Information for Sellers
It’s never easy leaving a home you love or even one you’ve outgrown. Sometimes life changes dictate the decision to make a move. If it’s time to liquidate your investment you need to know that you are working with a Real Estate professional that is well-versed in all aspects of a real estate transaction. After all, you’ve invested a lot of time and energy in your property. And you want to find buyers who’ll appreciate your hard work—as well as get the best price possible. We know how to help you do both—and look for the best possible buyer along with terms that match your needs.
Just as important, we’ll help you avoid common pitfalls and cope with the mountain of paperwork so you can enjoy a smooth transition out of your current property in a seemingly effortless way.
At Kennedy & Associates we maintain a classic approach to listing and selling property proving that integrity, experience and dedication really are qualities that equal success.
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[tabname]Choosing a Realtor®[/tabname]
[tabcont]The terms agent, broker and REALTOR® are often used interchangeably, but have very different meanings. Not all agents (also called salespersons) or brokers are REALTORS®. Learn who is a REALTOR® and the reasons why you should use one.
As a prerequisite to selling real estate, a person must be licensed in the state in which they work, either as an agent/salesperson or as a broker. Before a license is issued, minimum standards for education, examinations and experience must be met. After receiving a real estate license, most agents go on to join their local board or association of REALTORS® and the National Association of REALTORS® (NAR), the world’s largest professional trade association. They can then call themselves REALTORS®. The term “REALTOR®” is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics (which in many cases goes beyond state law). In most areas, it is the REALTOR® who shares information on the homes they are marketing, through a Multiple Listing Service (MLS). Working with a REALTOR® who belongs to an MLS will give you access to the greatest number of homes.
Working for America’s property owners, the National Association of Realtors provides an arena for professional development, research and exchange of information among its members.
Using an Agent and the Obligations That are Owed to You
An agent is bound by certain legal obligations. Traditionally, these common-law obligations are to: Put the client’s interests above anyone else’s; keep the client’s information confidential; obey the client’s lawful instructions; report to the client anything that would be useful; and account to the client for any money involved. NOTE: A REALTOR® is held to an even higher standard of conduct under the NAR Code of Ethics. In recent years, state laws have been passed setting up various duties for different types of agents.
How to Evaluate an Agent
In making your decision to work with an agent, there are certain questions you should ask when evaluating a potential agent. The first question you should ask is whether the agent is a REALTOR®. You should then ask:
- Does the agent have an active real estate license in good standing? (to find this information, you can check with your state’s governing agency)
- Does the agent belong to the Multiple Listing Service (MLS) and/or a reliable online home buyer’s search service? (Multiple Listing Services are cooperative information networks of REALTORS® that provide descriptions of most of the houses for sale in a particular region.)
- Is real estate their full-time career?
- What real estate designations does the agent hold?
- Which party is he or she representing–you or the seller?
- In exchange for your commitment, how will the agent help you accomplish your goals?
The discussion is supposed to occur early on, at “first serious contact” with you. The agent should discuss your state’s particular definitions of agency, so you’ll know where you stand.
[tabname]12 Questions to Ask Real Estate Pros[/tabname]
- Are you a REALTOR®?
A realtor is a member of the National Association of REALTORS® (NAR) and therefore is bound by its strict Code of Ethics. REALTORS® are committed to treat all parties to a transaction honestly and are expected to maintain a higher level of knowledge about the buying and selling process than practitioners who aren’t NAR members. Identify them by the REALTOR® logo – a stylized block “R” – on their business card, membership pin, or other marketing literature.
- How long have you been selling real estate?
Level of experience needn’t be the sole arbiter, but it helps.
- What professional real estate designations do you have?
Salespeople’s designations, the initials following their name, show they’ve completed courses of specialty education. Designations indicate a high level of commitment to staying current.
- How many homes have you sold in the past year?
You want to know that they’re effective in the current market.
- What’s your average list-to-sale price ratio?
You want these numbers to align as closely as possible. Salespeople who agree to overprice your home aren’t doing you any favors.
- What’s the average length of time your listings are on the market?
The longer time, the more likely the salesperson isn’t a stickler for marketing or realistic pricing.
- How many homes have you sold in the last three months?
- What specifically will you do to get my home sold?
Expect to see a marketing plan.
- How often will I hear from you once I’ve given you the listing?
Look for a salesperson who can commit to the level and method of communications – e-mail, fax, phone – that you prefer.
- What will you do to keep me informed about changes in the market that will effect my price and terms?
- What are your company’s resources?
- Could you please give me the names and phone numbers of three sellers you recently worked with?
Who is your broker and how does your broker support your marketing efforts? Do you have an assistant? If so, what will this person be doing on this listing?
[tabname]Real Estate Agency Relationships[/tabname]
[tabcont](As required by the Civil Code)
When you enter into a discussion with a real estate agent regarding a real estate transaction, you should from the outset understand what type of agency relationship or representation you wish to have with the agent in the transaction.
A Seller’s agent under a Listing Agreement with the Seller acts as the agent for the Seller only. A Seller’s agent or a subagent of that agent has the following affirmative obligations:
To the Seller:
A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Seller.
- Diligent exercise of reasonable skill and care in performance of the agent’s duties.
- A duty of honest and fair dealing and good faith.
- A duty to disclose all facts known to the agent materially affecting the value or desirability of the Property that are not known to, or within the diligent attention and observation of the parties.
A selling agent can, with the Buyer’s consent, agree to act as agent for the buyer only. In these situations, the agent is not the Seller’s agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller. An agent acting only for a Buyer has the following affirmative obligations:
To the Buyer:
- A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealing with the Buyer.
- Diligent exercise of reasonable skill and care in performance of the agent’s duties.
- A duty of honest and fair dealing and good faith.
- A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, or within the diligent attention and observation of the parties.
An agent is not obligated to reveal to either party any confidential information obtained from the other party that does not involve the affirmative duties set forth about.
AGENT REPRESENTING BOTH SELLER AND BUYER
A real estate agent, either acting directly or through one or more associate licensees, can legally be the agent of both the Seller and the Buyer in a transaction but only with the knowledge and consent of both the Seller and the Buyer.
In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer:
- A fiduciary duty of utmost care, integrity, honesty, and loyalty in the dealings with either the Seller or the Buyers.
- Other duties to the Seller and Buyer as stated above in their respective sections. In representing both Seller and Buyer, the agent may not, without the express permission to the respective party, disclose to the other party that the Seller will accept a price less than the listing price or that the buyer will pay a price greater than the price offered.
The above duties of the agent in a real estate transaction do not relieve a Seller or Buyer from the responsibility to protect his or her own interests. You should carefully read all agreements to assure that they adequately express your understanding of the transaction. A real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional.
