REPRESENTING THE SELLER
Top Ten Things a Seller Needs to Know
1.What is Attorney Review?
After you review the other 9 issues that are most important for Sellers, you will begin the process of marketing your home to buyers and accepting offers.
You may have already started and are reading this because you’ve reached the contract stage.
Once you get to the point of signing a Contract of Sale, both parties have three (3) days to review the contract and disaffirm any of its provisions, before it becomes final.
At this point, it is important to have a qualified attorney that can guide you through the buying process and explain to you what you contract says, and to help you revise the contract so that you are protected.
2.Whether or Not the Buyer is Taking Out a Mortgage?
As a Seller, you want to get the best price you can on the market. But, you also don’t want to sell to a buyer who is “reaching" to make the purchase price. If the buyer is taking out a loan and they are applying for a mortgage with 90% financing or greater, they may have difficulty getting financing, and the deal may fall through.
3.What is a Mortgage Contingency?
There is a big difference between a buyer who is paying with cash and a buyer that needs a mortgage. If your buyer is taking out a mortgage, you want to make sure you have included a carefully thought out mortgage contingency clause in your Contract of Sale. This clause should require the buyer to put some “skin in the game." A standard Seller’s mortgage contingency clause will say that the Seller retains the deposit monies if the deal falls through due to the buyer’s inability to obtain a mortgage, but will allow the buyer to walk away from the deal.
Keeping the deposit monies is a fair consolation to the Seller for locking up the property for a few months in anticipation of a closing and taking the property off the market.
4.What Should the Home Inspection Clause Say?
As a Seller, you want to limit the home inspection clause to a defined period of time and require the Buyer to use a licensed home inspector, or waive his rights to inspect. Once the home inspection is complete, as a Seller, you usually want to reserve the right to make the repairs indicated yourself, provide a credit in the amount identified in the home inspection report, or walk away from the deal if you feel the repairs are not warranted.
5.Why Is It Better for the Buyer to Take the Property “As Is"?
Sellers don’t want to get a potential buyer interested and then see the value of the deal eroded by a buyer who wants credits for repairs and upgrades. A Seller should bargain for a sale of the property “as is". Once a purchase price is established, that should reflect the total value of the deal and the Seller should be able to know with some certainty what they can expect to walk away from the deal with.
The Seller still has an obligation to inform the Buyer of any known defects.
6.What Kind of Closing Costs Should I Expect?
Your closing costs will include:
Real Estate Commission (Seller’s Agent)
Realty Transfer Fee
Removal of Liens (if any)
Property Tax Adjustment (usually a credit)
Water/Sewer Bill Adjustments
7.How Will I Know How Much Money I Will Be Walking Away With?
It’s a good idea to get a mortgage payoff statement before you start negotiating with potential buyers. You should create a spreadsheet for yourself adding up the amount needed to pay off your mortgage, any liens on the property, attorney’s fees, closing costs (including realtor commissions), potential minor repairs, and any other defects. Only then can you make a good guess on what you will be walking away from the closing table with.
8.What is the Realty Transfer Fee?
In New Jersey, the State imposes a Realty Transfer Fee on the recording of deeds to convey title to real property.N.J.S.A.46:15-5, et seq. The following link has helpful information:
Vested Title also has an online Realty Transfer Fee calculator that you can use to get a sense of what you will owe. ** http://www.vested.com/tax_calculator1.html.**
The Realty Transfer fee is included in your closing costs, but you should be aware of it when evaluating the what price you will want to sell for.
9.What is a Lead Based Paint Disclosure?
Congress passed the Residential Lead-Based Paint Hazard Reduction Act of 1992. Under this law, anyone selling a house that was built before 1978 must notify potential buyers of a possible lead problem.
10.What kind of liens might I find against my property?
Liens can be placed on your property for failure to pay taxes and for other reasons:
Tax Liens (Property Taxes, or personal IRS/State Taxes)
Unpaid municipal utilities or municipal fines
Unpaid child support
If any of these kind of liens pop up, you need to take immediate action to have them satisfied.