrow your choice:
 

  • Which one returned your phone calls?

  • Which one was most enthusiastic about selling your house?

  • Which one provided a competitive market analysis – an in-depth discussion on how the selling price was determined?

  • Which one provided a detailed marketing plan?

  • Which one provided a time frame on how long it may take to sell your house?

  • Which one explained things most clearly?

  • Which one made you feel most comfortable?
     

What to expect from a real estate agent
 

Expect:

  • To be treated as a respectable client, not as a transaction

  • To have your best interests represented

  • To be served selflessly; your agent shouldn’t be eyeing your wallet

  • Your agent to work as hard for you as they would for themselves

  • The highest skills available

  • To have calls returned promptly and to be kept up to date

  • Your agent to go above and beyond what’s expected when dealing with problems that may arise

  • Your agent to be a trusted advisor that you can consult even when the transaction is complete
     

Rely on instinct to determine which agent is right. The right person will have suitable credentials and a marketing plan you agree with, and will make you feel comfortable.

 

Setting Your Price
 

It is human nature for you to want the highest price for your home. However, to set the right price on your house, combine an objective evaluation of your property with a realistic assessment of market conditions. 


Study the comparables
 

You are more likely to benefit by determining a fair value and sticking close to it than by asking an unrealistic figure.
 

Underpricing can deprive you of money that’s rightfully yours. Unless rushed, aim for full market value.
 

Be cautious of either overpricing or underpricing if you rely on less than solid information. Know your competition. Learn the offering and selling prices of similar properties. Find out how long each took to sell.
 

Compare your home to others close in age, style, size, condition and location. Timing is all-important. If market demand is high, you should be able to increase the price. Sales prices of homes are published in local or regional sections of newspapers. 
 

Get an Appraisal
 

Appraisal opinions are subject to honest dispute. Generally, an appraisal prepared by an experienced, licensed professional comes as close to an objective evaluation as you can get. 

 

Showing your House to Potential Buyers

Your house should always be available for a potential buyer to see, even though it occasionally may be inconvenient for you. Your agent will probably suggest a lock box placed in a convenient location that will make it easy for other agents to show your home. Most agents will call and give you at least a couple of hours' notice before showing your property. 
 

Leaving during a showing

Potential home buyers may feel like intruders if you are home when they visit, and they might not be quite as receptive toward viewing your home. Visit the local coffee house, yogurt shop or take the kids to the local park. If you absolutely cannot leave, try to remain in an out-of-the-way area of the house and not move from room to room. Allow your agent to do all the talking – but do answer any questions the agent may ask. 

Lighting

When you know someone is coming by to tour your home, turn on all the indoor and outdoor lights – even during the day. At night, a lit house gives a warm, inviting impression when viewed from the street. During the daytime, turning on the lights prevents harsh shadows from sunlight and it brightens up any dim areas. Your house will look more receptive to buyers. 

Fragrances

Do not use scented sprays to prepare for visitors. For a pleasant aroma in your house, use a potpourri pot or turn on a stove burner for a moment with a drop of vanilla extract on it. It will smell like vanilla cookies. And who can resist a house with fresh, baked cookies?
 

Pet Control

If you have pets, make sure your agent puts a notice with your listing in the multiple listing service. If you know a buyer is coming, try taking your pets with you while the home buyers tour your home. If that isn’t possible, keep Fido and Max in a penned area in the back yard. Try to keep indoor cats in a specific room when you expect visitors, and put a sign on the door. Most of the time, an indoor cat will hide when buyers come to view your property. 
 

Kitchen trash

Having an empty trash can, freshly lined with plastic is much more appealing than having one with last night’s spaghetti box showing. Go through you house and make sure all the trash cans are empty, newly lined and have clean odors. It might even be a good idea to wash the trash cans at least once a week while your house is on the market. Not only will it make your house smell clean, it keeps germs from building up. 
 

Keep the house neat and clean

A nicely made bed, some fresh flowers on the nightstand will make your bedroom seem very inviting. Walk around your house before your buyers come by and pick up any newspapers, empty glasses or other clutter that may have made its way into your rooms. Keep everything freshly dusted and vacuumed. Try your best to have it look like a model home – a home with furniture but nobody really lives there. 

