Preparing To Sell Your Home: Paperwork, Repairs And Legal Concerns

Planning to sell a home? Ensure you are properly prepared by following this simple checklist.

Before you place a home on the market, it is critical to be properly prepared. Preparation will make your listing and sales transaction go more smoothly and will protect you from possible difficulties in the sales process.

1. Determine whether you want to work with a real estate agent to sell your home.

The major disadvantage to working with an agent is you must pay a sales commission. However, real estate agents can simplify the process for you by providing expertise, resources, marketing and advertising and contracts.

If you do plan to use a broker to sell your home, interview several prospective agents. You should feel comfortable with your broker as well as with his or her answers to your questions about:

- The commission rate

- Whether your home will be listed in the MLS (Multiple Listing Service)

- The advertising and marketing resources the agent will devote to selling your home

A good agent will prepare a report for you, often called a Competitive Market Analysis. This report should include the "comps" or comparable recent sales in your area, current homes on the market in your area and a recommended sales price for your home.

Once you select an agent, you will be asked to sign a listing agreement. This document is a contract in which you agree to sell your home if a suitable offer is made and agree to pay the listing agent a commission once the home is sold.

Even if you do not plan to use an agent to sell your home, it may be worth your time to speak with several to gather information from them on comparable home sales and on what they can do to assist you.

2. Determine the asking price for your home. What price will you be willing to accept?

Based on the comparable sales of homes in your area, the sales trends (how quickly homes are selling, whether prices are moving up or down), and the condition of your home, you can determine the price of your home. Professional real estate agents can quickly help you assess the range in which your home is likely to sell. In addition to the price for which you list your home, you should determine the price over which you will sell; deciding this "bottom-line" price ahead of time will help you to negotiate once you receive offers.

3. Assess the condition of your home. What repairs or improvements should be made to your home before you sell? Every home can use improvement, however before you sell, you should only do repairs that are legally necessary or necessary to make your home appealing to potential buyers. Also, consider what changes are good returns on investment. For example, repainting tired walls almost always pays for itself in the final sales price of the home. Adding new flowers and sprucing up a front yard to enhance "curb appeal" is also a wise move. However, it generally is not a good investment to remodel a kitchen or bathroom before selling a home, unless it is not functional. Removing clutter and cleaning are also great inexpensive ways to improve the appeal of a home to a prospective buyer.

Some repairs are legally mandated before you complete a home sale. These vary by area, but generally include items to bring a house up to code or to make it livable. For example, in California water heaters must be braced to withstand earthquakes before a home can be resold.

While you are not required to do so, consider hiring a home inspector to create a report on your home before you put it on the market. This allows you to fix any defects before a buyer even views your home.

4. Decide what items will be included in the sale. The standards for this vary by area, so make sure you understand whether window coverings, appliances, built in furniture and light fixtures are considered part of the sale of your home. If there is something you would like to keep, make sure it is excluded from the sale, as called out in the sales contract.

5. Gather all of the documents relating to your home. The paperwork you will need to have on hand generally includes:

- Title documents: You will need to prove you are the current property owner with the right to sell the home.

- Property tax bills and proof of property tax payment: If an upcoming property tax bill is due, or if a bill was recently paid, the payment must be factored into the final financial settlement on the home

- Information about any debt secured by your home; if you have outstanding loans, how much do you owe (the payoff balance) and to whom, including account numbers and addresses: Any income you earn from the sale of your home first goes to pay off any lien, or debts secured against the home. Since the proceeds will be sent directly to the lien-holder, you will need to provide the account number of your loan and contact information for payoff. Generally, your settlement or escrow company will contact the loan company to get the exact payoff amount, but it is useful to know the approximate amount you owe to ensure you will earn enough from the sale to pay off the debt.

- Proof of current homeowner's insurance policy: Many buyers want to see that the home is currently insured and to ensure the home is not in a difficult-to-insure area. Also, some insurers are reticent to write policies on homes that have had major claims in the past if they are of a possibly recurring nature (such as water damage due to poor property drainage or due to faulty pipes that were not replaced).

- Information about homeowner's associations to which your property may belong: Not only does the buyer need to know about any obligations to associations, but the settlement or escrow company must complete a name transfer and ensure that fees paid are up to date at the time of a sales transaction.

- Records of repairs and improvements made to the home and the associated permits, if required: If you repaired major damage to your home, it is important to disclose this to potential buyers. By showing receipts for repairs and applicable permits, the buyer will be confident in the condition of the home. In addition, if renovations requiring a building permit were accomplished, it is important to disclose both the improvement and the permit. Lack of a permit can affect the value of the home.

- Any other paperwork relevant to your home: While not required, it is useful to leave service manuals and other information about your home for the future owner.

6. What must you disclose to potential buyers? It is important to disclose defects in the home itself as well as in the neighborhood. If there is a proposal to build a freeway through your back yard, or an airport down the street it is important to make potential buyers aware of this possibility. Are there lawsuits active in your development? Does your back yard flood every time it rains? Do you live next to a professional heavy metal band that practices in the backyard every day at three o'clock in the morning? Anything that affects the title or value of the home, or the ability of the owner to live comfortably should be disclosed to the real estate agents and potential buyers of your home.

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