Real Estate—Frequently Asked Questions
- I am thinking of Selling my house, where do I start?
- I am looking to Buy a house, where do I start?
- What is a Listing Agreement?
- What is a Short Sale?
- What concerns are there with any Short Sale?
- As a Buyer, why should I have an attorney?
- As a Seller, what should I know?
- As a Buyer, what else should I know?
I am thinking of Selling my house, where do I start?
- The starting point is the verification that there will be net proceeds available from any Sale. There are various costs that accompany any transfer of ownership beyond the payment of the Mortgage. Should you need assistance in estimating any amount OR have other questions, the attorneys at June, Prodehl, Renzi & Lynch, LLC can be contacted by clicking below:
- The goal of any sale is to maximize your selling price and to find a qualified Buyer in as short of period of time as possible. Value will ultimately be defined as the price that someone is willing to pay. The asking price, however, can be found from a number of different sources. Suggested starting points would be:
- County Treasurer: A tax bill contains the value assigned by the County Assessor. While this value may not fully reflect the current economic downturn, it should provide a good indication of the property’s maximum value. Click here for the Will County Treasurer’s Website.
- Websites: Caution needs to be used as there can be a large discrepancy between the value given by any website and actual value, but they do serve as a useful initial tool. One such site is ZILLOW: Click here for Zillow: Zillow.com
- Real Estate Agents: They are professionals trained in both valuation and marketing of properties for sale. Generally, a real estate agent will provide you with a Market Analysis detailing both the value of your home and the suggested listing price. Before retaining the agent, you should also discuss and agree upon a marketing strategy and plan to insure that you fully understand the services being provided by the agent and the duty you owe the agent in assisting with securing a Buyer and closing on the Sale.
- Finding a Real Estate Attorney: The importance of a competent and thorough real estate attorney cannot be underestimated. You will have much to do: in addition to selling your home, you will need to pack and move, and find (and purchase?) another residence. The details of the closing and the necessary steps that lead up to the closing are matters that can be left to your attorney to address. As some people look to list the property for Sale by Owner, the need to secure a real estate attorney becomes even more critical. Assistance can be provided in the preparation of the Contract for Sale and the statutorily required documents that must accompany any such contact. The real estate attorney can also assist by detailing the process and the steps involved in the sale and work with you to secure all of the documents needed to effectuate the desired Sale. Should a problem arise that may threaten the closing, you will have an attorney by your side.
I am looking to Buy a house, where do I start?
Unlike the Sale, where the goal becomes one of maximizing your selling price, the purchase of your home carries many other considerations. If you have children, the quality of the school district and the proximity of its schools are a concern. If you need to commute to work, proximity to train stations or the interstates may be a priority. Once you determine the general area to which you would like to move, you focus your house hunting activities to that particular area. Suggested starting points for your search would be:
- Neighborhood: If you have an area that appears to suit you and your family’s needs a drive through is a good way to start any search. You will be able to observe the neighborhood, determine what parks and schools are nearby, and, through For Sale signs, find houses that are available. Since many listed houses have flyers detailing the sales price, this will also provide you with a range of prices for that neighborhood.
- Newspapers: Especially Sunday papers will carry extensive listings of properties for sale. While this will not necessarily be a definitive list of available houses, it will provide you with areas to begin your search.
- Websites: Many Real Estate companies maintain websites that will provide as much, if not more, information than the Newspapers. Additionally, For Sale by Owner’s properties can also be found on the internet.
- Real Estate Agents: They are professionals trained in both the selling and buying of Real Estate. Generally, a real estate agent can arrange for “showings” where you can enter into various homes for the all important personal viewing of the property. If you truly like the property and wish to make an Offer, the agent will assist you in drafting the Contract and then present it to the Seller. The agent would also assist you in working with your attorney for the resulting Home Inspection, finalization of your financing, securing the final Walk Through, and the purchase at Closing.
- Finding a Real Estate Attorney: The importance of a competent and thorough real estate attorney cannot be underestimated. You will have much to keep you busy as you look to finalize the financing for the Mortgage, arrange for the move-in, and address any school transfers and the like. There is a calming comfort that comes from having an attorney walking you through the process and being there to address any problems that do arise.
What is a Listing Agreement?