 

The Contract

A valid real estate contract must be in writing and be freely offered by the buyer and accepted by the seller. All parties to the contract must be legally competent to do business. Money or other valuable consideration needs to be exchanged for title to the property.

Keep in mind that if things go wrong, the buyers could require you to sell them your home or pay damages. Be familiar with the terms of any contract you give to a would-be purchaser.

Consider the contract as a whole. Is it slanted in favor of the buyer? If so, consult an attorney about making changes. Analyze the document as a series of paragraphs or clauses, each written to benefit one party or the other. 

 

Key Elements of the Sales Contract
 

Price and terms

If a low offer comes your way, remain cool until you've examined the terms. Nothing evokes a more emotional response than a low bid. Be realistic and objective because many properties don't bring full price. Don't use price alone as a reason not to counter or negotiate. A first offer may reveal what's most important – price or terms – to this particular buyer, giving you the key to begin bargaining. 

 

Condition of home and inspection

The purchaser should have your home inspected for soundness of construction and state of repair. Include all mandatory and voluntary disclosure statements concerning the property's condition, such as known defects in the contract. Be careful what you guarantee. You cannot be sure the roof won't leak, the heating system won't go out or any other number of such assurances. Once the property is sold, you are no longer responsible for it. 

 

Response deadline

You'll be asked to respond to an offer within a specified time frame. Try to get as long a response time as possible. Other offers may come up and you'll want to buy time to review them and perhaps use one offer to increase another. 

 

Settlement date and occupancy

If you have another home under contract, ask for a settlement date that will enable you to take your sales profits to the next closing. Be realistic; the buyer of your home probably will need at least 30 to 50 days to arrange financing and close. 

 

Finalizing

Everything in the offering contract is negotiable. When everyone has agreed to the terms, initialed the changes and signed the contracts, you've got an agreement binding on all parties. All that remains is removing contingency clauses, arranging financing and clearing title. 

 

Preparing for Closing
 

As the seller, you have relatively little to do at this point. Avoid common glitches by keeping ahead of progress on both sides.

 

Be aware if the buyer is having trouble getting a loan on the terms specified in the contract. If they are turned down, it could jeopardize the whole deal and your house could be put back on the market. A day or so before closing, make sure all the necessary papers and documents have been gathered and are in the hands of the right parties.

 

Things can go wrong. Documents can be misplaced, delayed or lost. However, common last-minute difficulties can be avoided.

 

Parties who should be present at closing need to be informed of any change in the date, time or place. They should be reminded a week before closing and again the day before.

 

Everyone named on the deed under which you hold title must sign the new deed by which you grant title.

 

Know when and how you will be paid. Don't expect to walk away from the settlement table with a check in hand.

 

If you are buying another property, consider having both closings at the same office scheduled back-to-back. That way, the timing of the disbursement is not a problem. You sign a paper authorizing the title company or attorney to assign the funds from sale to purchase.

 

The papers you'll need:

  • A copy of the sales contract and documentation showing that any contingencies have been removed or satisfied

  • All documents needed to complete the transfer of title; this may include certificate of title, deed, correcting affidavits, quitclaim deeds, survey and title insurance policy

  • Prorations for ongoing expenses, such as insurance premiums, property taxes, accrued interest on assumed loans and utilities (if not shut off between owners)

  • Receipts showing payment of the latest water, electric and gas bills

  • A certificate from your lender indicating the mortgage balance and the date to which interest has been prepaid

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FREQUENTLY ASKED QUESTIONS

1. What steps are involved in buying a home? 

Answer: After you make the decision to buy a home, you’ll want to plan a budget and contact a real estate professional to guide you through the entire process. You’ll also need to research and compare available lenders to finance your home beyond your down payment. Your real estate professional will likely be able to suggest prospective lenders if you need assistance in choosing one. A lender will pre-qualify you for a loan in the amount it determines you to be able to afford, so that sellers will consider you a serious and capable buyer. Once you’re pre-qualified, your real estate professional will begin showing you possible homes. When you decide on a particular home, your real estate professional will make an offer on your behalf to the home’s seller — usually for a price slightly less than the asking price. This may lead to a counter offer, meaning that the seller tries to negotiate your purchase price closer to his or her original asking price. Once both parties agree on an amount, your real estate professional will work with a title insurance agent and/or escrow officer to draft all necessary paperwork. He or she will then schedule a date for you and the seller to meet for the closing, where the transaction is completed and ownership is officially transferred from seller to buyer. Click here to see the home buying process graphically represented in a timeline. 

