It is time to sell your home. Where do you start? One of the most helpful places to begin is knowing who is or can be involved in the transaction. At first glance, you might think it will just be the real estate agent and you, but it is much more than that. There are different types of real estate agents who provide varying levels of service and expertise.
Other important players in the home buying process are the Escrow Officer, Appraiser and MLS. The Escrow officer works for the title company and coordinates documents, assists with closing, and manages disbursements. The Appraiser is hired by the Lender or the Buyer to personally inspect your home and calculate a monetary value for the Lender. The appraisal can signal to the Lender if the home is under or over valued for the purchase price. MLS (Multiple Listing Service) is a database of properties for sale, under contract and recently sold in any given area.
Now that you know who the players are, you might think that you can represent yourself and do just as well as being represented by a Real Estate Agent. That is often not the case! You may not realize that a Real Estate Agent is a licensed professional who has taken classes (and continues to get continuing education) throughout their career as an agent. Agents are usually experts in the current market conditions in your area and can be a valuable resource. Additionally, your Agent is significantly less emotionally involved in the transaction and can handle any difficult situation with professionalism. Overall, your Agent should be there to oversee the transaction, make sure your interests are represented, and that the transaction moves along smoothly.
The inspection is a necessary process of selling a home. The Seller has an obligation to disclose the true condition of the home on a Seller’s Disclosure form; if the statements provided by the Seller regarding the condition of the home are not truthful, and problems arise after the sale, then the Buyer may have the right to bring a lawsuit and recoup the monetary value of the deception. For these reasons, it is important to truthfully disclose the conditions of the home.
Once an inspector is selected by the Buyer (you should always require the Buyer to select the inspector so there is no chance that you will be responsible for a “bad” or “inferior” inspection. They Buyer should schedule a time for the inspection and the inspector should be given full access to every part of the home for as long as the inspector needs to complete the work required to provide a thorough inspection. Once the inspection is completed, the inspector will often provide a comprehensive report on the condition of the home.
A home inspection is performed by a licensed professional and should encompass the major components of the home: roof, plumbing, electrical, heating/cooling, appliances, water heater, exterior and any other visible features. A full report should be provided, including pictures and any recommendations for maintenance or repair. The buyer usually pays for the inspection, but this is negotiable.
A Structural Pest Control Inspection is a specialized type of inspection. This involves an examination for wood-destroying bugs such as termites. Most pest control reports will classify conditions as Section I (repairs) or Section II (preventative). Section I (repairs) are usually paid for by the seller; Section II are not necessarily completed but are items that may cause damage in the future, if not addressed by the Buyer.
Escrow is where a third party, usually a title company, temporarily holds either money, property or both until a specified condition has been met or a specified time has elapsed. This process is to protect both the Buyer and Seller in a real estate transaction. Being “in escrow” implies that an offer has been accepted by the Seller for the purchase of property.
The home warranty is an insurance policy that kicks in AFTER closing should there be any mechanical, electrical or plumbing issues. Including the policy in the real estate contract can add value and security to the Buyer for unknown or unexpected post-closing repairs that may arise.
Home Warranty Plans usually range from $250-500, offer varying coverages and are typically paid in advance at closing (as part of the closing costs). The policy is usually good for one year and does not auto-renew.
Title insurance is a type of policy that protects both the Lender and the home owner from issues/defects/clouds that may hinder ownership of the property. This type of policy protects a property owner from monetary loss and covers the cost of any defense in order to clear title. Unfortunately, even the most meticulous reviewer may not be able to find all title defects. There are two types of policies: an owner and lender policy. An owner policy covers the property owner for as long as that person owns the home. The lender policy insures the property over any claims that others may have. The Seller usually pays for the owner’s policy as it is the seller’s way of confirming that title is free and clear. If the purchase is financed, the buyer pays for the lender policy.
A homestead exemption removes a portion of your home’s value from the taxable base. In other words, the exemption makes your home’s value lower and that, in turn, makes your taxes that you owe each year lower. There are two qualifications to be eligible: 1) You must own your home on January 1st of the relevant tax year; and 2) it must be your principal residence. You can only have ONE homestead at any time. If you have a special exception (such as you are disabled or over 65), we will address that in a moment.
A homestead is defined as a condominium, manufactured home, or a separate structure owned by an individual living in the structure. The key take-away is that you (as the owner) must be living in the structure to qualify for the exemption. A homestead can also include up to 20 acres of land provided you own the land and it is used as a yard or for some other residential home use.
Short answer: yes. Please note, in order to qualify for the exemption, your driver’s license must reflect your principal address.
Your closing will be scheduled through the title company on a certain date and time. The title company will be responsible for coordinating the real estate brokers to pay their commissions from the proceeds of the sale. The title company will prepare and/or coordinate all the documents necessary to facilitate the transfer of the real property from you to the new Buyer. Once all the documents are signed, the title company will fund the transaction by wire. After funding, the Buyer is given keys to the home as the new property owners, and your closing should be complete. (There may be a few outstanding items to take care of depending on your specific transaction.)
The contents of this article do not constitute legal advice nor does it create an attorney-client relationship with Canada Lewis & Associates PLLC. You should discuss your situation with an attorney whom you have engaged to perform legal services for you. If you wish to retain the services of Canada Lewis & Associates, please contact our office for more information.