Closing the deal on your home sale is not as easy as giving a handshake to the buyer and taking the money. A normal real estate sale involves paperwork and procedures. Here are some important items that you will come across before, during and after the sale.
BEFORE LISTING YOUR HOME
Comparative Market Analysis (CMA)
This is a summarized report of sold properties in your neighborhood, sharing the same features with your home. The report indicates an estimated value to justify the price of your property before listing it for sale. It’s a good idea to complete a CMA before you list your house, so you can accurately price your home. An overpriced house could sit on the market a long time. An underpriced house could leave money on the table.
Home Repair and Maintenance Records
It’s a good idea to keep records of any completed capital improvements. You can share these
with the buyer, to enhance the sale. It’s also good to be able to show these to the appraiser, to
support a higher market value.
Keeping your capital improvements’ receipts will also help when determining your home’s cost basis. Capital improvements are considered costs, so they add to your purchase cost. This is important for your tax consequences when you sell. It could lower your capital gains tax.
You will need to take an inventory of your house. A Seller’s Disclosure form needs to be completed, where you will list your knowledge of the house’s condition, including: the mechanicals; utilities; any appliances; the foundation; roof; if any history of flooding and other items.
WHILE YOUR HOUSE IS ON THE MARKET
The buyer will submit their offer with a purchase agreement. It will list their offer price, type of financing they’re using, deposit amount, closing date and any other requested conditions.
When you accept the offer, the terms on the purchase agreement will dictate the sale.
After you accept the offer, the buyer will have a period of time to complete a private inspection of the house. The buyer will have an inspector go through the interior and exterior of the house, and do a very extensive inspection of the house mechanicals, foundation, roof, plumbing, hvac, electrical, windows…everything. This is the buyer’s opportunity to make sure there are no hidden defects.
If the buyer is financing the purchase with a mortgage, they will need to get an appraisal. The bank, or mortgage company will require an appraisal to get the house’s market value, based on comparable sold homes in the area. The seller does not choose the appraiser, the bank/mortgage company selects a 3rd party, neutral appraiser.
The title report is provided to the buyer to show that there are no liens on the property, and the buyer is receiving the home “free and clear” of any encumbrances. An initial title commitment will be run to see what is showing up on the title. It will show any requirements that will need to be satisfied before the final title policy is issued.
An addendum will be used, if there are any changes to the purchase agreement terms. Common reasons are: a closing date extension; repairs the buyer wants the seller to complete, after receiving the inspection report; price reduction after the appraisal report; other seller concessions. Both parties agree to the changes by signing the addendum.
This statement breaks out the seller and buyer’s closing costs, and any credits to complete the sale. There will be an initial Estimated Settlement Statement, giving both sides an idea of the expenses each will be responsible for. If the buyer is taking out a mortgage, the statement will show the mortgage credit, and it will show the amount the seller is netting on the sale. After the actual amounts are confirmed, a Final Settlement Statement is issued, and the closing is set.
AFTER THE DEAL
After the closing, the deed will need to be recorded. This will officially show the property was transferred to the new owner. The deed identifies both you and the buyer, a thorough description of the property and when the ownership was transferred.
1099-S Tax form
This is only required if you do not qualify for a capital gains tax exclusion. This is a report for taxes owed to the IRS with regards to the sale of your home.
There may be additional documents that you will need to provide depending on your specific sale.
Selling your property can be overwhelming, if you don’t prepare yourself for all the paperwork and procedures you need to complete. SellUsHomes can help you sell your house in a smooth, and seamless manner. We purchase homes in As-Is condition in Detroit and Southeast Michigan. Contact us now at (734) 224-5947, or email us at email@example.com.