 

2. What steps are involved in selling a home?

 

Answer: The steps involved in the home selling process are very similar to those involved in the home buying process. Once you have made the decision to sell your home, you will need to establish an asking price for it. While some sellers successfully sell their homes on their own, a for-sale-by-owner arrangement can be complicated and will require a great deal more of your personal time throughout the process. For this reason, most people consider the commission paid to a real estate professional well worth the investment, for the convenience, time savings and overall guidance provided. Real estate professionals will also be able to tell you if your asking price is appropriate for your property or home. In addition, they will manage the marketing of your home — from front-yard sign to MLS listing — while guiding you in preparing the home to be shown to potential buyers. Once a prospect makes you an offer, you can either accept the proposed purchase price or make a counter offer. When both parties agree on a price, your real estate professional will work with a title insurance agent and/or escrow officer to draft all necessary paperwork. He or she will then schedule a date for you and the buyer to meet for the closing, where the transaction is completed and ownership is officially transferred from seller to buyer. Click here to see the home selling process graphically represented in a timeline.

 

3. What is title insurance, and why do I need it?

 

Answer: Title insurance is an insurance policy that protects you against loss that could result from defects in the title of the property you are buying. The premium is paid only once and is good until the property’s ownership changes. Unlike most types of insurance which protect policyholders from future events, title insurance protects you against defects that could already exist.

 

4. What does a home warranty cover?

 

Answer: Stewart Home Warranty offers a variety of home warranty options to cover a home’s appliances and major systems such as air conditioning, heating, electrical and plumbing. Coverage offered varies by package and state, so contact Stewart Home Warranty directly at www.stewarthomewarranty.com or 866-338-8615 for details specific to you. Home warranties provide peace of mind to buyers and add value to their property for sellers.

 

5. How can I further research properties, neighborhoods, area schools and other demographic criteria important to me in my quest for a new home? 

 

Answer: Homebuyers and sellers will find ImageAtlas, powered by GlobeXplorer™, a valuable resource for accessing high-resolution aerial imagery from the Web. Using ImageAtlas, your real estate professional, builder or lender will be able to provide you detailed information and images extracted from searches by address, point-and-click navigation and pan-and-zoom views. Likewise, PropertyInfo™ from REIData provides extensive demographic information as it relates to specific properties, neighborhoods, school districts and counties.

 

6. What are the different types of housing available to homebuyers, and what are the advantages and disadvantages of each?

 

