Selling a home is a long process that needs a lot of preparation and various documentations. It’s not something you can do with a handshake, and the deal is sealed. You need to prepare rounds of documents from yourself, your buyer, the lenders, the lawyers, and many other people involved in the sale.
Paperwork for selling a house by an owner can be overwhelming. But if you don’t put everything in order, you’ll end with various legal and financial consequences. There is paperwork that protects you as the seller and those that protect the buyer. Take a look at this list of paperwork that you need before, during, and after selling your house.
Documents to Prepare before Listing Property for Sale
Before you announce your intention to sell the house, you must first organize and have the following documents ready.
Residential Sales Contract
This is the most crucial paperwork that you will need for your home selling process. It includes the terms of sale. These include the purchase price, down payment, dates of purchase and possession, and the conditions required upon the sale. This will be a legally binding contract after you finish the sale.
In recent years, cash purchases have become more common. It's not unusual for many homeowners to say "I want to sell my house fast" - and avoid listing all together by accepting a cash offer. However, even if you sell to a cash investor without putting your home on the market, you'll still need a sales contract!
Seller’s disclosure is a mandatory document when selling a house. The federal and state government requires that sellers disclose any issues with their homes. Failure to do this can lead to lawsuits or fines. The mandatory disclosures take into account everything from asbestos, environmental hazards, and other structural issues.
Your pre-sale documents should include a recent survey on your property. It will show the exact legal borders of your property. The survey will help the lender prove that what they’re buying is what it’s supposed to be. However, you’re not obligated to carry out a property survey before selling your house.
Homeowners Insurance Records
The insurance record is another essential piece of paperwork for selling a house that you must present to the buyer. Your buyer should prove that the information in the report of the claim is correct. It will also help the buyer have an idea of the amount of the homeowner’s insurance costs.
Consulting the property tax records office can help you understand the value of your home or give you a comparative market analysis. Understand that the market value will be higher than the tax basis of your home. But it will help you understand the pricing range for your home.
If your home is under Homeowners Association, you should get ready the HOA documents as well. The document will inform the buyer about HOA regulations, dues, and any penalties under your property.
Preliminary Title Report
You need to get a preliminary title report for your property to help you understand if it has an outstanding issue. The information will include back taxes, liens, and other restrictions. You can decide to add these issues to the disclosures or solve them yourself.
If you had a home appraisal in the recent past, you should have the paperwork to show for it. This will outline the condition of your house and the value of the property as it compares to nearby comparable homes. An appraisal is not required from the seller, per se, but it could be used to validate the property value if you're in an area that lacks relevant comps.
Comparative Market Analysis
Comparative market analysis (CMA) estimates the value of your property concerning recent sales of similar properties. The CMA gets you closer to getting the actual value of your property by taking into account the market dynamics. This is not required to list or sell the house, but is typically provided by a Realtor to help assign a value for the property.
Documents after Accepting the Offer
Once you put your house out in the market, you should expect buyers to start making their offers. If you get an offer that is likely to make you a good profit on your house sale, you should accept it. You’ll then start preparing another stack of paperwork. Here is the list of papers that you’ll need to prepare.
Purchase Offer & Counteroffer
A counteroffer is a purchase offer that explains the terms of the deal to the buyer. If you negotiate and end up with a different price, the counteroffer will be amended and named purchase offer. This also includes more specifications on the property as well as boundaries. Both parties are required to sign this document, and it will be named a purchase contract.
If the homebuyer purchases the property with a mortgage, the lender will need to carry out an appraisal. The appraiser will come up with an objective value of the property and ensure that it matches the buyer’s mortgage. The report will outline the value of the property as it compares to nearby comparable homes.
Home Inspection Report
Another essential document is the inspection report which gives information about the structural issues, cosmetic problems, and other issues in the house. The report is well-detailed and includes photos of your property. Some problems reported in this document might bring the seller and the buyer back to negotiation.
This involves the pre-conditions for sale. You’re required to meet the contingencies before closing the deal. The contingency removal form needs to be completed before you can close the sale. You should also note that contingencies expire after some time.
Binded Purchase Agreement
As from the name, this document means that the negotiation has reached its end and the purchase agreement is irrevocable. Both parties, including their respective attorneys, will draw the document. The document includes the final sale price, contingencies, terms of the deal, and the closing date. Both the seller and the buyer will sign the document, which will be a legally binding contract.
The Title Deed
This is a physical document that confirms the owner of the property. It contains details about the property and identifies the buyer and the seller. The seller will hand over the deed to the buyer in a process known as the transfer of property ownership.
There are lots of documents to fill and sign when selling your house. We might not cover all of them in this article because others are specific to your state. You need to carry out thorough research and find out all the paperwork of selling a house by the owner before taking the bold step. You might consider consulting your attorney or find low commission real estate agents to help you with the process.
SimpleShowing can help you organize yourself and arrange all the paperwork you need for the home sale. Get in touch and start your home selling journey today.