Throughout your real property transaction you may receive more than one disclosure form, depending upon the number of agents assisting in the transaction. The law requires each agent with whom you have more than a casual relationship to present you with disclosure form. You should read its contents each time it is presented to you, considering the relationship between you and the real estate agent in your specific transaction.
[tabcont]Of all the things homeowners control when selling their home, the condition of the property is one of the most important.
A crucial part of marketing is the presentation of the product. Corporations and retail businesses understand this concept, and pay millions of dollars each year to advertising and marketing consultants to get the best advice possible.
The same is true of real property. In order to compete effectively with other sellers, homeowners must present their homes to the marketplace in an attractive, desirable, condition. When you bought your home, you probably comparison shopped — well, buyers are still doing that today. According to the National Association of REALTORS, the average purchaser looks at 18 properties prior to purchasing a home. Regardless of how many properties are on the market, available buyers will always seek the best priced property that is in the best condition.
Think Like A Buyer!
You are not just selling a house, you are selling shelter, security, lifestyle, and dreams. People always want the best for themselves and your home should represent the buyer’s answer to this goal. Put yourself in the buyer’s shoes! Remember, they arrive at your front door wanting to find the right home. Don’t make them search somewhere else for it. If you have done your homework, every room in your home will create a desire for the buyer to stay.
Start Making A List
Walk outside and take a look at the property through the critical eyes of a buyer. Is there anything that needs repairing, looks worn, or is outdated? Start writing these items down on your list. Walk through the interior, and do the same things. Ask for the assistance of everyone in your family. After all, a shorter sales time will benefit everybody in the family!
Why Did You Purchase This Property?
You know this home better than anyone else. Think back to when you first walked in this house. What attracted you to this property? These features should be among the first that you enhance. Ask your spouse and your children to add their own special positive reactions. Your teenager may remember how she fell in love with your home years ago because of the "climbing" tree in the backyard. Listen carefully to your children’s perceptions.
Tour every room, the attic, basement, garage, and yard. Note at least one positive feature in each. Include the items that attracted you and those desirable features you have added.
Do Everything Before You Put Your Home On the Market!
The longer a house is on the market, the more likely prospective purchasers are to suspect that something is wrong with the house. Remember back to all the times you have looked at properties during a home search. Chances are that whenever you came across a property that had been on the market for a while, the first thought that went through your mind was, "I wonder what is wrong? Why isn’t this property sold?". Don’t let that happen to you! Complete all of your repairs, improvements, and enhancements prior to your first showing.
The following pages will guide you step by step through the process of preparing your home for sale to achieve the highest possible sale price in the least amount of time. Your concentration will be in six areas: repairing, cleaning, neutralizing, space management, atmosphere, and staging. None of these activities are fun to do, but all are an extremely important part of marketing your home.
6 Key Points for Focus
1. The rule of thumb is, if something needs repair, fix it! There are probably many things in your home that you have simply become used to over time, things that you have been "promising yourself" that you will attend to. Well, now is the time. The buyer will mentally add up the cost of repairing all those minor flaws and end up with an amount that is generally much higher than what it would cost you to do the repairs.
You might be saying to yourself, "These repairs aren’t any big deal, " but the buyer is thinking, "If the owners didn’t take care of these little items, then what about the roof, or the furnace?"
Needed small repairs and perceived owner neglect will either lower the purchase price or lengthen the time required to sell.
2. Check all walls for peeling paint and loose wall paper.
3. Large repairs: In today’s climate of open disclosure and vigilant professional home inspections, the rule is: Treat a buyer as you would yourself. Repair any problems with major systems or offer an allowance for the buyer to make repairs after closing. Always disclose anything that you know about the property. Having been a consumer yourself, you know that buyers will more readily make a purchase decision with someone whom they can trust.
4. Every area of the home must sparkle and shine! Each hour spent will be well worth it. Would you rather buy a clean car, or a dirty one? Would you hurry to buy a pair of shoes with mud on them?
5. Clean all of the windows, including attics and basements.
6. Clean all wall-to-wall carpeting and area rugs. Clean and polish linoleum, tile and wooden floors. Consider re finishing wood floors if necessary.
7. Clean and polish all woodwork if necessary. Pay particular attention to the kitchen and bath cabinets.
8. Clean and polish all light fixtures.
9. Be cautious about selecting colors when painting or replacing carpeting. Your objective here is to make your home appeal to the largest possible buying segment. Ask your self, "How many of the available buyers would be able to move into your house with their own furniture and not have to replace the carpeting?" Position your home on the market to be as livable to as many people as possible, and to allow the buyer to mentally picture the home as theirs.
10. Forget your personal taste — the market is always demand driven! The average buyer will have a hard time looking beyond blue carpeting and bold wallpapers. Consider replacing unusual or bold colors with neutral tones. Two coats of off-white paint may be the best investment you ever make.
This involves creating the illusion of more space.
11. Arrange furniture to give the rooms as spacious a feeling as possible. Consider removing furniture from rooms that are crowded. If necessary, store large furniture.
12. Pack up collectibles — both to protect them, and to give the room a more spacious feel. Leave just enough accessories to give the home a personal touch. Dispose of unneeded items.
13. Remove all clutter, and make it a habit to pick up clothing, shoes, and personal possessions each day for possible showings.
14. Empty closets of off-season clothing and pack for the move. Organize them to demonstrate the most efficient use of space. Leave as few items on the floor or shelves as possible.
15. Use light to create a sense of space. All drapes should be open. Turn on all of the lights throughout the home.
When placing yourself in the potential buyer’s shoes, consider the overall atmosphere of your home. Keep in mind your sense of smell as you go through this check list. Create the atmosphere of your home as a shelter, a place that is safe and warm, and in good condition.
16. A clean-smelling house creates a positive image in the buyer’s mind. Be aware of any odors from cooking, cigarettes, pets, etc., that may have adverse effects on potential buyers. Remember that some people are much more sensitive to odors than others. Smokers rarely notice the odor of tobacco that fills their homes, and pet owners may be oblivious to objectionable doggy odor.
17. You can use products like carpet deodorizers, air fresheners, and room deodorizers; but the best strategy is to remove the source of the smell rather than cover it up.
18. Unfortunately, often the only way to remove the smell of pet urine from flooring is to rip up the carpeting, padding and underlayment and replace them. If this is preventing the sale of your home, don’t hesitate to make this investment.
19. If smoking and cooking odors have permeated your home, have your carpets and furniture cleaned, and air out or dry-clean your drapes.
20. Mildew odors are another no-no. Don’t allow wet towels to accumulate in hampers, or dirty laundry to pile up in closets.
21. Once offensive odors are removed, consider adding delightful ones. Recent studies have shown that humans have strong, positive responses to certain smells. Cinnamon, fresh flowers, breads baking in the oven are all excellent ways to enhance your property for sale.
This part of preparing your home for sale is the most fun and involves the use of color, lighting, and accessories to emphasize the best features of your home.