Answer: A single-family home refers to a free-standing property that does not share walls with other nearby homes or structures, and that is built from the ground up at the site of its foundation, on its own piece of land. The pros for owning a single-family home include the fact that the owner owns everything — the home itself as well as the land it is on, and as such is able to landscape, remodel or rebuild the home to the extent desired. Possible disadvantages to owning a single-family home may include the fact that the owner is responsible for all repairs and maintenance, as well as any remodeling done to both the interior and exterior. He or she will also likely have fewer amenities than high-density living structures which often provide swimming pools, tennis courts and more as part of homeowners’ association fees charged. A townhouse is a home that is attached to one or more other houses, located on a specific property that the townhouse owner also owns. Townhouses can range drastically in size and architecture, including multi-unit structures such as duplexes or triplexes. Advantages to owning a townhouse can include less financial responsibility for exterior maintenance and repair costs, heightened security afforded by a more high-density community and amenities for which the homeowner is not directly responsible (pool, tennis courts, etc.). Disadvantages often include less privacy than with a single-family home, less freedom to alter the home’s exterior and a monthly or yearly homeowners’ association fee. A condominium, or condo, is very similar to an apartment in terms of structure and multi-unit design. Often, apartments are converted to condos as the result of changes in complex ownership and management. Condominium owners own only the interior of their dwelling — from the walls inward — and, just like with an apartment, their home is attached to their neighbors’. All condominium owners who live in a particular complex share the financial responsibility for maintenance and repairs to the overall property and building exteriors, through payment of a monthly homeowners’ association fee and, if necessary, a special assessment requiring a one-time payment of a predetermined amount. Possible advantages to owning a condo include less individual financial obligation for exterior home repairs and a lower purchase price than a single-family home or townhouse. Disadvantages may include greater difficulty when selling a condo, as compared to single-family dwellings and townhouses, monthly homeowners’ dues, less privacy than with other types of housing and usually a complete lack of freedom to alter the exterior of the home in any way. A manufactured home, once typically referred to as a mobile home, is a single-family home that is built at a location other than the land on which it sits. Most manufactured homes are modular in structure, and final assembly occurs on the home site after separate “pieces” are transported from the manufacturing plant to the homeowner’s property. Advantages to owning a manufactured home may include the fact that it is often a less-expensive means of acquiring a single-family residence, and in the event the owner moves to another property or sells the home, it may be easily transported to another location. Disadvantages include an obvious limitation in architectural options (since the homes are built off-site and then moved) and, often, reduced longevity in the durability of the home.

 

7. What other types of coverage does Stewart offer homebuyers or home sellers?  

 

Answer: In addition to title insurance, Stewart offers homebuyers or sellers home warranty, property and casualty, errors and omissions, bonds and other personal insurance coverages available through Stewart Specialty Insurance Services.

 

8. What are Flood Zone Determinations?

 

Answer: Simply put, flood zone determinations define geographic areas, or zones, according to their flood history using a classification system that assesses the potential for rainfall to be converted to storm water runoff. This information is very important to a buyer because it will likely affect insurance availability and cost. Likewise, it is important to a seller to know how the flood zone determination for his or her home may affect the sale of the home. Stewart Mortgage Information produces the highest resolution flood hazard analysis in the industry quickly and accurately. Ask your real estate professional or homeowners’ insurance provider about a flood zone determination from Stewart Mortgage Information.

 

9. What is a 1031 exchange?

 

Answer: A §1031 exchange refers to legislation that allows an investor to sell a property, reinvest the proceeds in a new property and as such defer all capital gain taxes. 1031 Exchange Company is recognized as one of the leading Qualified Intermediaries in the nation, meaning that they have a proven track record guiding investors through the exchange process.

 

10. What is a National Hazard Disclosure Report?

 

Answer: California law requires sellers to provide natural hazard information for their buyers. Stewart Natural Hazard Disclosure provides these reports quickly, affordably and completely either online or delivered to your door. When sellers need quick service that’s done right the first time, they select dependable, professional natural hazard disclosure reports from Stewart NHD. To learn more, visit www.stewartnhd.com.

 

11.  What is Stewart doing to facilitate homeownership in traditionally underserved homebuyer segments?

 

Answer: Stewart Multicultural Markets is committed to increasing the homeownership rate of traditionally underserved consumer segments by working with title agent offices, real estate professionals, lenders and consumers, and through our partnership with national trade organizations serving those particular homebuyer populations. Visit www.stewartmulticultural.com for more information.

 

12. How can I better understand the terminology used in the home buying and selling processes?

 

Answer: Visit the Stewart Glossary to learn the terminology you’ll need to know before buying or selling a home.

 

13. What is a timeshare?

 

Answer: A time share is a form of joint ownership of property where many owners share title and enjoy use or occupation of the property according to a fixed time period or schedule.

 

14.  Does Stewart offer title insurance for timeshares?

 

Answer: Most definitely. Stewart Vacation Ownership provides solutions to the unique and complex challenges of timeshare development — solutions forged from superior industry acumen, unequaled market experience and state-of-the-art technology and systems. To learn more about the services available to timeshare owners, visit www.stewart.com/vacationownership/.

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