Whether you're downsizing an empty nest or you've outgrown a starter house, selling your house can be complicated. Although the steps involved in selling a home are similar regardless of where you live, New York's real estate laws and practices are unique in some respects—particularly if you own a co-op or condo.
Organizing paperwork, scheduling open houses and showings, and dealing with regulations that may have legal ramifications may be overwhelming. Becoming familiar with the process early will help you avoid problems later. Here’s an overview of the basics—from working with a real estate agent to making legally-required disclosures to closing the deal.
Working With a Real Estate Agent
A real estate agent will be an integral part of your homeselling team, and most people selling their home in New York work with a licensed real estate broker or agent. A good real estate agent will help price your house, based on a comparative market analysis (or comps), accurately assessing the current values of similar homes in your area; effectively market your house to prospective buyers; and handle other tasks, such as reviewing house purchase documents and negotiating with buyers.
Before signing a listing agreement (discussed below) with any agent, get references from other home sellers and check customer reviews on sites such as Zillow and Trulia. You can find licensed New York real estate agents at the New York Department of State’s Licensee Info Search (or eAccessNew York). You can also search for Realtors on the New York State Association of Realtors website.
You can sell your house "for sale by owner" or FSBO, but it may expose you to unnecessary risk. The average seller’s lack of understanding regarding home pricing, advertising strategies, and the overall transaction process can put you at a disadvantage, causing unnecessary hassles and preventing you from getting the best price for your home.
For more information on working with a real estate agent, see the New York State Department of State guide, Looking to Buy, Sell or Rent Property in New York State? Know Your Rights.
Signing a Listing Agreement in New York
Once you find a real estate agent you want to work with, you’ll sign a “listing agreement” giving the agent the right to market and handle the sale of your house. Most real estate agents use standard forms created by their state or local Realtor association, such as the New York State Association of Realtors.
Listing agreements typically cover the following terms.
- The real estate agent commission that you (the seller) will pay. This typically ranges from 5-6% of the house sales price, and is split between your real estate agent and the buyer’s agent.
- The type of listing. Most listing agents will want you to sign an exclusive right to sell listing, which obligates you to pay a commission to the agent regardless of who brings in the buyer (see, for example, the sample Long Island Board of Realtors Listing Agreement For Real Property Exclusive Right to Sell). Other arrangements are possible, however, such as an open listing, in which you agree to pay a commission to whichever agent brings in a buyer, or an exclusive agency listing, in which you agree that your agent is the only agent authorized to sell your house, but that you will pay a commission only if the agent brings in the buyer (not, for example, if you do).
- Duration of listing. In all cases, the listing agreement will cover a set amount of time, such as 60 or 90 days.
- Listing price. Your agent will recommend the appropriate selling price by comparing prices of similar homes (“comps”) that have been listed in your immediate area, based on his or her experience and data found in a Multiple Listing Service (MLS). To educate yourself as to whether the agent is recommending an appropriate price, the National Association of Realtors’ website is a good source of information on prices of houses currently on the market, and websites such as Zillow and Trulia provide data on actual sales prices. See the Nolo article, Listing Your House: What List Price Should You Set? For more details.
- Items included or not included in the sale. For example, you may plan to leave behind a built-in dishwasher (which is therefore part of the property that the agent is contracted to sell), but exclude a refrigerator that you plan to move to your new home.
- Duties and obligations of seller and real estate agent. Your agreement will spell out how the real estate agent will list or market your house, what type of insurance you must maintain on the property, and what disclosures you must make.
New York State law requires real estate agents to advise potential sellers with whom they work of the nature of their relationship and your respective rights and obligations. See the New York State Division of Licensing Disclosure Form for Buyer and Seller.
Making Real Estate Disclosures in New York
State law in New York (New York Real Property Law Section 462) requires that sellers provide buyers a disclosure form, which includes details on the property, including:
- material defects in the electrical, plumbing, and other house systems
- conditions such as rodent damage or asbestos
- homeowners’ association rules, and
- shared driveways, water source, and other details on the property.
Disclosures must be on a Property Condition Disclosure Statement form established by the New York Department of State. A seller who fails to provide the disclosure form will need to credit the buyer $500 at closing.
