Selling a home in the Golden State is a major undertaking. With various required disclosures and potential legal pitfalls, there are a number of things you should know before you begin the process.
Why Do You Need a Real Estate Agent?
You can try to sell your home on your own, but a qualified agent will know the current value of similar homes in your area, and how to effectively present and market your home so a good number of buyers will make credible offers. Home sales involving real estate agents usually involve purchase prices significantly higher than those without an agent, even after payment of commissions.
Find a Real Estate Agent
You can find a licensed California real estate agent at Realtor.com or by going to any of the major real estate firms in your area to interview an agent. Find an agent with a diverse marketing plan who has a proven track record of success.
Your Listing Agreement
There are three kinds of real estate listing agreements. An open listing is one where the owner retains the right to sell the home and pays no commissions. An exclusive agency listing is used for a sale by the owner. The owner executes the listing agreement with a broker if the broker is the cause of the sale. With an exclusive right to sell listing, the seller agrees to pay a commission to the listing broker regardless of who brings in the buyer.
How to Set the Sales Price
Your agent typically determines the listing price of your home by comparing sales prices of similar homes within a quarter mile or half mile of your property. Other factors should also be considered, such as proximity to schools, markets and freeways.
What to Include in Your Listing Agreement
Listing agreements should include several details, such as:
- Sales price and commission
- Duration of the agreement
- Responsibilities of the seller and the agent
California law requires that sellers provide certain disclosures regarding property defects, such as:
- Natural hazards
- Illegal substance contamination
- Lead-based paint
- Special assessments
- Sex offender registrations
Failure to disclose known defects or to make other required disclosures can expose you to a lawsuit. California home sellers use the California Residential Real Estate Disclosure Statement.
Getting the Offer
An offer is a proposal to pay a certain price based on set terms and conditions. It's not a legally binding contract until the seller accepts the offer and its material terms and then notifies the buyer that it has been accepted.
A counteroffer rejects the original offer based on purchase price or other terms or conditions, and proposes a different price or new terms.
After an offer is agreed on and signed by all parties, the buyer deposits funds into an escrow account, secures mortgage approval, arranges a home inspection, and follows all state and local regulations regarding transfer of the property.
The Purchase Agreement
A purchase agreement is a legally binding contract for the sale of real estate. It includes includes details, terms and conditions such as:
- The identities of the parties
- A description of the property
- Price and financing terms
- Items included in the sale
- Guarantee of clear title
- Date of closing and inspection
Negotiating Post-Contract Issues
If an inspection turns up material defects, the buyer can insist that you pay to fix the problems or lower the purchase price so the transaction can still proceed.
Closing the Sale
At the close of escrow, several events typically occur, such as:
- The buyer signs a promissory note.
- Seller pays certain closing costs.
- Buyer signs the deed of trust on the property as security for the loan.
- Title insurance is verified.
- The deed is recorded on the day escrow closes.
As the seller, you don't have to be present at closing, as long as all costs are paid and all documents are signed. You typically have to turn over the keys to the buyer that day if the deed is recorded at that time.
A Real Estate Lawyer Can Help
California real estate laws are complicated, and not all laws are the same in every state. This article is a brief introduction to the topic. Sellers should consult with a real estate attorney to ensure a successful and problem-free home sale.