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Copyright 2004-5 Homesolutionssandiego.com
All Rights Reserved
admin@homesolutionssandiego.com
All Rights Reserved
admin@homesolutionssandiego.com
For the Seller
Getting Ready to Sell
The condition and appearance of your home can dramatic affect the offers your receive. A
clean and odor free house can increase your home valuation and lead to better offers. In
addition, fresh paint, new carpeting, and minor repairs may be more valuable than their
respective costs.
The other "preparation" you need to do is to set your asking price. You want to ask enough
that you don't leave money on the table, but you don't want to ask so much that you scare off
potential buyers. Use Home Magnets resources to help set you asking price. Home Price Check
is an on-line service that allows you to check sale prices of comparable homes in your area.
Offers to Purchase your Property
You may receive several offers but only one is going to be the right one. The whole
offer-counteroffer process is extremely stressful but it ultimately results in a contract to transfer
property from one party to another at a specified price.
Before entering into a purchase agreement, you and the potential buyer might want to sign a
"letter of intent." Generally non-binding, an Intent to Purchase Real Estate document outlines
the basic terms and conditions of the sale. With the letter of intent, both parties can document
the terms they've agreed on without a binding contract to complete the transaction. This is
useful:
To minimize misunderstandings.
To document progress already made.
To provide the buyer's lender with documentation of the transaction structure.
Optionally, to prevent discussions with other potential buyers.
The most important terms and conditions to be included eventually in the purchase agreement
(and documented in the letter of intent as well) are:
Description
Restrictions
Fixtures and Personal Property
Purchase Price
Possession
Inspection
Conditions and Contingencies
Description
The street address and/or the legal description should be included in order to identify the exact
house. The legal description can be obtained from the abstract of title to the property or from a
title insurance policy. The legal description should be entered exactly as it appears on the
deed or other legal document.
Restrictions
Most real estate is subject to various reservations or restrictions that limit development and/or
use of the property. You should disclose all known restrictions to the buyer, to avoid surprises
to the buyer and potential legal action. Examples include:
Subdivision covenants.
City or county ordinances.
Limitations on access to the property.
Utility easements.
Reservation of mineral rights.
Fixtures and Personal Property
Occasionally, parties include personal property items with the sale of their house. It is best to
specify in the letter of intent (and later the purchase agreement) what items are included with
the sale and what items are not included with the sale.
Items such as a furnace are "attached" and are expected to be included; appliances and
decorations are often "unattached" and should be specified if to be included. Like all other
terms of the contract, parties can negotiate to include or exclude individual items in the sale of
the home.
Purchase Price
The purchase price is likely to be the most negotiated element of the entire transaction. If a
potential buyer offers exactly what you're asking for then negotiations are not needed. If a
potential buyer offers less, than you will have to negotiate until you agree on deal.
Possession
The two parties will need to come to agreement about a possession date and specify it in the
agreement. The possession date is often the date of closing. Typically, the parties agree on a
target date for possession but allow for that date to be accelerated.
Inspection
Your potential buyer probably will want to inspect the property for structural or mechanical
defects, plumbing or electrical deficiencies, pest infestation, and/or radon gas or other
environmental problems. It is fairly common for the buyer to make the entire transaction subject
to satisfactory results of the inspections. Generally inspections occur between the signing of a
binding purchase agreement and the closing of the deal.
Defects noted during the inspection don't necessarily kill the whole deal. You can negotiate
with the buyer to fix the defects or reduce the selling price.
Conditions and Contingencies
In addition to other terms, the sale may be conditional on certain events happening in a timely
manner. It's common for the buyer to condition the purchase on obtaining financing for the
purchase. You should insist that the condition specify the exact type of loan - amount, length,
and maximum interest rate -- that the buyer will need and accept, so that the buyer cannot
back out by claiming he or she could not obtain "satisfactory" financing. The purchase also
may be conditioned upon the sale of the buyer's current home or being able to break a current
lease.
You can "condition the conditions" by insisting that the buyer agree to deadlines for the
process to continue and thus allowing you to resume efforts to sell the property to another
party if deadlines are not met.
The Closing
The closing is the time at which ownership changes hands from seller to buyer. The seller, the
buyer, and respective advisors get together to sign all the paperwork necessary to transfer the
property from one party to the other.
As with any legal documents, you should make sure you know what you're signing before you
sign it. Take the time you need to read everything thoroughly and ask questions of your
attorney if there's anything you don't understand.
Closing costs are all the costs that will be paid as part of the closing. Closing costs often are
thought of as solely the buyer's expenses, but the seller typically pays some of the closing
costs. Every situation is different, and the parties can allocate the closing costs between
themselves however they choose, so long as they both agree.
One specific element of the closing costs that is likely to affect you is the allocation of property
taxes between the buyer and seller. Generally, the parties try to allocate the taxes so that the
seller is responsible for the taxes attributable to the property to the date of the closing, and the
buyer is responsible for the taxes after that date. But dates for payment of the taxes to the
appropriate governmental body probably will not coincide with the closing date, and in some
jurisdictions, the dates for the payment of taxes do not coincide with the periods for which the
taxes are attributable. A real estate attorney or the buyer's lender can help with the allocation.
Tax Effects
Unless you sell your home for exactly what you paid for it you have a gain or loss on the sale.
In general, a gain is taxable but a loss is not deductible. For tax purposes, your sale price and
purchase price are complicated by selling expenses, closing costs, and amounts spent on
improving the home while you owned it. We recommend you consult a tax attorney for any
clarification regarding tax implications.
