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FORMS, FORMS, AND MORE FORMS

Buying a piece of real estate is anything but simple legally. The State and Federal governments have set a lot of rules to help document all of the particulars in all real estate transactions so that the consumer is fully informed. However, these useful consumer protection efforts lead to a lot of forms in a transaction, most of which need to be signed to be valid. "Required" and "possible" forms may differ in each state, but they can be a headache for the average homeowner unless they are utilizing the services of a professional. We know which forms are required by law in your area and which will protect your best interests in the transaction. The most common ones that you will probably be using are:

Exclusive Right to Sell Listing Contract—includes the name of the seller and the property address, the price and terms of sale that you have agreed to list at, the commission percent or dollar amount that the sellers agree to pay your agent’s broker upon closing and successful transfer of title to the new owner, and the length of the contract, usually three to six months. The listing agreement must include a dual agency disclosure provision, explaining how dual agency would affect the agent’s representation of the seller. It should be noted that giving a real estate agent the "exclusive right to sell" the property does not mean that there will not be other agents involved. The seller’s agent is the listing agent and part of his or her job is to market the home to other agents who work with buyers. Those agents will show the property to their clients. Regardless of who sells the home, even if the sellers sell it themselves to a friend at work, the listing agent will still earn a commission. An exclusive right to sell is the only type of listing an effective real estate agent will accept, because they have a reasonable expectation of earning back any money they spend on promoting and marketing the property

Seller’s Property Disclosure Statement----Generally, sellers provide and buyers receive and review this document prior to the purchase agreement being signed. The statement is usually a document which the sellers fill out by themselves, describing conditions affecting the property to the best of their knowledge. Furthermore, the Disclosure Statement does not constitute a contract between the buyer and seller, but merely provides a disclosure of the seller’s knowledge about the property as regards environmental issues, foundation status, roof/ceiling damage and operational systems such as plumbing, heating, electrical etc. As such, the buyers are required to sign the statement acknowledging that they have received and reviewed the document.

Arbitration Disclosure and Residential Real Property Arbitration Agreement----Buyers and Sellers have the right to choose whether to have any disputes about the physical condition of the property decided by binding arbitration or by a court of law. Arbitration allows the resolution of these disputes by one or more impartial persons who hear testimony and receive evidence in a formal hearing. Based on the evidence, they render a final and binding decision, known as an award, which has the same force and effect as a court judgment. Arbitration is binding only if all parties to the transaction agree to arbitrate.

Seller’s Estimated Expense Worksheet---includes the estimated seller charge or range of charges for the services listed on the worksheet. Items that may be included are mortgage payoffs, brokerage fees (commissions), settlement fees to title companies, state deed taxes, abstract fees, real estate taxes due at closing, recording and service fees, any closing costs paid by the seller on behalf of the buyer, deed preparation fees, and courier fees. The expense items are totaled and subtracted from the selling price of the home to determine cash proceeds due to the seller at closing.

Lead-Based Paint Disclosure----applies to sales of all housing built before 1978. Seller must disclose known lead-based paint and lead-based paint hazards and buyer has the option of having a lead-based paint inspection performed, at buyer’s expense. Both buyer and seller sign the disclosure.

Well Disclosure, Private Sewer System Disclosure & Well/Sewer System Location Maps---County and State regulations may vary but if the Seller is trying to transfer title to a rural property, they may be required to disclose well and septic information, along with their locations (in map form) in relationship to each other and the main residence. The buyer in turn will acknowledge receipt of such information.

THE MARKETING PLAN

Review of the marketing plan as presented by your listing agent will give you a good feeling about the competence of the agent and company who will be representing your interests. With this approach, when you sign the listing agreement, you will also have in your hand the promised marketing plan, which is the responsibility of your agent and his broker to perform. It is our job to expose your home to the market and generate activity. Bear in mind that the agent who listed your home often is not the person who sells it. Look for the following elements to be a part of a "tried and true" marketing plan.

Realtor Network—After the "for sale" sign goes up and flyers are printed, your agent’s main job is to market your home to other agents. The local Reginal Multiple Listing Service (RMLS) is a database of all the homes listed by real estate agents who are members of the service, which is practically all of the local agents. Important information is listed here, from general data such as square footage and the number of rooms, to such details as the type of heating or if you have hard wood floors. There should also be a main photo, interior photos and a short verbal description of what makes your house "special". The main point about having your house listed in the MLS is that you expand your sales force by the number of local MLS members. Instead of having just one agent working for you, now you may have hundreds, depending on the size of your community, and each agent is searching the database for homes that fit the price range and needs of their clients.