22. Study magazine ads or furniture showrooms to see how small details can make rooms more attractive and appealing. The effect of a vase of flowers, an open book on the coffee table, a basket of birch logs by the fireplace, etc., can make the difference in a room. Be careful not to create distractive clutter.
23. The use of a brightly colored pillow in a wing chair or a throw blanket on a couch can add dimension to a sterile room.
24. Soften potentially offending views, but always let light into your rooms. Replace heavy curtains with sheer white panels. Never apologize for things you cannot change. The buyer will either decide to accept or reject the property regardless of the words you say. Just present the home in the best way possible with complete honesty.
25. Go through your photo albums and select pictures of your house and yard during all four seasons. If hung at eye level in a well-lighted area, the pictures will speak for themselves and give you yet another selling edge.
26. Take advantage of natural light as much as possible by cleaning windows, opening shades and drapes, etc. Add lamps and lighting where necessary. Be sure that all fixtures are clean and have functioning bulbs. Increase the wattage of the bulbs in the basement area.
Check your home for any needed maintenance just as a buyer would. Repaint or touch up as necessary. You can’t make a better investment when you are selling your house! Don’t let the outside turn buyers off before the inside turns them on.
27. Color has the power to attract. A tub of geraniums, a pot of petunias, or a basket of impatiens on the front steps is a welcoming touch.
28. If you are selling during the winter months, consider using a wreath of dried flowers on the front door, or an attractive milk can on the porch.
29. If you have a porch or deck, set the stage with pots of flowers and attractively arranged furniture.
30. Check to see that all doors and windows are in good working order. Give special attention to your home’s exterior doors and front entry. Clean and paint doors if necessary. Remember, first impressions are likely to color the remainder of the house tour.
31. Wash all windows and replace any broken or cracked window panes.
32. Screens should be free of any tears or holes.
33. Inspect all locks to ensure that they are functioning properly.
34. Check for loose or missing shingles. Clean out gutters and down spouts. Touch up peeling areas on gutters.
35. Invest in a new doormat that says "Welcome".
36. Make sure the yard is neatly mowed, raked and edged.
37. Prune and shape shrubbery and trees to compliment your house.
38. Consider adding seasonal flowers along the walks or in the planting areas. Plop the plants into a well-placed wheelbarrow, an old-fashioned washtub, or what have you. Brightly colored flowers such as nasturtiums, petunias, impatiens, and verbena are easy to maintain if you only remember to water them regularly. Try a row of sweet smelling alyssum to line a short sidewalk or pop in some perky dwarf marigolds to form a cheerful oasis of color in your yard.
39. Add an inch or two of bark mulch around your shrubs and trees.
40. Set up your old badminton or volleyball net — suggest a scene of family fun!
41. It is important to devote at least one area of your yard to outdoor living. Buyers will still recognize a scene set with picnic table and chairs and respond positively to it. Cover your picnic table with a fringed, red-and-white checked cloth, set out some plastic plates and glasses, bring out the barbecuing equipment, and buyers will almost smell the hot dogs cooking!
42. The driveway is no place for children’s toys. Not only are such things dangerous, the clutter is unsightly.
43. The surface of your driveway should be beyond reproach; after all, it’s one of the first things a buyer will see when he drives up. Sweep and wash the driveway and walks to remove debris, dirt and stains. Repair and patch any cracks, edge the sides and pull up any weeds.
The Front Entry:
Whether a graciously proportioned center-hall or a small space just large enough for a coat rack and tiny table, this part of your home deserves your particular attention.
44. Study your entry hall and ask yourself what kind of impression it makes of your home. Dried flowers or a small plant can make a striking focal point on a hall table any time of the year.
45. Virtually any entry hall will benefit from a well-placed mirror to enlarge the area.
46. Your entry hall’s flooring will be observed carefully by the prospective buyer. Make sure the surface is spotless and add a small rug to protect the area during showings.
47. The entry hall closet is the first one inspected — make it appear roomy. Add a few extra hangers. Hang a bag of cedar chips or a pomander ball to give a pleasant, fresh scent. Remove all off-season clothing.
Think of these areas as if they were furniture showrooms. Your job is to make each room generate a positive response. Add touches that make a room look truly inviting.
48. Sweep and clean the fireplace. Place a few logs on the grate to create an attractive appearance. You are welcome to have a fire going for showings during the winter months – it creates a great atmosphere.
49. Place something colorful on the mantel, but don’t make it look like a country craft store.
50. Improve the traffic flow by removing excess furniture. Have easy traffic flow patterns. Be sure that all doors open fully and easily.
51. Draw attention to exposed beams or a cathedral ceiling with special lighting. Be sure to remove any cobwebs and dust.
52. Remove oversized television sets if they dominate the room. If necessary, substitute with a smaller one until you move.
The Dining Room:
Avoid going overboard. To be effective, any stage setting that you create should reflect the character of your entire home appropriately.
53. Set the scene by setting the table with an attractive arrangement. Add fresh or silk flowers as a centerpiece.
54. Visually enlarge a small dining area. If your dining table has extra leaves, take one or two out. Consider placing your dining table against a wall. Remove any extra "company" chairs. Consider putting oversized pieces in storage until your house is sold.
The Kitchen:Pay particular attention to your kitchen — this room continues to be the "heart of the home." A pleasant, working kitchen is near the top of most buyer’s list of priorities and is a room that buyers always scrutinize closely.
55. Avoid clutter! Clean counters of small appliances and store whenever possible to maximize the appearance of work space.
56. Check the counter top around your sink, and remove any detergent or cleanser, etc., that may be cluttering the area.
57. Sinks, cabinets, appliances and counter tops should be clean and fresh.
58. All appliances should be absolutely clean, bright, sparkling and shiny!!
59. Clean off the top of the refrigerator! If you must use that space for storage, use baskets and bowls to camouflage the items kept there.
60. Set the scene with an open cookbook, a basket filled with fruit, a basket of silk flowers, or a ceramic mixing bowl and wire whisk.
61. Create the aromas associated with happy homes! Bake some cookies from pre-mixed, refrigerated cookie dough, start baking a loaf of refrigerated bread dough, or pop a frozen apple pie in the oven. A delightful kitchen aroma can be created with commercial pot pourri preparations or mix up a batch from scratch on top of your stove:
Cinnamon Pot Pourri:
- 1 T grated nutmeg
- 5 cinnamon sticks
- 1 tablespoon whole allspice
- 1/2 tablespoon whole cloves
Add all ingredients to 2 1/2 cups of water in a saucepan. Bring to a boil, then lower to simmer.
62. In the heat of summer, place a bowl of lemons or limes on the counter to provide a fresh and pleasant aroma.
63. Clean and organize all storage space. If your cabinets, drawers, and closets are crowded and overflowing, buyers assume that your storage space is inadequate. Give away items you don’t use, storing seldom-used items elsewhere, and reorganize the shelves. Neat, organized shelves and drawers look larger and more adequate for prospective buyer’s needs.
