Considerations for Sellers of Real Estate
There are probably as many reasons for putting a house up for sale as there are sellers. Regardless of the reasons, once the decision is made to sell, sellers have many things to consider that will make the process run smoothly. Among them are the physical condition of the property, the selling price, the remaining balance on any other mortgages or liens that are recorded against the property, and the use of a broker.
Physical Condition and Disclosures
Over the years, sellers may have come to see the flaws and defects of their home as idiosyncrasies that give the home charm and character. Although some buyers may agree with that assessment and would not mind making certain repairs and renovations themselves, most states impose an obligation on sellers to conduct an investigation of the premises and to disclose to potential buyers the existence of any material flaws and defects. In such jurisdictions, disclosure forms are available from realtors, real estate attorneys, and state boards of realtors. The forms are typically a checklist of features such as plumbing, electric, air conditioning, heating, pests, water damage, and other features that would materially affect a buyer's decision as to whether the value of the house was fairly represented by the asking price, whether the buyer should make an offer on the house, and the amount of an offer. A seller's failure to disclose defects of which he or she had knowledge or should have had knowledge can result in liability, even after the buyer has purchased the property.
Selling Price and Encumbrances
When determining the asking price of the home, two of the primary factors to consider are the selling price of comparable properties in the neighborhood and the remaining balance of any mortgages and liens that are recorded against the home. Buyers generally purchase property subject to any mortgages or liens that have been recorded against the property. That means that, unless the buyer and the lenders and/or creditors agree that the buyer will assume the outstanding balances due, the seller must be able to pay off those encumbrances at the closing. If the outstanding balance of the encumbrances exceeds the sale price plus the ordinary costs of closing the sale, the seller will have to find other ways to satisfy those encumbrances at the closing.
Use of a Broker
The decision to use a broker to facilitate a sale may depend on the seller's need to sell the house in a hurry, the location of the house, the seller's experience in real estate, and many other factors. Generally, the use of a broker may be beneficial because a broker is experienced in finding a buyer through listing services and in working through the obstacles that can be encountered in selling real estate. Although broker commissions are generally set by each agency, a seller can often negotiate the amount of commission that the broker receives for the services rendered. Typically, no money is paid to the broker until the broker or a cooperating broker obtains a qualified buyer and the sale is closed. The commissions are considered part of the costs of closing the sale and are paid to the broker at the closing from the proceeds of the sale, after the encumbrances have been paid.
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