Getting Ready to Sell
The condition and appearance of your home can dramatic affect the offers your receive. A
clean and odor free house can increase your home valuation and lead to better offers. In
addition, fresh paint, new carpeting, and minor repairs may be more valuable than their
respective costs.
The other "preparation" you need to do is to set your asking price. You want to ask enough
that you don't leave money on the table, but you don't want to ask so much that you scare off
potential buyers. Use Home Magnets resources to help set you asking price. Home Price Check
is an on-line service that allows you to check sale prices of comparable homes in your area.
Offers to Purchase your Property
You may receive several offers but only one is going to be the right one. The whole
offer-counteroffer process is extremely stressful but it ultimately results in a contract to transfer
property from one party to another at a specified price.
Before entering into a purchase agreement, you and the potential buyer might want to sign a
"letter of intent." Generally non-binding, an Intent to Purchase Real Estate document outlines
the basic terms and conditions of the sale. With the letter of intent, both parties can document
the terms they've agreed on without a binding contract to complete the transaction. This is
useful:
To minimize misunderstandings.
To document progress already made.
To provide the buyer's lender with documentation of the transaction structure.
Optionally, to prevent discussions with other potential buyers.
The most important terms and conditions to be included eventually in the purchase agreement
(and documented in the letter of intent as well) are:
Description
Restrictions
Fixtures and Personal Property
Purchase Price
Possession
Inspection
Conditions and Contingencies
Description
The street address and/or the legal description should be included in order to identify the exact
house. The legal description can be obtained from the abstract of title to the property or from a
title insurance policy. The legal description should be entered exactly as it appears on the
deed or other legal document.
Restrictions
Most real estate is subject to various reservations or restrictions that limit development and/or
use of the property. You should disclose all known restrictions to the buyer, to avoid surprises
to the buyer and potential legal action. Examples include:
Subdivision covenants.
City or county ordinances.
Limitations on access to the property.
Utility easements.
Reservation of mineral rights.
Fixtures and Personal Property
Occasionally, parties include personal property items with the sale of their house. It is best to
specify in the letter of intent (and later the purchase agreement) what items are included with
the sale and what items are not included with the sale.
Items such as a furnace are "attached" and are expected to be included; appliances and
decorations are often "unattached" and should be specified if to be included. Like all other
terms of the contract, parties can negotiate to include or exclude individual items in the sale of
the home.
Purchase Price
The purchase price is likely to be the most negotiated element of the entire transaction. If a
potential buyer offers exactly what you're asking for then negotiations are not needed. If a
potential buyer offers less, than you will have to negotiate until you agree on deal.
Possession
The two parties will need to come to agreement about a possession date and specify it in the
agreement. The possession date is often the date of closing. Typically, the parties agree on a
target date for possession but allow for that date to be accelerated.
Inspection
Your potential buyer probably will want to inspect the property for structural or mechanical
defects, plumbing or electrical deficiencies, pest infestation, and/or radon gas or other
environmental problems. It is fairly common for the buyer to make the entire transaction subject
to satisfactory results of the inspections. Generally inspections occur between the signing of a
binding purchase agreement and the closing of the deal.
Defects noted during the inspection don't necessarily kill the whole deal. You can negotiate
with the buyer to fix the defects or reduce the selling price.
Conditions and Contingencies
In addition to other terms, the sale may be conditional on certain events happening in a timely
manner. It's common for the buyer to condition the purchase on obtaining financing for the
purchase. You should insist that the condition specify the exact type of loan - amount, length,
and maximum interest rate -- that the buyer will need and accept, so that the buyer cannot
back out by claiming he or she could not obtain "satisfactory" financing. The purchase also
may be conditioned upon the sale of the buyer's current home or being able to break a current
lease.
You can "condition the conditions" by insisting that the buyer agree to deadlines for the
process to continue and thus allowing you to resume efforts to sell the property to another
party if deadlines are not met.
The Closing
The closing is the time at which ownership changes hands from seller to buyer. The seller, the
buyer, and respective advisors get together to sign all the paperwork necessary to transfer the
property from one party to the other.
As with any legal documents, you should make sure you know what you're signing before you
sign it. Take the time you need to read everything thoroughly and ask questions of your
attorney if there's anything you don't understand.
Closing costs are all the costs that will be paid as part of the closing. Closing costs often are
thought of as solely the buyer's expenses, but the seller typically pays some of the closing
costs. Every situation is different, and the parties can allocate the closing costs between
themselves however they choose, so long as they both agree.
One specific element of the closing costs that is likely to affect you is the allocation of property
taxes between the buyer and seller. Generally, the parties try to allocate the taxes so that the
seller is responsible for the taxes attributable to the property to the date of the closing, and the
buyer is responsible for the taxes after that date. But dates for payment of the taxes to the
appropriate governmental body probably will not coincide with the closing date, and in some
jurisdictions, the dates for the payment of taxes do not coincide with the periods for which the
taxes are attributable. A real estate attorney or the buyer's lender can help with the allocation.
Tax Effects
Unless you sell your home for exactly what you paid for it you have a gain or loss on the sale.
In general, a gain is taxable but a loss is not deductible. For tax purposes, your sale price and
purchase price are complicated by selling expenses, closing costs, and amounts spent on
improving the home while you owned it. We recommend you consult a tax attorney for any
clarification regarding tax implications.
Your resource for real estate and home decorating in San Diego