64. Large, cheerful kitchen windows are an advantage and should be highlighted as a special feature of your home. Take a critical look at the window treatment — is it clean, sharp and up-to-date? Do the curtains need washing or the blinds need cleaning. Would the window area look better without any window treatment?
65. If you have a counter top eating area, set two attractive place settings with coordinating napkins and place mats , and place cushions on the stools.
66. Set the table for an informal meal with bright place mats and a generous bowl of fruit as a centerpiece.
A separate laundry room is a true asset and is one of the most frequent requests that buyers make during a home search. Don’t hide this treasure behind closed doors. Spruce up the room and open the door proudly for inspection.
67. Add a fresh coat of paint or put up cheerful wallpaper.
68. Organize all closets and storage areas.
69. Remove all dirty laundry. Keep current with your laundry or store all dirty laundry in a closed container.
70. Clean and polish the washer and dryer.
71. Consider adding an attractive, coordinated throw rug.
Stairways should provide an attractive transition from one level of your home to another.
72. Make sure the stairs are safe! Stair lighting should be more than adequate, stairs must be clutter free, stair railings tight and secure, and runners or carpeting tacked securely. Remove any items from the surface of the stairs and store elsewhere. Check the condition of the walls, and paint or re-wallpaper if necessary.
73. If the stairs are a focal point of the main living areas, carefully choose accents to improve the visual appeal. If you have a wide, gracious staircase, emphasize this feature by hanging a few pictures along the wall. Draw attention to a handsome lighting fixture by polishing the brass and dusting each small light bulb or crystal prism. Any stair landing should also have an attractive focal point, be it a fern on a plant stand, a dramatic poster, a chiming clock, or a special chair on a large stair landing. If the staircase is narrow, fool the eye by minimizing clutter.
Imagine for a moment that you’re in the "bed-and-breakfast" business. How would you change your home’s bedrooms to appeal to a paying lodger? Naturally you’d make up the beds with your prettiest sheets and comforters. Maybe you’d add a vase of flowers on the dressing table or a cozy armchair in the corner. Every bedroom in your home should invite prospective buyers to settle right in.
74. Large master bedrooms are particularly popular among today’s home buyers. Make your bedroom larger. Paint the room a light color, remove one of the bureaus if the room is crowded, minimize clutter to maximize spaciousness. Aim for a restful, subdued "look".
75. A private bathroom off the master bedroom is a real sales plus. Decorate to coordinate with the color scheme of your bedroom, creating the "suite" effect.
76. Virtually all buyers are looking for a house with plenty of closet space. Try to make what you have appear generous and well planned. Remove and store all out of season clothing. Remove any items from the floor area — this will make a closet seem more spacious. Arrange all shelves to maximize the use of space.
77. Make sure all articles in the closet are fresh and clean smelling. When prospective buyers open your closet door, they should be greeted with a whiff of fresh smelling air.
78. Make sure all closet lights have adequate wattage and are operating. Add battery operated lights to those closets that lack them. Lighted closets look bigger, are more attractive, and allow buyers to inspect the interiors easily.
79. Take the time to explain the importance of marketing to your children. Encourage them to participate in preparing your home for showing; particularly the principle of appealing to the widest possible market segment. Ask your children’s cooperation in making their beds and picking up their rooms prior to showings. Consider promising a special reward if they willingly participate in your house-selling goals.
80. Have them pack up any items that are not currently in use and dispose of unused possessions.
81. Remove any crowded, unusual, or personal wall hangings such as posters and store them until your home is sold.
Wise sellers take special pains with preparing their bathroom(s) for scrutiny by strangers. The bathroom is a room after all, and a very personal one. Prospects will inspect yours carefully, so be sure it is immaculate. Cleanliness is the key! Make sure that all surfaces are spotless.
82. Replace worn or dirty shower curtains, clean and repair caulking, and remove non-skid bath surface decals that are in poor condition.
83. Clear off counter tops and store all personal care products out of sight.
84. Repair any faucets that leak or do not function properly. Clean off mineral deposits with vinegar or commercial products.
85. Clean and organize all cabinets and drawers. Don’t forget the medicine cabinet: dispose of old prescriptions, and polish the shelves. The same goes for the storage cabinet under the sink.
86. Remember to appeal to a wide range of buyers. Play down dominate colors with contrasting neutral colored towels and accessories. If your bathroom is mostly white or neutral, add a few cheerful accents of color: use towels in the popular new shades. Don’t hesitate to buy a few new towels and a rug; you’ll be taking them with you to your new home.
87. Scrub and wax an old floor. Cover the largest area you can with a freshly washed scatter rug.
88. Decorate and personalize — create a pleasing, individual look. Consider bringing out your best towels and perfumed guest soaps. Add a plant for color and freshness.
89. A gentle hint of fragrance in the air is fine, but keep it subtle.
90. Clean and organize the basement. Be sure that the stairs are cleared, well lighted and that the handrail is secure. Remove and dispose of any items that you will not be taking with you. Pack other items neatly in boxes and arrange them neatly in the center of the room so that basement walls can be inspected.
91. Make sure your major systems, such as the furnace and electrical service are operating properly. If appropriate, vacuum out the furnace, and install a clean filter.
92. A dark, damp-smelling basement, will have trouble selling. Clean up mildew stains, throw out any upholstered furniture that retains that musty smell, and check the basement walls for high water marks. Many basements are a turnoff simply because they’re too dark. Increase the wattage of your existing light bulbs, and if needed, install a few more lights.
93. As a final touch, take a damp cloth and wipe off any dust and grime from the surface of your water heater and furnace. Apply a coat of wax when you are finished.
94. Sweep and wash the floor to remove dirt and stains. Organize tools, garden equipment, bicycles, etc. A clean, organized garage appears larger.
95. If the area is dark, add more light. If it is small, and accommodates only one car, remove your car before buyers visit. An empty garage always looks larger. If a two-car garage with very little extra room, remove one of your cars so that buyers can make their inspection in comfort.
96. If the basement is appropriate to use as a recreation area, set up your ping pong table (with balls and paddles as props), hang some bright posters, put down an area rug, and you’ve transformed the place into a teen retreat. Your setting does not need to be complete and shouldn’t cost a large amount — it’s only meant to suggest further possibilities to buyers.
97. Clear off and organize the workbench in your basement and draw attention to it as a sales feature. Make sure the lighting is excellent and stage the area as a comfortable place in which to work. Add a throw rug as cushioning against the cement flooring.
Whether a high-ceiling room or a crawl space under the eaves for storage, your attic area will be examined and should not detract from the well-kept appearance of your house.
