You’ve spent weeks preparing your home to sell. You patched and painted and staged, hoping to catch the eye of a new buyer … and thankfully, you succeeded!
But now what?
Putting your home up for sale and finding a buyer, while often stressful, is only the first part of the equation. Now it’s time to work through the list of what needs to be done now that you have a home buyer ready to go.
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Whether you’ve advertised your home or have existing friends, neighbors, or tenants who want to buy, you’re probably reading this because you want to sell by owner. A for-sale-by-owner (FSBO) transaction can be one way to save money as a seller since you won’t have to pay a commission to a real estate agent. But is it allowed?
While every state – and even county – can set its own regulations, they all allow owners to sell their homes without hiring an agent. So no, you aren’t required to have a real estate agent facilitate the sale.
Of course, not hiring an agent to act in your interests may limit your ability to market your home and can impact the negotiation process. If you already have a buyer, though, and the negotiations are amicable, this may be a moot point.
While you can choose whether or not to hire a real estate agent when selling your home, you may not have a choice when it comes to hiring a real estate attorney. In fact, having a real estate attorney handle some of the closing documents is a requirement in many states.
Plan to hire a real estate attorney if you are selling your home in Alabama, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, or West Virginia.
Even if you don’t live in one of these states, it might still be wise to hire an attorney for your home’s closing documents. They will usually charge an hourly rate for their services.
A seller’s disclosure is a form that you will prepare for your new buyer, outlining the condition of – and any known concerns relating to – the home.
Your seller’s disclosure may include things like past improvements, upgrades, and renovations. You should also include any known issues with pests, appliances, or systems within the home, as well as any past or present liens on the property. Anything that seems important, or legally required, to mention should be included on this form.
While earnest money isn’t required when selling your home, it can help boost the confidence of both parties during the transaction.
You’ll want to be sure that any funds received are kept in a proper account. For those selling by owner, it might be easiest to have the title company hold these funds. Oh, and be sure to keep a copy of that check in a safe place, for your records.
After accepting an offer from your buyer, you’ll want to prepare for an inspection and/or appraisal of the home.
Appraisals are often required by lenders to determine a house’s fair market value. Many factors go into calculating this value such as the home’s location, its age, comps from other sales in the area, improvements and upgrades made to the home, and its overall condition.
An appraisal is especially important if your buyer plans to finance their purchase with a mortgage. That’s because many lenders have limits on the loan amount they will approve compared to the fair value of a home.
Some mortgage lenders will also require an inspection, and even if it’s not required it can still be very beneficial for buyers to receive one.
A licensed inspector will evaluate your home, inspecting the entire structure from its roof to its floors, and everything in between. This includes electrical systems, plumbing, windows and doors, and heating/cooling systems. Certain additions to the property – such as septic systems, pools, sprinkler systems and individual appliances – aren’t usually included in this report.
If you accepted earnest money from your buyer, you may have already chosen a title company to hold the funds in escrow. If not, though, you’ll need to select your title company soon. They’ll help gather the necessary paperwork for your home’s sale, research and prepare the title, and oversee the closing.
Your title company will also be in charge of scheduling the closing date, so you will need to coordinate with them and your buyer.
Your home’s title has been researched and deemed clear. The inspection and appraisal (if applicable) have been completed and provided to the buyer. And any necessary repairs have been completed.
Now, it’s time to sign the closing papers!
Closing day marks the end of your selling journey. It’s the day you’ll hand over the keys to your home buyer and accept your funds from the sale. Now, you just need to decide what to do with them.
Deciding what to do with the money from your home is one of the most important aspects of the sale. This choice can affect everything from your tax burden to your next home purchase, interest earned, and more.
It may make sense to put the funds in a money market account or certificate of deposit (CD), so you can earn interest on the balance until you’re ready to spend it. You’ll also want to be sure to research the current tax laws regarding home sales and tax exclusions, as these are subject to change at any time. If you’re unsure of what to do with your proceeds and how to best optimize them, you may want to consult with a financial professional.
Long after your home has been sold and the keys handed over, you should still keep records of everything involved in the sale. This includes appraisals and inspections, your seller’s disclosure, closing documents, and even documents relating to your original purchase of the home.
All of these can be useful down the line. For instance, if you plan on claiming related expenses on your taxes, you’ll need to have receipts and other proofs available. And if you’re ever audited, these records will prove imperative.
Selling your home can be an exciting, though sometimes stressful, experience. However, knowing what happens after you find a home buyer can help you better prepare for the second half of the process, and ensure that both you and your buyer walk away happy.
