Real estate contracts come with their own special language, and it can be difficult to remember what a particular word means in the real estate context while you’re also trying to figure out all of the steps in the selling process.
Remember the mountain of paperwork you signed when you purchased your home? You’re going to need some of those same documents (and more) when you list your home for sale. Whether you’re selling your first home or your fourth, here’s a refresher on the fine print when you’re selling your home.
The Documents You’ll Need to Provide
Set aside some time to gather all of the information you’ll need to provide to the many stakeholders involved in your home’s sale. Just a word of caution: the documents you need to provide may vary based on your county, city, or state.
Seller’s Disclosure Documents
You are legally obligated to disclose any issues with your property so that the buyer isn’t unpleasantly surprised when they assume ownership. If you’re not sure about what you should or shouldn’t include, it’s better to err on the side of caution than to face a lawsuit. Your real estate agent can help you with this.
Buyers will ask for your utility documents so they can estimate their bills. Proactively providing them will make the selling process go more smoothly.
Just like utility documents, a tax certificate shows a buyer what their potential tax burden will be, and it verifies that you’re current on your property taxes.
You’ll request the loan payoff document from your lender for the total amount left on your loan.
Purchase and Sale Agreement (P&S)
After negotiations are hammered out with the buyers, the P&S agreement will be signed. It’ll include any contingencies that were settled on, earnest money, and the final negotiated price.
Bill of Sale
During your negotiations, if you’ve agreed to sell any personal property to the buyer, it’ll be included in the closing papers as a bill of sale. It will name the personal property and the estimated value of the property.
The Affidavit of Title
You’ll provide this document to the buyer to verify that you are the legal owner of the property and as such, you have the authority to sell the property.
Pro-tip: You may be encouraged by friends or even your agent to obtain your own appraisal to present to potential buyers, but the buyer’s bank will still require an independent appraisal even if you’ve had one done. Save your money and skip getting your own appraisal.
Why Deadlines Matter
Can you imagine dragging out negotiations on your home sale for months? Deadlines are the gift you didn’t know you needed to prevent an endless state of negotiation limbo. Make a special note of the important time frames that represent each phase of the contract so that your home’s sale isn’t derailed by a missing signature or by a forgotten disclosure form.
Real Estate Contract Terms Defined
From state to state, and even from title company to title company, there are a large variety of real estate contracts. Just a cursory search on Google yields dozens of contracts with major differences in the information they ask for. These are just a few of the common terms used on a contract; your contract may contain slightly different verbiage.
Description of Property- Going beyond the physical address, the description of the property is a legal term referring to parcel numbers, plot markers, longitude and latitude, and physical descriptions of the property.
Personal Property Included- During negotiations, sellers and buyers may agree to include custom-built furniture, difficult-to-move amenities (think hot tub), or chemicals to care for the lawn. If it’s spelled out in the contract, then the seller will leave it at the property.
Personal Property Excluded- Don’t assume that you need to leave all of your appliances when you sell your home. You can take your brand-new refrigerator or your heirloom chandelier with you if you’ve excluded it in the contract.
Seller Assist- More commonly used in a buyer’s market, a seller assist is when the seller agrees to cover part of the closing costs.
Purchase Price- The final, agreed-upon price. This might be different after going through several negotiations, so it’s always a good idea to do a final check.
Escrow Agent- This third-party person holds on to the earnest money during the transaction — they might be a Realtor®, the title company, or even an attorney.
Financing- Not only will this include which company holds the buyer’s mortgage but will also note any additional financing like city housing grants or federal first-time homebuyer grants.
Time for Acceptance of Offer- Rather than dragging out an offer, the time for acceptance of offer puts a date on when you need to respond to the buyer. You don’t have to have all of the negotiations figured out by this date; you simply need to respond within the timeframe outlined.
Closing Date- The entire transaction will be completed by this date.
The Bottom Line
Contract purchase agreements and real estate laws vary from state to state, so if you have further questions, ask your local real estate agent for guidance. A rockstar agent will be able to help you navigate the complexities of the homeselling process. AgentStory connects you with agents with proven experience in all the fine print of selling your home.