98. If your attic is reached by a steep flight of stairs, be sure they’re clear of objects and well lit; if your attic space is reached by a folding set of stairs that you pull from the ceiling, be sure the mechanism is well oiled and there is adequate lighting.
99. Spruce up your attic space, hide the mousetraps, and install bright lights. If your attic does have windows, be sure to clean off the grime and let in as much light as possible. Clean as needed.
100. Get rid of anything that you don’t plan to move to your new home. Place remaining stored material neatly in boxes and trunks, and position away from the walls.
101. If the attic is windowed and can be expanded under the current municipal building codes, be sure to inform your prospective buyers of this potential. Be sure to verify this information first.
Some final tips on showings
Increase your chances. The more people who see your home, the more likely you are to sell it quickly. Yes, it’s an inconvenience to show your home at dinner time, but if the people buy your home, isn’t it worth the effort?
Prepare for inevitable, unexpected showings with a family game plan. Work out an effective plan in writing with your family so that everyone knows what to do if you sound the alarm.
There shouldn’t be any major housecleaning at this point. The kinds of tasks you ought to be concerned with now are simple ones; making the beds, stuffing last night’s dirty pans in the dishwasher, picking up loose newspapers, etc. Even young children can participate by "cleaning" their rooms.
If the season is appropriate, open the windows in each room and let in some fresh air. Stale air isn’t appealing, particularly in a home with smokers or pets.
Keep your thermostat at a comfortable temperature.
Turn on all of the lights for every showing before prospective buyers arrive. This also gives you an opportunity to select the lighting effects you want for each room. Be sure not to overlook areas like your attic and basement where light switches are often difficult to locate. No area of your home should be dark.
Turn off the television and turn on light, back ground music.
Arrange for pets and children to be at a neighbor. Perhaps it’s unfair to lump children with pets, but young children can distract buyers from their purpose. Keep pets away from buyers.
Don’t try to "sell" the house with words! By this time you have prepared the house for sale — let it sell itself. Buyer’s buy on emotion — theirs, not yours! Keep your emotions under control.
Never misrepresent! Today’s consumer protection laws are very specific.
Assemble utility expense records, such as total yearly heating costs or monthly budgets, for the buyer’s inspection.
If you are including any appliances in the sale price of your home, you should keep warranties and instruction booklets in this same file.
Have information about the major systems of the house available.
Consider hiring a surveyor to mark the boundaries of your property. This will not only show consideration, it will be an effective sales tool. Caution! If you are not exactly sure of the boundary lines, do not attempt to represent their location to the buyer!
Items not included in the sale: Remove (and replace if applicable) any items that will not be included in the sale of the property such as light fixtures.
Please be gone whenever a prospective buyer, accompanied by a Realtor, wants to see the house— and STAY gone until they are gone! Buyers need to "try it on for size", but they can’t do that as long as you are there!
Now you are ready for your home to be presented to the market! Contact the leading Real Estate Team on the Coast! Kennedy & Associates at 707-884-9000 or e-mail us at email@example.com.
[tabname]What is Your Property Value?[/tabname]
[tabcont]Have you ever wondered why the market value of your property may differ from what your bank appraises it? And why is that value different on your property tax bill? It’s easy to be confused about the different valuations being used in the buying and selling process, but knowing a properties value or worth in the real estate market will help you get a fair price.
There are generally three ways to determine the value of a property: through a Comparative Market Analysis, a professional appraisal or an assessed valuation. A Comparative Market Analysis (CMA), performed by an experienced agent, can determine a reasonable listing price for your property. The properties used for this comparison are listed for sale, have a ratified offer pending and those that were recently sold. The analysis includes the properties that have the most features in common with yours.
An appraiser, used by a lender, determines the value of your property by looking at the supply and demand of like properties in the area, comparing your property with others that have recently sold, determining the amount of money it would take to replace your home at current material. Labor costs and determining how much income a property would produce is used for rental property, apartments and commercial property. Lenders frequently require a professional appraisal upon which to base your loan amount.
Local governments also perform independent appraisals to determine your properties assessed value, which are available on public record, so that your property is taxed fairly.
When comparing the CMA and the appraised values, don’t be surprised if they do not match. There are a number of reasons that these differences occur.
The “market value” determined by the appraisal can be different from the “market price” determined through a CMA. In essence, the appraisal amount reflects the cost of replacing your home. But the goal of the CMA is to determine a price that someone will pay for your home. The sale price can be much different from the appraisal value, especially if there are multiple offers on the home.
Finally, government assessors and bank appraisers have different goals. Government assessors make recent sales comparisons over an entire city or county area so that their evaluations are as consistent as possible. The bank appraiser may select among recent sales in your neighborhood only to find three that will justify the loan request.
We can help you determine the value of your property by performing a Comparative Market Analysis. We can also recommend professional appraisers. Please call us to discuss the current real estate conditions that affect the market price of your property.
Please contact Kennedy & Associates at (707) 884-9000 or contact us for more information on the value of your property. Fill out our Market Analysis Form for more in-depth information about the value of your property.
[tabname]Pricing Property Correctly[/tabname]
[tabcont]When you decide to sell your property, you want the highest possible return from its sale. Determining price is the most critical step in preparing your property for sale.
Obviously, pricing your property too low won’t provide the best return. You are apt to be deluged with lookers and may get many offers, but you could lose thousands of dollars on your family’s largest investment.
Likewise, pricing a property too high is risky. Homes priced too high miss their target market. Qualified buyers who might find the home just right for their needs won’t see your property, or make an offer on it, because it is out of their price range. If they are shown an overpriced property during its early marketing stages and do not buy because it isn’t a good value, they are unlikely to revisit your property once the price is lowered. Real estate agents will hesitate to show an overpriced property, unless it will make a competing property look like a better value.
If your home is priced right from the outset, you maximize your opportunity of reaching the most qualified buyers. Buyers who have seen most available homes in their price range are waiting for the right house to come on the market. This is why a well-priced property often sells quickly once it is put on the market.
Multiple listing association statistics show that the longer a property is on the market, the lower the selling price. The property becomes stale and a price reduction results.
The right price really is the right price range to attract the maximum number of qualified buyers within a time frame that suits the sellers’ needs. Pricing strategy depends on the market conditions at the time your property is put up for sale. It can best be determined by an agent who is active in the market, who constantly views properties and is monitoring the changing market conditions.
If you need help to determine the right price for your property, in order to sell in the least amount of time for the highest return, please contact Kennedy & Associates at 707-884-9000 or e-mail at firstname.lastname@example.org.
[tabname]Dangers of Overpricing[/tabname]
[tabcont] If you over price your property you will lose the excitement that a new listing generates. Most activity on a listing comes within the first 30 days. An initial high price will discourage buyers, causing you to miss out on pent-up demand.
You will lose the most qualified prospects! Buyers will not “just make an offer” because they probably will never see your property. They will view the properties that are priced within their purchase power range, knowing that they cannot afford anything above their price ceiling.