This is where a Seller retains the services of a Real Estate Agent. It will provide the agent with an exclusive right to sell your home, detail the length of the contract, and set out the listing price. Since there are legal ramifications associated with each provision, time should be taken to carefully read the document. Any questions and clarifications should be sought prior to signing the document. It is also advisable to contact an experienced real estate attorney, who can represent you and protect you from future problems that may otherwise arise, especially if you are contemplating a SHORT SALE.
What is a Short Sale?
This is where the Buyer attempts to buy the property without providing enough funds to pay the Mortgage(s) in full. Any sale must, therefore, be approved by the Lender(s) before any closing can occur. Generally, the Seller receives no money from the Sale and may, under certain circumstances, contribute some money towards the Sale.
What concerns are there with any Short Sale?
There are two (2) major concerns to be addressed. The first flows from your listing of the property and the second concern arises once a Contract offer has been received. With prompt legal representation, you can address those issues and limit their potential adverse consequences.
- When you seek out a real estate agent to list your property, a Listing Contract will be signed. This Agreement may provide for the payment of a commission to any agent that secures a full price contract. While this may be a “full price contract,” it will not pay the Mortgage in full. As a result, the Lender may refuse to release the Mortgage at the Contract price. This would preclude any sale to the Buyer (unless you agree to pay the remaining balance to the Lender). However, this does not alter the fact that the real estate agent produced a “full price offer” and, as such, may be able to assert a claim for a commission. Similarly, the Buyer may also be able to file a lawsuit to compel you to sell the property to them.The basis for either suit is your failure to clarify either agreement. Both agreements should clearly show the property is subject to a short sale. Your Lender’s approval should, therefore, be a requirement of the Contract for Sale (known as a condition precedent). Your real estate agent should recognize this problem and a real estate attorney can assist you with any drafting issues to protect you against any such claims.
- Once a Buyer has made a written offer to purchase, the matter becomes subject to the policies and procedures of the Lender(s). As such, Lender approval must be sought; it cannot be compelled. The closer the proposed purchase price is to the property’s fair market price and the more money to be paid to the Lender, the greater the likelihood the Lender will approve and agree to provide the needed Release of Mortgage.Approval can, however, carry a requirement of that a portion of the deficiency be included in a new Note that will need to be paid by the Seller at a later date. There may also be tax consequences as the Lender may issue a Form 1099 C due to the cancellation of a portion of this debt. Depending on the language of the Contract for Sale, you may be forced to accept any such requirements or face a breach of contract claim from the Buyer. The key to protecting yourself is to retain a real estate attorney and to secure legal representation early in the process and before any contract is signed.
As a Buyer, why should I have an attorney?
There are a number of reasons for legal representation. With all that goes into a move-in, you have enough issues and concerns, without worrying about getting to a closing and what happens once you finally get to the closing table. That is where the services of the Real Estate Attorney come into play:
- Address terms in the Contract for Sale that can be modified to allow you to pay less money at closing to purchase the home. There are a number of cost-related matters, such a repair credits, real estate tax credits, and warranty and title expenses, which may be subject to negotiation and can be used to save you additional money.
- Insure that the Contract reflects your understanding of the deal. This can relate to personal property being transferred with the house, the condition of the property, and when you can expect to truly finalize the purchase and move into your new home.
- Address any unexpected issues that arise from Home Inspection Reports, chain of title, Radon levels, possession issues, and related matters. If additional time is needed, extensions can also be sought. The representation by a Real Estate Attorney will insure that you have legal advice when deciding how to address these unforeseen problems and, for the more significant problems, whether or not the Contract for Sale can be cancelled without any consequence to you.
- Additionally, when it is time to execute all of the documents required to obtain your loan, the Real Estate Attorney will be there explaining the reason and purpose for each and every form, especially when dealing with loan documentation. This provides a level of comfort and should greatly reduce any anxiety and stress from the vast amount of documents that you will be asked to sign.
- The “security blanket” effect. Even if you believe there is little risk of anything going wrong or any issues arising, it is good to have an attorney on your side, listening to your concerns, and representing only your interests in the transaction.
As a Seller, what should I know?
There are a number you should know. Clearly, you secured the right real estate professional as the Agent has brought you an offer to purchase that you are about to accept. As you head towards finalization of the sale (closing), there are certain aspects of selling a home that are generally common to all transactions.
CONTRACT EXECUTION: The first step in the process is the signing of the contract. Most contracts contain approximately four pages which outline the terms of your deal. There may or may not be certain attachments, known as Riders, which cover certain contingencies not set forth in the main contract. Once signed, these Riders and their terms become a part of the contract. If your deal is for a SHORT SALE, the inclusion of a SHORT SALE RIDER is essential.
