The Contract For The Sale And Purchase Of Real Estate No Broker in a nutshell
Selling a house with a real estate agent can seem daunting on its own, yet selling a house without one might seem impossible. It isn’t impossible, and it isn’t as hard as it seems. Even after listing your home online, you may receive calls from brokers telling you frightening statistics about selling without a real estate agent; don’t let them scare you, that’s all it really is, agents trying to get you to submit the process over to them.
There are roughly nine steps to landing and closing a real estate purchase agreement. In this article, we’ll be exploring this subject, along with the contract for the sale and purchase of real estate.
The Nine Steps to a Home Sale
This is a general guide and should not be considered complete. Every state has their own unique approach to property laws, and a lawyer should be consulted to ensure that you are following your state and local laws.
Before dreaming of signing the land sale contract, the first step to any real estate sales is to repair and fix up the property being sold. Over time, problems accumulate, such as cabinet hinges becoming misaligned, leaky faucets, warped floorboards, or cracked drywall. It’s important to repair everything you can before proceeding.
Comparable Market Analysis
After repairing the property, it’s time to understand the localized market value. Every neighborhood and street has its own property value. Homes just two streets away may have better access to parks, while noise from traffic is muffled by trees and foliage; perhaps there is a lack of accessible commercial property nearby; or the surrounding area may have dilapidated agricultural or industrial facilities. There are a number of factors that can contribute to price fluctuations. As a result, residential real estate prices are incredibly localized.
To understand the value of your home, it is important to contact a number of real estate agents. They will appraise the home, typically without charge, with the hope that you will choose them to help you sell the property. Never rely on only a few appraisals, each broker can value the property very differently.
At this point, after the appraisal, it’s important to prepare the home for showings and walkthroughs. There are a few important points to keep track of. Lighting is critical, every dimly lit corner and every dark room makes the home appear smaller. Swap out lightbulbs for brighter ones and bring in lamps for dark corners. The second most important point is to clean up any signs of daily life within the house. Electric kettles, toothbrushes, large family photos, and personal items should be stuffed away into cabinets and drawers. You want to open up as much floor and counter space as possible. The buyers need to be able to imagine themselves and their families living there.
Hiring a professional photographer can make or break a listing online, long before even looking at a residential purchase agreement. If you’ve ever been looking for homes and have seen a listing that has been around since the dawn of time, you immediately assume that there must be something wrong with it. Bad photos are often the culprit for many unsold homes. A photographer worth their professional salt may cost a few hundred dollars, but it’s worth every penny.
This stage of the process involves describing every detail that makes your home stand apart from others. Do you have a pool, large garden, solar panels, deck, or a smart home system installed? Be sure to highlight the unique features of your home in your listing, and that your contact information is clearly labelled in the description, separate from the majority of text. It’s also very important to show that you are willing to work with buyer agents, as the majority of buyers are working with one. Discouraging buyer agents can cost you a number of offers.
Working with Realtors
The initial wave of discouraging calls aside, you will need to start scheduling times for agents to show the property to their clients. An important tip is to not be present for this process. The sooner you can get the agents in, the better. People buy homes on emotions, and will quickly move on to other properties if you delay. This is a good time to get your hands on a purchase agreement template.
Combing through Offers
After buyers have walked through the property a few times, you will receive a buy offer; a buy offer precedes a purchase agreement. Counter-offers are usually recommended to find a middle ground so that both parties are happy. In the buy offer, you may find items within the house listed, known as concessions. These items can include a painting, furniture, or appliances the buyer liked.
Once negotiations have ended, and both buyer and seller agree to the terms, you will sign a Purchase and Sale Agreement. We’ll discuss this in more depth after we complete these steps; however, that said, this is essentially your contract to sell real estate, be sure it is completed to the best of your knowledge.
Appraisal and Inspection
After signing the sales contract, the buyer will have a window of time to send a property inspector to check the home for faults, damage, stability, plumbing, electrical systems, and more. Don’t worry if there are a few items that need to be fixed, this is normal. Additionally, the buyer’s bank will request an appraisal of the property to ensure that it’s worth what they’re lending.
The title company is the most important part of the entire process. The title company handles all documents related to the transfer of ownership and ensures that everything is properly documented, including the contract for purchase of real estate.
Once all documentation is complete, you and the buyer will go to the title company and sign all of the proper documents and real estate forms to finalize the deal.
What is a Sales Contract for Real Estate?
What Should be in a Contract for the Sale and Purchase of Real Estate?
While real estate contracts can vary to be buyer or seller oriented, there are elements which will always remain essential to the agreement that must be filled out; and others that should always be present.
If a few key items are not present within the agreement, they should be added to it. If you’ve already signed the agreement and need to extend deadlines, or add terms, you might be wondering how to write an addendum to a purchase agreement. It isn’t too difficult, but it is very important to consult a lawyer to ensure that everything is in order; writing terms on your own may result in terms that are not in-line with state, local, or federal laws. You can find an addendum template here.
One of the most important features in the home purchase agreement covers who is liable for outstanding or current property costs and agreements. This includes current and outstanding taxes, liens, rental agreements, leases, maintenance costs, utilities, and more. If this information isn’t stated in the contract, the buyer could face problems in the future.
Following the clarification of liability comes the details of the address of the property in question, parties involved, and the legal description of the property. This information can also include tenancy, or shared ownership, in regards to the buyers. Additionally, the offered price, details about furnishings, whether or not the property will be paid in cash in full or in part, with a new or existing mortgage, earnest money, and other terms related to contingencies regarding the forfeit of earnest money which was already deposited, should the agreement fail to be completed. Earnest money is a sum of money used to provide the seller confidence in the legitimacy of the buyer’s intent.
In the sale and purchase of real estate, timelines are important. The longer a home is listed, the harder it is to sell. Time is precious, and as a result the land purchase agreement should include details regarding when the sale should be closed, how long the potential buyer has to inspect the property, as well as acceptance, delivery, and offer expiration dates. Consequently, it should also detail who is responsible for costs related to closing the sale. Your agreement should also list items that are excluded, included, or both along with the transfer of title and funds.
In some state and local laws there is something known as a homestead classification. Homestead classification relates to how the property can be taxed.
Other key details include disclosures on safety issues, such as: if the property has a well, was host to known prior methamphetamine production, has termite damage, sewage access, facilities taxes, was exposed to radon gas, may face annexation, is subject to personal interest, or was built prior to 1978 and may contain lead paint. There are of course other disclosures required by varying state and local laws, and it is recommended to seek legal counsel to learn more.
Lastly, contingencies within the contract should include those for financing issues, failure to appraise the property, an inability to have an inspector check the premises, or an issue with title possession on behalf of the seller.
There are, of course, other important concepts to take note of; however, the aforementioned information listed should give you a running head-start. It may seem like a lot to take in, but as with any legal process, the most important part is to ensure that everyone is protected from liability and issues arising from poor documentation. No one wants to go to court once they feel they finished such a hefty process, therefore it’s important to read every contract before you sign.
If you’re wondering how to get a purchase and sale agreement template, click here.