Overpricing helps sell other owners properties, more competitively priced properties sell first. Your property may be used to demonstrate the good value of other properties. Your objective should be to enter the market in a position that will attract prospects, not drive them away.
Your property may become stale on the market. Prospects may wonder why it has been on the market too long or if something is wrong with the property, even after you lower your price. You may even have to settle for less than market value. A property takes on a reputation surprisingly fast, so don’t wear out your welcome on the market.
If you do get an offer, the contract may fall through because of appraisal problems. The lender may not be able to justify the price as it relates to loan value, considering it a high risk and refusing to lend the buyer mortgage funds.
You lose a strong negotiating position when your property is on the market a long time, both financially and mentally! Prospects will not “rush” to make an offer on overpriced property, and you may feel compelled to accept less when they finally do.
The agent you list your property with cannot set the sales price of your property any more than your stock broker dictates the price of a stock sale. The selling price is simply a function of supply and demand. Never let an agent bid for your listing. Most unsold listings that expire on the market are due to poor pricing, subjecting the owners to the risks discussed above. Select your agent on their ability to negotiate, competency and ability to reach the market. Above all select someone you trust!
If you are thinking of selling and would like a free market analysis, call Kennedy & Associates 707-884-9000 or contact us.
[tabcont]When Should You Refinance?
How do you know when to refinance from both a financial and timing standpoint? Here are some of the questions you should ask yourself:
Q: Why does it pay to refinance?
A: First you must analyze your own mortgage and fully understand its terms and conditions. What is the interest rate? Do you pay private mortgage insurance on top of that interest rate? Is there a prepayment penalty? If your loan is an adjustable rate mortgage, what are the index and the margin? How often does it adjust and when? You need to be able to answer these questions before you can consider refinancing.
Q: How much lower than my current rate should interest rates be compared to make refinancing available?
A: This is not as simple as it sounds. Many articles have been written suggesting that if the rate is not 2 percent or lower than your present rate; you shouldn’t bother refinancing. You should consider both the costs of refinancing and how long you plan on staying in your present home. Combine these two factors with the anticipated monthly savings on your payments and you can determine exactly how long it will take to break even. After that break-even point, the savings are all yours.
Q: When do I know that rates are at their lowest point?
A: No one can predict how low rates will go. The real question is, are rates low enough to make it worthwhile to refinance now? Talk to a professional mortgage lender who can analyze your situation with today’s rates. Ask them to be specific and put the facts in writing. If it makes sense at 7%, then consider refinancing now. No one can forecast the bottom of the cycle, and when it happens, it will be over before you can react.
Q: Are there other reasons to refinance than lower rates or payments?
A: Yes. Many homeowners are combining a lower rate with a shorter maturity, such as a 15-year loan, in order to save on total interest costs. Others are consolidating consumer debt because of the law changes eliminating deductibility of interest on those debts. Others simply are remodeling or sending their children to college.
Whatever the reasons, see a mortgage professional so your present mortgage can be analyzed and today’s alternatives fully explained. For referrals on local lenders on the coast, call Kennedy & Associates, (707) 884-9000 or e-mail us at email@example.com.
Reduce Your Tax Burden Through Home Ownership
Here’s a nice surprise…good news involving the word “taxes".
Recent changes in the tax laws have made real estate a more attractive investment than ever before. As a homeowner you are eligible to take advantage of these tax changes and deductions to keep more money in your pocket this year. These laws apply to your single-family residence that you claim as your primary residence on your tax return.
Profits from the sale of your home
Congress did homeowners a huge favor by passing the Taxpayer Relief Act of 1997. Today, you can exclude up to $250,000 in profits (or $500,000 if you are married and filing a joint return) from the sale of your primary residence from your taxable income. Previously, this type of deduction only applied to those who were age 55 or older. For more details please call Kennedy & Associates at (707) 884-9000.
To be eligible for this exclusion, your home must have been owned by you and used as your main home for a period of at least two out of the five years prior to its sale. You also must not have excluded gain on another home sold during the two years before the current sale. If you and your spouse file a joint return for the year of the sale, you can exclude the gain if either of you qualify for the exclusion. But both of you would have to meet the use test to claim the $500,000 maximum amount.
Let’s say a married couple purchased a home for $300,000 five years ago and sold it for $450,000 in 1998. They get to keep the $150,000 profit tax-free, provided they have lived in the home for at least two years. The IRS allows people of any age to claim the exemption each time they sell their home, but no more frequently than once every two years.
To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use. Longer breaks, such as a one-year sabbatical, do not count.
Homeowners looking to downsize will benefit the most from the tax change. You no longer have to reinvest the profits in a home that is similar in price to avoid paying capital gains tax, and you free up cash for additional investments like rental property, mutual funds, education, and more.
If you do not meet the ownership and use tests, you may be allowed to exclude a portion of the gain realized on the sale of your home if you sold your home due to a change in health or place of employment.
Mortgage interest, real estate taxes and points
In most cases, the interest you pay on your primary mortgage and your real estate taxes are fully deductible on your tax return. Your lender will send you Form 1098, outlining the amount you paid in interest and real estate taxes over the course of the year.
Mortgage points are also deductible. If you bought a home last year, you can deduct the full amount of the points you paid as home mortgage interest. Meanwhile, if you sold a home in 1998 and paid points, you cannot deduct them as interest but you can claim them as a selling expense if your profit is subject to a taxable gain.
One last point about points. If you were one of the many homeowners who took advantage of low interest rates and refinanced your mortgage last year, the points you paid on the refinanced mortgage are not fully deductible on your return. You can, however, deduct refinancing points as mortgage interest over the life of the loan. And, if you are refinancing for the second or third time, don’t forget to deduct the remaining balance of your previous refinance (those points not yet deducted). This extra deduction can be claimed in the same year you do your new refinance.
Please contact Kennedy & Associates for more information on reducing your tax burden through home ownership. Call us at (707) 884-9000 or email at firstname.lastname@example.org.
Often investors do not realize that taxation on a personal residence is far different than taxation on an income or investment property. Under Internal Revenue Code ¤121, homeowners are allowed to exclude up to $250,000 of capital gains if single, $500,000 if married, upon the sale of a principle residence provided they have owned and occupied it two of the previous five years.
If an investor sells property they pay tax. Taxes are paid on capital gain, not equity or profit. However, property that qualifies for preferential treatment under Internal Revenue Code ¤1031 is treated quite differently.
No gain or loss shall be recognized if property held for productive use in a trade or business or for investment purposes is exchanged solely for property of a like kind.
The benefits of exchanging include using leverage to maximize your investment dollars to property diversification to allow you the widest range of investment freedom. 1031 Tax Deferral can range anywhere from a simple swap of two properties to a complex, multi-leg, multi-property transaction involving a delayed, reverse or construction exchange. The investment strategy and the nature of the transaction will decide which exchange best suits your needs.
