by Cornelia M. Koetter, Esquire
Many property owners try to sell their homes without a licensed real estate agent to save the cost of the commission. A real estate sales transaction can be more complex than anticipated and sellers without representation often find themselves with problems after a contract has been signed. With legal representation, a seller can avoid these problems and successfully navigate the sale of their home to closing.
This firm has represented both sellers and buyers of real estate and knows first hand the problems encountered in “For Sale By Owner” transactions. The following outline is intended to highlight areas of the transaction where the seller should be aware of laws and regulations and be proactive to avoid problems after the contract has been signed.
DETERMINE THE VALUE OF YOUR HOME
Negotiation over price is the first hurdle an owner will face when selling their home. In the current volatile market, it is important to know what a reasonable asking price is for your home.
- If uncertain of the value of your property, have an appraisal prepared by a licensed residential appraiser before you put your home on the market to give you a ball park number.
- Check local newspapers and internet websites, such as the State Department of Assessments and Taxation, to find out for what prices neighboring properties are selling.
- Visit open houses for properties in your neighborhood and pay attention to the amenities other homes offer compared to yours.
GETTING YOUR PROPERTY READY FOR SALE
Many buyers insist on home inspections and their contract will be conditioned upon a home inspection being done by a professional home inspection company. In the event problems or repairs are discovered, this often creates a second round of negotiations between the buyer and seller for the repairs or a possible reduction in purchase price after the contract has been signed.
- Consider having a home inspection performed by a licensed home inspector before you put the house on the market to find problems which may exist. By having the home inspection done before hand, you will know if there are any repairs or problems the buyer will discover during its home inspection. Invest the time and money to have the problems fixed and the home inspection updated after the repairs have been done.
- You may want to provide prospective buyers a copy of the updated home inspection report before a contract is signed.
Advertising your property for sale by way of newspaper ads or yard signs are the most common way an owner finds prospective buyers for their property and not always the most successful.
- In the event you want to expose your property to real estate agents and are willing to pay a buyer’s broker commission on the sale, consider listing your property with a real estate firm which offers a “flat fee listing and no additional broker services”.
- A listing agreement is a legal document and you should have it reviewed prior to signing it.
Unfortunately, many owners rely on form contracts of sale found on the internet or in an office supply store. These documents do not necessarily address all of the issues relating to your sale and do not protect the rights of the seller adequately in a sale transaction. Nor do they provide the necessary disclosures required by law. Legal representation prior to signing a contract is vital in order for the seller to be protected and in compliance with federal, state and local laws.
- Consider having a contract of sale drafted for your property before the house is advertised on the market to include the numerous disclosures required by federal, state and local government. This contract should be given to the prospective buyer to use when making you an offer for the property.
- Buyer financial information forms to be completed by the buyers verifying the buyers’ ability to obtain financing should be a part of the contract offer process.
Closing on residential real estate is the final step in selling the property and involves many legal documents and legal compliance issues. Problems can arise at closing and without legal representation, a seller’s rights may not be properly represented.
- Allow us to review the documents before closing and attend closing with you to review the closing documents and settlement sheet, and negotiate any problems which arise at the settlement table.
- We can advise you on the benefits of a 1031 tax free exchange or seller take back mortgage as well as other legal vehicles to defer negative tax consequences.
- Follow-through after closing includes confirmation of recording the transfer documents and payoff and release of mortgages.
The above is a brief summary of the major issues concerning the sale of residential real estate by the owner. The specific circumstances surrounding your situation will dictate the actions necessary to best protect you. Nolan, Plumhoff & Williams, Chtd. is experienced in handling the contract, settlement and negotiations on behalf of property owners selling their own homes. Please call us today to assist you.
Copyright (c) 2005 by Cornelia M. Koetter, Esquire. All rights reserved. This is intended to be a guide and not legal or tax advise. You should seek professional advice regarding your particular transaction.
Ms. Koetter is an attorney at Nolan, Plumhoff & Williams, Chtd., a general practice law firm in Towson, Maryland with a concentration in real estate transactions. She has been named the Up and Coming Attorney in real estate in Baltimore Magazine 2003. She can be reached at 502 Washington Avenue, Suite 700, Towson, Maryland 21204. 410-823-7800;
Permission to reproduce this document is granted for non-commercial education use only and provided attribution is given to the author.