Certain types of properties (such as newly built homes and cooperatives) are exempt from state disclosure rules.
In addition to state disclosure rules, if your house was built before 1978, you must comply with federal Title X disclosures regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website, for details.
What Goes Into New York Offers, Counteroffers, and Purchase Agreements
A buyer who wants to purchase a particular New York home will make the seller a written offer, specifying the price, proposed down payment, and any contingencies, such as a satisfactory inspection report. (See the Nolo article Contingencies to Include in Your House Purchase Contract for details). Other common contingencies include the buyers’ arranging financing or selling their current house.
You may reject an offer outright, accept it as, or (more typically) respond to a buyer’s offer, with a counteroffer. A counteroffer accepts some or most of the offer terms, but suggests changes to others, such as a higher price or a closing date that’s sooner than the buyer proposed.
A legally binding contract, typically called a purchase agreement, is formed when you accept a final offer (agreeing to any changes from the original offer), and notify the buyer of its acceptance. Your agreement will contain key terms of the sale, such as the agreed-upon price, contingencies, financing terms, dispute resolution, and closing date. In New York, attorneys commonly assist with purchase agreements because they're binding contracts. See the New York State Bar Association Residential Contract of Sale for a sample.
Once a purchase agreement is signed by both buyer and seller, the transaction will go into what’s called “escrow.”
What Is Escrow?
Escrow is the time period between signing the purchase agreement and closing on the house. You will choose an escrow or title agent, a neutral third party, to serve as intermediary and supervise the process (preparing title reports, processing loans, removing buyer contingencies, and so on).
The buyer typically has a lot more to do during this time period than the seller. By the close of escrow, the buyer will need to finalize financing, remove all contingencies, have the house appraised (typically required by mortgage lenders), and get title insurance—usually under set deadlines. Issues often come up that require negotiating, such as who will pay for repair problems identified in an inspection report. The buyer may insist that you pay to remedy a defect or lower the purchase price. If you cannot reach an acceptable agreement, the buyer may have the right to back out of the deal.
What Happens at the Closing of Your New York Home
By the close of escrow (known as the closing or settlement), you and the buyer should have fulfilled all the terms of your purchase agreement. At the closing itself (sometimes a meeting of the parties, other times conducted in separate locations), all final documents and funds will be exchanged between buyer and seller. The buyer pays you the purchase price, and you give the buyer a deed and other transfer documents and clear title to the house or condo. You pay off any outstanding loans on your property and pay commissions to the real estate agents (per your listing agreement).
The closing normally takes place on one day, though it’s possible to go over several days.
Sellers do not usually need to be present at a New York closing (although your lawyer will represent you) so long as all costs are paid and documents are signed. Typically, the buyers will sign the final documents at the office of their title company or escrow agent and pick up the keys. Then the buyers will record the new deed their name at a local government office, and the home is officially theirs.
For more details, see Escrow and Closing in Buying or Selling a Home. You’ll also find useful information on Sandy Gadow’s website, Buying, Selling, and Closing Simplified, which includes a state-by-state guide to closing practices.
Working With a Lawyer
Unlike many states, New York requires sellers to involve a lawyer in the house-selling transaction. (N.Y. Jud. Law Section 484). Among other tasks, your attorney will review the title report and work to resolve any issues, such as liens on the property; prepare all the closing documents, such as the deed; and calculate how much money is owed to whom at the closing of the deal, and assure that all payments are accurately made. You may also want a lawyer’s help drafting a lease agreement if you plan to rent the home back for an extended period of time after the house closing, or if problems show up on the title report such as a lien on your property. Check out Nolo’s Lawyer Directory, to find an experienced real estate attorney in New York.
More Information on Selling a House
The Selling a House section on Nolo.com includes a variety of useful articles on all aspects of the house selling process, including marketing strategies and tax issues.
For detailed information on every phase of selling a home, from marketing to closing, see Selling Your House: Nolo’s Essential Guide, by Ilona Bray.
If you’re selling a home in New York City, check out BrickUnderground: The Insider’s Guide to NYC Real Estate. For useful information on selling a home in New York, including special advice on cooperatives and condos, see the New York State Attorney General’s Real Estate Finance Bureau website.