Imagine selling rental property, your vacation rental or land, acquiring new real estate of any type and not paying one dime in capital gain taxes. Thousands of investors are profiting every day simply by using the tax deferred sale IRC 1031!
Investors often mistakenly believe they must acquire property like their relinquished property. They are surprised to learn a wide variety of properties can be considered “like-kind.”
“Like-kind” does not refer to the nature, character or type of property. Instead, it addresses the intended use of the property. Provided the property is initially acquired and held for either business or investment purposes, it can qualify as a suitable replacement property under IRC Section 1031.
For example, any of the following can be considered “like-kind” property exchanges: a
duplex for a fourplex, bare land for improved property, a rental house for a retail center , an apartment building for an office building or a vacation home for another investment property. Investors do not have to exchange for exactly the same type of property as relinquished.
The tax code also lists items that are not considered “like-kind”. These include:
- Stock in trade or other property held primarily for sale;
- Stocks, bonds, or notes;
- Other securities or evidences or indebtedness
- Interests in a partnership;
- Certificates of trusts or beneficial interest.
Benefits of Exchanging
Prior to 1979, trading properties was at best complicated. Completing a tax deferred exchange meant properties had to be “swapped” simultaneously. Unfortunately, this made exchanging cumbersome and risky, if not impossible.
The 1979 Starker decision in the U.S. Court of Appeals enabled the non-simultaneous or “delayed” exchange to qualify for tax deferral. This gave investors the time necessary to find desirable replacement property by using an Intermediary.
Treasury Regulations effective June 10, 1991 validated the delayed exchange and simplified the exchange process. By providing specific guidelines, these Regulations were welcomed by real estate investors who were previously uncertain of the viability of 1031 transactions.
Many investors have held property for years because a sale translated into paying taxes of up to 40% of their capital gain. Typically, as an investor’s needs change over the years, the type of investment property they want changes. Relocation, estate building, retirement, desire to increase cash flow, to reduce management responsibilities, all affect the type of property investors want to own. Under IRC Section 1031, investors now have the alternative of moving their investments (and equities) into more desirable or profitable properties.
The true power of exchanging is the ability to meet investment objectives without losing equity to taxation.
Frequently Asked Questions
What is the difference between a sale and an exchange?
A sale is an exchange of real property for cash. Because cash does meet the requirements for “like-kind” property, the capital gains tax is not deferred. An exchange where property is traded for property is a “non-taxable” sale.
What provisions are required in a Purchase and Sale Agreement to enter into an Exchange?
Exchanges begin with a Purchase and Sales Agreement. When a Purchase and Sale Agreement is used to begin a transaction, it should contain language which establishes the exchanger’s intent and notifies the buyer of the exchange.
Examples of such contractual provisions are:
“It is the intent of the Seller to perform an IRC Section 1031 tax deferred exchange.”
“Buyer agrees to cooperate with seller at no additional cost or liability to Buyer.”
“It is the intent of the Buyer to perform an IRC Section 1031 tax deferred exchange Seller agrees to cooperate with buyer at no additional cost or liability to Seller.”
Can an investor trade from several small properties into one large one?
Yes. An investor can also trade out of one large property into several smaller ones. When selecting more than one property, investors must adhere to the guidelines regarding property identification.
How much time do I have to complete the transaction?
In the delayed exchange, “like-kind” properties must be designated within 45 days of the sale closing. The replacement property must close escrow by the 180th day.
What do I need to do first?
Notify your Realtor of your desire to execute a 1031 exchange at the time the property is listed for sale. The proper language for the buyer to cooperate with you in the exchange needs to be part of the purchase contract. You should discuss the transaction with your CPA or accountant to confirm that the transaction will qualify. A “qualified intermediary” needs to be involved as a principle in the transaction. The exchange intermediary will execute the exchange documents and forward them to the to the appropriate parties in the transaction.
Funds from your sale will be transferred to either the intermediary, in the case of the deferred exchange or to the escrow company in the case of a simultaneous exchange.
If you are thinking of selling your vacation or investment property, contact Kennedy & Associates at (707) 884-9000 or e-mail at email@example.com.
Be sure to consult our accountant or CPA for specifics about your exchange property or tax ramifications.
[tabname]Checklist for Moving[/tabname]
[tabcont]Before You Leave
- Post Office: Leave forwarding address
- Charge accounts, credit cards
- Subscriptions: Notice requires several weeks
- Friends and relative
- Transfer funds, arrange check-cashing in new city
- Arrange credit references
- Notify insurers of new location for Life, Health, Fire, and Auto coverages
- Notify gas, light, water, telephone, fuel
- Request refunds on any deposits made
- Stop or change laundry, newspaper, milk
Medical, Dental, Prescription Histories
- Ask doctor and dentist for referrals; transfer needed prescriptions for eyeglasses, X-rays. Obtain birth records, medical records, etc.
Church, Club, Civic Organizations
- Transfer memberships; get letters of introduction
- Ask about regulations for licenses, vaccinations, tags, etc.
- Empty freezer; plan use of food
- Defrost freezer and clean refrigerator
- Have appliances serviced for moving
- Remember arrangements for TV cable service. Return boxes from old location
- Clean rugs or clothing before moving; have them moving-wrapped
- Check with your moving counselor about insurance coverage, packing and unpacking labor, arrival day, various shipping papers, method and time of expected payment
- Plan for special care needs of infants
- Plan for a garage sale
On Moving Day:
- Carry enough cash or travelers checks to cover cost of moving services and expenses until you make banking connections in new city
- Carry jewelry and documents yourself, or use registered mail
- Plan for transporting pets; they are poor traveling companions if unhappy
- Carry travelers check for quick, available fun
- Let close friend or relative know route and schedule you will travel, including overnight stops
- Double check closets, drawers, shelves to be sure they are empty
- Make arrangement with Realtor to transfer keys
At Your New Address
- Obtain certified check or cashiers check necessary for closing real estate transaction
- Check service for telephone, gas, electricity, and water
- Check pilot light on stove, hot water heater, incinerator and furnace
- Have appliances checked
- Ask post office for mail they may be holding for your arrival
- Have new address recorded on driver’s license
- Visit city offices and register to vote
- Register car within five days after arrival to avoid possible penalties
- Obtain inspection sticker and transfer motor club membership
- Apply for state driver’s license
- Register family in your new place of worship
- Register children in school
- Arrange for medical and dental service
[tabs type=”accordion” collapsible=”true” heightstyle=”content”]
[tabcont]The dictionary defines escrow as the deposit of funds and written instruments with a neutral third party until certain conditions are fulfilled.
