There are several components to the process of selling a home, and enough complexities and potential issues that hiring an attorney to protect your interests is a wise if not essential choice. Kellem & Kellem, LLC, protects our clients’ legal interests while serving as their guide, advisor, and sounding-board throughout this complex process.
Preparing Your Home for Sale (to “FSBO” or not to “FSBO”)
Many homeowners consider selling their home “FSBO” (for sale by owner ) — without the assistance of a realtor. It is our experience that a good realtor will provide a substantial advantage over selling your home on your own. FSBO homes often are not prepared adequately for sale. A good realtor will help you stage your home, making certain tweaks in appearance to make your home more appealing to potential buyers. De-cluttering, furniture placement, lighting, and curb appeal will affect whether your home sells quickly or sits on the market with consequent price reductions. A good realtor has garnered through experience and training an excellent sense of what modifications should be made to maximize appeal.
Another critical advantage that a realtor provides is proper pricing. A home priced too low will move quickly, but will likely deprive a seller of thousands of dollars. Priced too high, a house will linger on the market, become stale and subject to price reductions that will likely bring the sales price well below what it could have been initially sold for. A realtor will recommend setting a price point that will spark energy and interest among the buyer pool. Lastly, a good realtor will be an invaluable advisor in many of the stages in the selling process discussed below. We are happy to recommend a number of realtors in your town that will provide excellent service.
The offer is the “kickoff” document in the sales negotiation process. It is generally prepared by the buyer’s broker. The offer presents the overall terms on which the buyer proposes to purchase a home. It includes basic matters such as the price and the closing date, and contains “contingencies,”,which are conditions that allow the buyer to withdraw if the conditions are not satisfied. We encourage clients to consult us before signing an offer. Once an offer is accepted, you have entered an enforceable contract that defines many aspects of the process. The consequences to a seller of signing an offer that is insufficiently detailed or leaves out important matters can be severe.
Have you accepted an offer “subject to the sale of the buyer’s present home?” Have you sold your condominium unit “subject to buyer’s satisfaction with the condo documents?”? In either of these scenarios you have allowed the buyer to back out through the date of closing. Do you need to purchase a new home now that yours is sold? If yes, have you considered a clause to provide a window for finding “suitable housing?” — As seller’s counsel, we make sure contingencies are properly worded and included in the offer document.
Surviving Home Inspection and Mortgage Commitment
There are generally two scenarios that provide the largest obstacles to completing the sale of your home: one is failure to obtain the mortgage commitment after the purchase and sales agreement (P&S) is signed. The other is failure to proceed after the home inspection. If the parties cannot reach a consensus after home inspection, it is likely the deal will fall through and you will be back to square one, showing your home and awaiting an offer.
How you handle repair requests may very well determine whether the transaction moves past inspection toward closing or ends prematurely. It is likely that the home purchase is the biggest investment your buyer has ever made, and anxiety is a natural accompaniment. Expect your buyer to request some repairs.
Do not take anything personally.
Be reasonable and responsive. Helping your buyer to feel good about the purchase by being accommodating reasonable repair requests is a great tack to take. Certain repairs you should expect to make if asked:
- Correction of previously-undiscovered health-related issues like high radon levels or asbestos-wrapped pipes;
- Repair of deficiencies that pose a safety hazard, like improper wiring.
Although we are happy to serve as a sounding board on inspection items, there is never a time where a good real estate broker will be more helpful. Your realtor will know how to negotiate this treacherous part of the process in a way likely to prevent the parties from becoming obstinate. Remember, a successful negotiation is one where all parties feel like they have given and received, and compromise is key.
Although we don’t generally get involved with the negotiation of repair items, we can suggest creative ways of resolving issues. As the seller, you may not have the time nor inclination to make repairs. We often suggest simply offering your buyer a “closing cost credit,” which is adjusted on the settlement statement at closing. We are always careful to specify any agreed upon repairs in sufficient detail so both parties are clear about the exact scope of work. This will avoid disagreements as to whether the repairs have been done sufficiently, and will forestall last minute snags at the day of closing.
The Purchase and Sales Agreement (P&S)
After the offer is accepted and home inspections completed, you will be required to enter a “Purchase and Sales” agreement. This is the detailed contract for the purchase of the home. It governs the responsibilities of the parties and defines exact conditions relating to the purchase. It is far more detailed and specific than the offer. If there are bumps in the process, this document will dictate how they are handled and the incident legal consequences.
Although the seller’s realtor can prepare the initial draft, we prefer to prepare it if engaged to represent the seller. In either event, we will review the P&S with you and make sure the terms are accurate and reflect all agreements of the parties. We will almost always insert several clauses that add critical protections. There is often negotiation back and forth during this process, and we will be your guide and spokesperson.
Some of the matters that a purchase and sales govern are:
- What happens if there is a title problem?
- What happens if there is an issue with the buyer’s financing?
- What happens if there is a casualty loss at the house (fire, storm damage)
- What are the mechanics of follow up or final inspection?
As you can imagine, the intricacies of selling a home are many. Hiring an attorney to protect your interests is a wise if not essential choice.