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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.
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WE’VE GOT IT LISTED, NOW WHAT? |