Basically, escrow is a means for enabling ownership transfers to occur fairly and squarely. Escrow involves an impartial third party brought into a transaction to see that the primary parties, the buyer and the seller, perform as they have agreed they would. Escrow enables a buyer and seller to do business with minimum risk because the responsibility for handling the funds and documents is placed in the hands of someone who is not affected by the outcome. The escrow holder is a disinterested go-between for the parties involved in the transaction, one whose legal obligation is to safeguard the interests of everyone who is affected by the outcome.
The escrow process can be more simply defined as the process in which a buyer and seller hire a trusted third person who will act as a stakeholder. In their simplest form those “stakes” are a deed (usually a grant deed) and money. This stakeholder, otherwise known as the escrow agent, will accept the deed from the seller and the purchase money from the buyer and hold it safely for a designated period of time, until he or she can help the principals complete the escrow transaction after all the conditions of escrow have been met.
[tabname]Why Opening an Escrow is Important[/tabname]
[tabcont]Buyers and sellers should open escrow in order to assure concurrent performance. Concurrent performance means that the grant deed is from escrow, that is, after all obligations, such as loans, inspection fees, monies for termite clearance, title fees and the like have been paid. Escrow guarantees that the money is taken care of properly and legally and that the real estate transaction will occur with concurrent performance.
Escrow also assures principals that their money and important papers are safely in the hands of a trusted third party who has the legal responsibility to protect them. In essence, escrow provides a clearinghouse for funds and documents and a means for seeing that all the conditions of the real estate transaction are met before the property changes hands. All parties to the escrow have legal protection during the period of escrow. The neutral escrow holder, thereby minimizing the possibility of fraud or violation of any terms of the agreement, manages everything.
[tabname]Requirements of Escrow[/tabname]
[tabcont]Escrow is said to exist when a buyer of real property agrees through a valid written contract to relinquish all control over his or her purchase money in exchange for the seller’s grant deed. This makes escrow a legal process, and the written contract that brings escrow into existence is usually the real estate purchase contract and receipt for deposit and later accompanied by the written escrow instructions. Either instrument, if properly written and signed by the principals in escrow (buyers, sellers, and often lenders, too), could be enforced by the courts as a binding contract. Escrows must therefore comply with contract law. Not only do the principals have to comply with the contracts they have signed, but also the escrow agent has to comply with the escrow instructions. Remember that the escrow instructions are actually drawn up by the escrow agent to help the principals accomplish their arm’s-length transaction, but they are written in such a way that the principals are actually instructing the escrow agent as to the principals’ wishes for the transfer of the title to the property in escrow.
A contract sufficient to involve an escrow must comply with the four basic requirements for a valid contract. These are competent parties, mutual consent, lawful nature and valid consideration. A fifth requirement, a proper writing, is necessary only in certain contracts.
[tabname]Helpful Escrow Information[/tabname]
[tabcont]There are about 60 people involved in the settlement of a real estate transaction. The following are some tips to make the process run smoothly:
If you have a lender call them for advice about making your mortgage payment during the month of closing. Notify your agent with your lender’s name, address, telephone number, your loan number and your social security number and they will provide to the title/escrow company. They will need this information to order your loan pay offs.
NOTE: If you make a payment after the payoff amount is determined, the closing/escrow statement will have to be changed, and your lender may charge a fee for updating the documents to reflect the new pay out amount.
If you currently have an FHA mortgage, 30 day advance notice of mortgage payoff may have to be given to avoid an additional charge of one month’s interest. (Some lenders charge a per diem rate, others charge 30 day’s interest.)
You should be aware that it is common practice to add several day’s interest to the amount due as of settlement on your mortgage payoff. Your lender considers the actual pay out date to be the day the funds are received. If you have a local lender, it may be possible to hand carry the payoff check to save any extra charges for daily interest. Check with your title company about their policy.
Lien waivers must be provided at closing for all work done to the property in the previous six months. A lien waiver is a standard form provided by contractors or other workman verifying that they have been paid in full and cannot place a mechanics lien against the property.
Be sure to make arrangements to transfer all utilities out of your name as of the date of occupancy. If your home is heated by fuel, it may be considered to be personal property and, as such, will be purchased by the buyer at the time of settlement. Please arrange for your vendor to measure the amount of remaining fuel and to give you a written statement as to its current value. Send that statement to your agent.
Water and Sewer Bills (if applicable) will be prorated on the closing statement. If you have a bill coming due near the date of settlement, please inform your closing/escrow agent as to whether or not you have paid it.
The following items are usually pro-rated on the closing/escrow statement:
- Homeowner’s Association Fees
- Condominium Association Fees
- Current Taxes
- Rents (If applicable)
It is not always necessary for you to sign your closing documents at the title/escrow company. These documents can be Federal Expressed to you. Detailed instructions will be included for you.
Some lending institutions have a policy of not releasing real estate tax escrows until after a loan is paid off in full. This may cause a temporary cash flow problem if all your proceeds of sale are needed immediately upon settlement. Call your lender and ask if the tax escrow will be fully credited on the pay out statement.
We hope this information will be useful and help make your escrow run smoothly.
For an estimate of fees specific to your property transaction, call Kennedy & Associates at 707-884-9000 or contact us.
[tabcont]Some of the items associated with closing costs are:
Title Insurance Premium
Fee paid by an individual to insure he has a marketable title or, in the case of a lender, to insure their lien position. Fees vary depending on the company used.
If you are planning to resell within 1 year, with some title companies you can pay an additional 10% of the title fee at escrow’s close. With this "binder-policy" , if you then sell within 1 year 100% of the original fee that you paid will be credited. This is an attractive plan for investors and relocation prospects.
Most companies offer a refinance rate which is 70% of base rate.
Short term rates (discounts) if a policy has been issued within 5 years. Rates and fees vary from company to company.
Real Estate Commission
Fee paid to a real estate broker for services rendered in listing,
showing, selling and consummating the transfer of property.
Transfer and Assumption Charges
Fees charged by a lender to allow a new purchaser to assume
an existing loan.
Fees assessed by a county recorder’s office for recording the
document of a real estate transaction.
Fees charged by a lender in connection with the processing of
a new loan. These may include points, origination fee and credit report.
Fees charged by a title and/or escrow company for services
rendered in preparing documents necessary in the
consummation of a real estate transaction.
Taxes, insurance impounds and interest prorations, termite
inspection fees, tax prorations.
Title or escrow company personnel will review and explain your closing statement when you prepare to close your transaction. Planning to resell within 2 years? With some title companies you can pay an additional 10% of the title fee at escrow’s close. Sell within 2 years and 100% of the original fee will be credited. The complete title fee cost? Just the 10% of the original title fee. This is an attractive plan for investors and relocation prospects. Refinance rate is 70% of base rate. (Short term rate does not apply).
It’s the big day. You go to the title company, sign your name on the dotted line hand over a check and prepare to take ownership of your new property.
For an estimate of fees specific to your property transaction, call Kennedy & Associates 707-884-9000 or contact us.