SELLING REAL ESTATE
Following is real estate legal information on for sale by owner, selling, financing, insurance, mortgages, deeds, escrow, and home loans.
Buying a House. Before you look for a house, it's essential to determine how much you can afford to pay and what your financing options are. You'll also need to define your housing priorities and understand how to easily find homes that meet your needs. Even if you think you've found your dream home, you'll need to master the ins and outs of house inspections and making offers. Here you'll find some answers that will help you find your way through the house buying maze -- taking advantage of the numerous resources available on the Web.
Selling a House. If you're selling a home, you need to time the sale properly, price the home accurately and understand the laws (such as disclosure requirements) that cover house transactions. Here's some information to get you started.
What are the best and worst times to sell a house? Too many people sell their house at the wrong time or are in too much of a hurry. Basically, you want to sell when there's the largest potential pool of buyers -- causing prices to go up--something that occurs in the following situations:
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Your area is considered especially attractive -- because of the schools, low crime rate, weather, proximity to major city or other factor such as employment opportunities.
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Mortgage interest rates are low.
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The economic climate of your region is healthy and people feel confident about the future.
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There's a jump in house buying activity as often occurs in spring.
Of course, if you have to move immediately -- because of financial reasons, a divorce, a job move or imperative health concern -- and you don't have any of the advantages listed above, you may have to settle for a lower price, or help the buyer with financing, in order to make a quick sale.
What's the best way to price a house for sale? The key thing is determining how much your property is actually worth on the market -- called "appraising" a house's value. The most important factors that determine a house's value are recent sales prices of similar properties in the neighborhood ("comps").
Real estate agents have access to sales data for the area ("comp books") and can give you a good estimate of what your house should sell for. Many real estate agents will offer this service free, in hopes that you will list your house with them. You can also hire a professional real estate appraiser to give you a documented opinion as to your house's value. Public record offices, such as county clerk or recorder's office, may also have information on recent house sales.
Finally, asking prices of houses still on the market can also provide guidance (adjusting for the fact that asking prices are typically 10% or more over the market). To find out asking prices, go to open houses and check newspaper real estate classified ads. You'll also find a lot of valuable information on the Internet.
Is it possible to sell a house without a real estate broker or agent? Usually, yes. This is called a FSBO (pronounced "fizzbo") -- For Sale By Owner. You must, however, be aware of the legal rules that govern real estate transfers in your state, such as who must sign the papers, who can conduct the actual transaction and what to do if and when "encumbrances" arise which slow down the transfer of ownership. You also need to be aware of any state-mandated disclosures as to the physical condition of your house. Check with your state department of real estate for advice on FSBOs, including the involvement of attorneys and other professionals in the house transaction. If you want to go it alone, be sure you have the time, energy and ability to handle all the details -- from setting a realistic price to negotiating offers and closing the deal. Also, be aware that FSBOs are usually more feasible in hot or sellers' markets where there's more competition for homes, or when you're not in a hurry to sell.
If you're interested in listing your house online, check out sites such as http://www.owners.com, the largest national FSBO website. To find local FSBOs, see www.fsboguide.com. If you live in a major metropolitan area, check to see which newspapers put their real estate classifieds online.
Is there some middle ground when a seller can use a broker on a more limited (and less expensive) basis? You might consider doing most of the work yourself -- such as showing the house -- and using a real estate broker's help with such crucial tasks as:
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setting the price of your house
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advertising your home in the local multiple listing service (MLS) of homes for sale in the area, published by local boards of Realtors, or
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handling some of the more complicated paperwork when the house closes.
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If so, you may be able to negotiate a reduction off of the typical 5-7% commission brokers charge, or you may be able to find a real estate agent who charges by the hour for specified services, such as reviewing the sales contract. "Discount" real estate services are available from franchise operations such as Help-U-Sell (http://www.helpusell.com) as well as other independent real estate companies and individual brokers.
Holding an Open House Without a Real Estate Agent - Tips for FSBOs holding an open house and talking with potential buyers.
If you're a FSBO and selling your home on your own, you'll be doing your own advertising and marketing. In addition to setting appointments with prospective buyers, you may want to hold an open house. Here's how to make it successful:
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1. If your children are small, have them visit a friend or relative during open house times.
Children may be underfoot or demand attention when you're trying to conduct business with a potential buyer. In addition, children may blurt something out that you'd rather a prospective buyer not hear.
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Anticipate buyers' questions and practical needs and have your answers ready.
For example:
Estimate the walking or driving time to the nearby commute train or bus, even if you don't
use public transportation. Get fare rates and schedules and have them at the ready.
Go through your home with a view toward its potential -- for example, adding a room in the basement, remodeling the bathroom to add a stall shower, enclosing the porch, or whatever might strike a buyer's fancy -- without representing the feasibility or cost of improvements.
Understand your legal obligation to disclose material facts about the property.
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Be on time.
If your open house is scheduled to start at 2:00 p.m., have your Open House signs in position by 1:45. Why? Because people will probably start arriving as soon as they see the first sign or as soon as the appointed hour strikes, whichever comes first. You don't want to keep your public waiting.