(Click here for a FAQ addressing Short Sales).
While most contracts contain a provision for attorney modification (for everything but the purchase price), some do not. It is also not a guarantee that your Buyer will be willing to make a change once the contract is signed. The document will become a binding legal contract for the sale of your house. Accordingly, you should be sure that you understand the terms and your obligations prior to agreeing to any sale. If you have any questions or concerns regarding any section of the contract, you should contact an attorney experienced in real estate for an explanation.
SELLER’S DUTIES: As the Seller, it is your responsibility to provide your Buyer with various items, including, but not limited to: a clear legal title to the property, a survey, and all the necessary documents to effectuate the transfer. Although not required that you personally secure an attorney, most parties find it easier and less stressful when they choose the attorney to handle the sale for them. If you decide to retain June, Prodehl, Renzi & Lynch, LLC, we will take care of ordering title and related documents, and fulfilling the requirements set forth in your contract and will prepare all the closing documents for you. We will work closely with you as we prepare for closing. We will also take the time needed to explain all of these various closing documents to you prior to your signing them.
SELLER’S CLOSING COSTS: Even before you find a Buyer for your property, you can estimate the costs involved and can approximate the amount you should receive upon closing. If you have secured a Real Estate Agent, this calculation should have been done by the Agent. We provide a PDF file that you can download to project the costs that range from paying off your mortgage to unpaid taxes to title expenses.
As a Buyer, what else should I know?
Finding the right home to buy can be quite an involved and lengthy process, but it is only the start of the process. There are certain aspects of buying a home that are the same in all transactions. As such, you can prepare yourself in advance for the steps you will be going through during the next few weeks as you look to finalize your purchase of the home.
CONTRACT EXECUTION: The first step in the process is the signing of the Contract. Most contracts contain approximately four pages which outline the terms of your deal. There may or may not be certain attachments, known as Riders, which cover certain contingencies not set forth in the main contract. If you need to sell your house before you can purchase this house, a Rider detailing the contingent nature of your offer needs to be included. Once approved and signed by the Seller, these Riders and their terms become a part of the contract.
While most contracts contain a provision for attorney modification (for everything but the purchase price), some do not. It is also not a guarantee that your Sellers will be willing to make a change once the contract is signed. It is, therefore, important you specifically address any questions or concerns prior to your signing of the contract. Any such questions or concerns regarding any section of the contract should be addressed to a Real Estate Attorney to insure you get the needed advice and/or explanation before you act and are bound by the terms of the contract.
APPLYING FOR A MORTGAGE: The next step, once you have found the perfect house and signed a contract, is to formally apply for a mortgage. Please understand that “pre-approval” or “pre-qualification” does not mean that you have loan approval for the purchase of the home. You still need to secure a loan commitment for this particular piece of real estate. Although many banks or mortgage companies offer competitive rates, you may wish to check with several different lending institutions to satisfy yourself that you are getting the best rate and services available to you. Care should also be taken to understand all of the financing costs you will incur and, unless it is a fixed rate loan, the exact variable nature of your loan and the likely final interest rate.
SECURING AN INSPECTION: A provision exists in most contracts, which allows the Buyer to obtain an inspection of the premises. This must occur within a certain period of time. This inspection may include one or more of the following items: structural system, roof, electrical, plumbing, heating & cooling systems, interior walls, and insulation and ventilation systems. An inspection clause in the contract makes the final purchase obligation contingent on the findings of a professional home inspection should you elect to have one done.
Other inspections that are available which you may wish to consider are for Radon and lead-based paint hazards. Since Radon remediation can be quite expensive, any concerns over this issue should be addressed immediately within the time for securing inspections.
CAUTION: One of the most important things to remember regarding your rights under the contract as a Buyer is that time is of the essence. Although certain protections are granted to you in the contract, they must be utilized within the timeframe set forth in the contract.
An attorney can be sure that all of your concerns are addressed in a timely and proper fashion. Should you decide to retain the services of June, Prodehl, Renzi & Lynch LLC for your residential real estate transaction needs, we will work closely with you. We will also work closely with the Seller’s attorney in verifying that title to the prospective property is free and clear of liens. We will insure that the Seller’s attorney has prepared the deed with title held in the way which provides you the most protection. We will also attend the closing with you to explain the documents prepared by your mortgage company as well as all of the other documents required to finalize the purchase of your new home.