Broker Opens—Most real estate brokers will hold weekly office tours during which all agents get their first look at the newest properties of the agency. That’s when the networking and buyer showings begin. Individual firms will also host "broker opens," where Realtors from other companies visit their listings on behalf of their clients. The theory is that you can’t sell it if you don’t see it! Also, feedback from professionals as to pricing and condition is critical to marketing success.

World Wide Web—the internet has taken the real estate world by storm as is evidenced by the ability of potential buyers world wide to conduct a customized search for their dream home in virtually any locality at their convenience. Search criteria such as price range, community area, number of bedrooms, bathrooms, and amenities can be specified. Homebuyers can then view full color photos and sometimes a "Virtual Tour Showcase" of a particular home, along with more detailed information on each home of interest. Usually included is a means of contacting the listing agent to get vital information about the property by phone or email.

Picture Classified Ads—Color ads are an extremely effective tool for marketing your property. Buyers looking for property in a certain neighborhood read the classified ads, and buyers pre-qualify themselves financially based on information contained in the ad.

Magazines—many communities have a monthly real estate guides which is available free of charge at supermarkets and other retail shopping locations. The magazine highlights properties for sale in the community.

Open Houses and Open House Directories—An open house when your property is first placed on the market can be very important, but not for the reasons most homeowners think. Just like with advertising, most visitors to open houses rarely buy the house they come to look at. They may not even know the price of your home when they stop by to visit---they probably just followed an "Open House" sign to your door. An open house lets all of your neighbors and the community-at-large know that your house is for sale, and it practically invites them to come "take a look". Being generally a curious bunch, they will take advantage of the invitation, and they may tell their friends about your house, creating more "word of mouth" advertising.

Marketing Brochures (Home Profiles) —contain photos and important information about your property. Pictures attract attention and leave a lasting impression. Copies are left in the home for prospective buyers to take with them, reinforcing the visual picture of your property.  A quality color brochure is a must!

For Sale Signs—One of the largest sources of qualified buyers; frequently has a brochure box attached to accommodate potential buyers who help themselves to a brochure that highlights the key selling points of your property.

Target Mailings—mailing is sent to those people whose lifestyle, family size and financial ability match your property.

 

WHAT ABOUT A PRE-INSPECTION AND WARRANTY?

You may wish to consider the benefits of having a pre-inspection of your home. A complete inspection of your property will include areas such as plumbing, electrical, heating systems, fireplaces, foundation, roof, exterior and interior wall surfaces, windows and appliances. This eliminates worries and offers you, and the future buyer, peace of mind about the condition of the home.

It pays to get the inspection done up front! When someone makes an offer on your home, it is very likely that the sale will be subject to an inspection that the potential buyer will arrange for, and it is also likely that, as a result of the buyer’s inspection, they will submit to you (as is outlined in the Inspection Contingency Addendum to the Purchase Agreement) a laundry list of the items that they would like to have repaired before closing. They may even choose to make the necessary repairs themselves, but counter their original offer price, which you have already negotiated and accepted, with a lower offer based on the results of their inspection report. Both scenarios will cause unnecessary delays and stress to the closing process, just when you thought the sale of your home was a "done deal". With a pre-inspection, buyers will be able to examine the seller’s inspection report and make an offer on your property accordingly; the seller remains in control of the outcome with an inspection report available upfront.  Depending on your location, you may required to complete a city truth in housing inspection.

Many brokers offer a home warranty plan that the seller may purchase as an incentive to potential buyers. The warranty plan will benefit both the seller and the buyer since there is usually coverage throughout the listing period, and for a year following closing. The better warranty plans include coverage for all systems and appliances, and even roof and foundation repairs up to a maximum amount. Repair service may be called 24 hours a day, 365 days a year by using a toll-free number, with the current owner of the home (seller or new owner) paying only a deductible. A complete home inspection is typically required with the more comprehensive plans, although some home warranties are available without the inspection; these are usually limited in scope, however.

Next: WE’VE GOT IT LISTED, NOW WHAT?

 

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