04/02/2020
On Monday, I posted some information relating to the process of purchasing a home. Today, I will discuss a few things to think about if you decide to sell your home. If you know of anyone who might be interested in this post, please feel free to share it with them.
SELLING YOUR HOME:
Although there is no legal requirement to hire a real estate agent to help you sell your home, in almost all cases, it is a good idea to do so. First of all, an experienced realtor is able to go through your home and give you a very good idea of what the fair market value of your home is. The realtor has access to the prices that were paid for homes recently sold in your area and can use that information in order to determine what your asking price should be. Second, a realtor has knowledge of the things that typical buyers in your area are looking for in a home. There may be some things about your home that you are fine with but many potential buyers would not like. If there are some minor alterations to your home that would bring the sales price higher, the realtor will tell you about it. The realtor will tell you how much he or she thinks the value of the home would increase by making some alterations to it. You could then get estimates of the costs of making the recommended improvements. If spending a small amount on a project would increase the value by a large amount, you may decide to take on the cost.
Another advantage of hiring a real estate agent is that they have access to many people who are looking to purchase a home. The minute you hire the realtor, he or she can reach out to prospective buyers who are in the market for a home in your area. This could result in a very quick sale. Also, as I said in my last post, realtors from competing offices often work together when it comes to home sales. Once you list your property with a real estate agent, realtors from other agencies may also show your home to client's that they are dealing with. This does not cost you anything extra as your agent will simply share their commission with the other realtor. Typically, when you hire a real estate agent, they will charge a fee that is a percentage of what the property ends up selling for. For residential property, a 6% commission is pretty typical. Other types of properties are often different. You do not pay the realtor anything until the property actually sells. The realtor will get his or her check out of the proceeds from the sale.
If you choose to sell your home without a realtor, I would highly recommend having the property appraised prior to putting it on the market. Many people mistakenly believe that the assessed value of their home as shown on their property tax bills is the actual fair market value of the home. This is not true. More times than not, the assessed value is far less than the actual value. Spending a few hundred dollars on an appraisal is well worth eliminating the risk of selling your property for several thousand dollars below it's actual value.
The "legal process" begins once a seller and buyer have entered into a written contract for the sale of the property. It is important for any seller (or buyer for that matter) to hire an attorney who is experienced in real estate matters as the process can sometimes become complicated. The primary role of a seller's attorney is to gather and update all title documents for the property and to prepare many of the documents necessary to complete the transaction.
A very important set of documents that a seller is required to provide to a buyer is an "abstract of title". This is a set of documents that shows anything that may have happened to the property that would effect title. A title company searches all of the records of things that may effect title to the property such as Deeds, mortgages, judgments, bankruptcies, taxes, deaths as well as other things. To be a valid abstract of title, the search must go back a minimum of forty years. When you purchased the property you are now selling, you should have received an abstract of title that was up to date as of the time you purchased it. If you still have this abstract, you should give it to your attorney right away so that it can be sent to the title company to be brought up to date. The title company will search all of the records that would effect title from the date you purchased the property through the date you are selling it. The shorter amount of time that has passed since the abstract was last updated, the less it will cost you. If you do not have an existing abstract of title, it will likely cost several hundred dollars extra since they will have to search at least forty years of records. After the abstract has been brought up to date, your attorney will review all of it to make sure there are no issues that would effect title to the property. For example, if you have a mortgage on the property that has not yet been paid, that will show up on the abstract and your attorney will need to pay the remaining balance of the mortgage out of the proceeds of sale. There are numerous other things that may show up on the abstract that your attorney will need to address before closing. The bottom line is that your attorney must make sure that when you transfer ownership of the property, there are no unresolved title issues that could negatively effect the new owners.
The standard real estate contract requires the seller to provide a survey of the property to the buyer. Sometimes, the parties agree to waive this requirement or to have the buyer pay for the survey if they want one. The cost of providing a survey varies depending upon several things, including the size of the property being surveyed. An average size residential lot may cost a few hundred dollars to survey while a several acre lot may cost a few thousand dollars. This is something that every seller should think of prior to signing a contract that requires them to provide a survey. If you already have a survey, sometimes people agree to accept the existing survey along with an affidavit from the seller confirming that they have not done anything to alter the property lines since the date the existing survey was completed. Often times, a survey will show that there are boundary line issues that need to be resolved. A common issue is a situation where a fence exists that is not on the boundary line. Typically, this can be resolved by the seller and the owner of the neighboring property signing a boundary line agreement which basically says that they agree that the actual boundary is where the survey says it is. Usually the agreement will also say that the fence can stay where it is but if a new fence is built in the future, it will be on the boundary line. Again, there are a lot of title issues that a survey can uncover but there are usually ways to resolve them.
Once the seller's attorney knows that all of the title issues are resolved, he or she can prepare all of the necessary documents for the sale. Everything is sent to the buyer's attorney (and bank attorney if the buyer is getting a mortgage) for his or her review. If everything meets with the buyer's attorney's approval, a closing can be scheduled. Once a closing date is set, both attorneys must work together to figure out the total amount the buyer will need to bring to closing and what things need to be paid from this amount to cover all of his or her costs. Typically, the seller does not pay any of his or her costs until closing. Costs such as the abstract of title, survey etc. are paid by the seller's attorney out of the proceeds of sale. After closing, the deed and other documents are recorded in the County Clerk's office and the buyer is officially the new owner of the property.
Any attorney who handles real estate transactions will tell you that the secretaries who work on the files are every bit as important to the process as the attorney. I am blessed to have three legal secretaries in my office who are very knowledgeable and dedicated to my real estate practice. Without their hard work, my practice would not be nearly as successful as it has been.
The above is just a small sample of things to consider when you sell your home. Hopefully, some of it will be helpful to any of you who are thinking about selling your home. If you have any questions about this or any other legal matter, please feel free to call my office at (607)324-6690 or email me at [email protected] as I would be happy to assist you.
In the next few days, I will be posting something that discusses many of the things that are in a written real estate contract. In the meantime, everyone stay safe and stay happy!!