Before showing your house to prospective buyers, you'll want to make your house look as attractive as possible -- it may mean the difference of several thousand dollars in your pocket. Sweep the sidewalk; mow the lawn; clean windows; fix chipped or flaking paint. Clean and tidy up all rooms; be sure the house smells good -- hide the kitty litter box and bake some cookies. Check for loose steps, slick areas or unsafe fixtures, and deal with everything that might cause injury to a prospective buyer. Take care of real eyesores, such as a cracked window or overgrown front yard. Don't overlook small, but obvious problems, such as a leaking faucet or loose door knob. Look for ways to improve the look of your house without spending much money -- a new shower curtain and towels might really spruce up the look of your bathroom.
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Have a sign-in sheet ready to accompany your property fact sheets. Remember, you are exchanging facts with your visitors. If they have the right to enter your house and learn things about it, you have a right to know who they are. A sign-in sheet will also help you evaluate the effectiveness of your advertising.
Ask visitors to provide the following information on a sign-up sheet:
A. Name
B. Address
C. Phone Numbers
D. How they learned about the house.
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Be prepared to deal with "nosy nerds," or "nosy neighbors." These are not quite the same as "lookie-lous" who just go looking at houses for the fun of it when they have no intention of making a purchase. "Nosy nerds" only look at houses in their immediate neighborhood, in order to pat themselves on the back or console themselves concerning their own homes -- even though they have no intention of selling in the near future. The only way to respond to these folks is to be polite but not waste much time on them. One way to defuse the "nosy nerd" bomb is to invite neighbors to your open house by means of a card which you can put in mailboxes of neighbors within a block or two of your house. Your invitation to neighbors could look something like this:
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Be prepared to talk with potential buyers.
Talk about neutral subjects, such as family and neighborhood. Be pleasant, and do a lot of active listening, drawing the buyers out as to their needs and preferences -- entertaining at home, which means maximizing the living-dining area; doing lots of cooking, which means a serviceable, bright and cheery kitchen and the like. These conversations can help you frame a subtle sales pitch geared toward the buyer's interests and practical needs -- for example, if the potential buyer mentions that he took a recent bicycle trip, mention the nearby bike paths. If he says that bread is his favorite food, point out that three bakeries are in the area.
Don't volunteer personal information that may be used against you in negotiating a sales price or contract. For example, don't tell prospective buyers that you're incredibly anxious to sell because you're starting a new job out of state soon.
Don't go overboard praising your house or its amenities. Too much praise may seem phony and be used against you when negotiating contract terms. At the same time, keep your disagreements about personal taste to yourself.
Be cordial, but don't overwhelm prospective purchasers with energy or enthusiasm. Many people look at hundreds of homes; others check out houses as a hobby and don't ever really plan to buy one. If one person doesn't seem clearly interested, concentrate on someone who does.
Learn to look at your house as if you were buying it. Think about:
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probable down payment, closing costs and monthly cost of ownership, including taxes, insurance and utility costs
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neighborhood conveniences and services (school district, parks, shopping, transportation and the like)
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local zoning ordinances, including restrictions about adding on to a house.
Listen carefully. You can learn a lot about questions and comments you hear over and over. For example, if prospective buyers seem intent on verifying district boundaries of local schools, they obviously have or are planning to have children. Not only should you talk about the school district, but mention other child-related attractions, such as a nearby park or day care center, light traffic on the streets, other children in the neighborhood or whatever else.
Above all, to sell your own house you must keep your sense of humor. Many buyers look at houses the way they look at used cars -- they search for, and pounce on, every major and minor flaw. Apparently, they believe that emphasizing the negative will get the seller to accept a low offer. Often, however, this "exaggerate the flaws" approach does just the opposite because it makes the seller mad. Try not to take negative comments personally. Just remember, people who don't want to buy your house are not rejecting you. They probably want a larger yard or more bedrooms or just don't want an all-electric kitchen. Finally, don't take it to heart if the buyers don't fall in love with your home; remember, there's another buyer out there for your house, and the perfect match is yet to be made.
What you need to tell potential buyers. When selling your home, you may be obligated to disclose problems that could affect the property's value or desirability. In most states, it is illegal to fraudulently conceal major physical defects in your property such as a basement that floods in heavy rains. and states are increasingly requiring sellers to take a pro-active role by making written disclosures on the condition of the property.
Generally, you are responsible for disclosing only information within your personal knowledge, but that doesn't mean you'll always have an adequate defense if you are sued over an obvious defect or in cases where the law requires you to determine whether a defect exists.
While it's not usually required, many sellers hire a general contractor to inspect the property. The information will help you determine what needs repair or replacement and will assist you with preparing any required disclosures. An inspection report is also useful in pricing your house and negotiating with prospective buyers.
If you have an inkling of a question about whether or not you should disclose something, avoid the potential for liability and tell potential buyers about it. Full disclosure of any property defects found in a home inspection will help protect you from legal problems later, such as buyers who want out of the deal or who claim damages suffered because you carelessly or intentionally withheld information about your property.
and remember, just because you disclose a problem doesn't mean you must repair or correct it. The disclosed item can become a point of negotiation between you and your buyer.
Most laws mandate disclosures on special disclosure forms the seller must sign and date. Be sure the buyer acknowledges receipt of the disclosures by signing and dating the form as well. If your state doesn't require a specific disclosure form, be sure the buyer otherwise affirms receipt of your disclosures -- in writing.
Check with your real estate broker or attorney or your state department of real estate for disclosures required in your state. Also, check with your city planning department for information on local ordinances and disclosures that affect your sale. Finally, be aware that real estate brokers are increasingly requiring that sellers complete disclosure forms, regardless of whether or not it's legally required.
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