The Paperwork for Selling a House by Owner
There are three common ways to sell your home, and each takes a certain amount of time and paperwork to succeed.
When you use a real estate agent, they handle most of the paperwork and then spend several weeks or months showing your house.
When you use an investment company, they provide most of the paperwork and close the deal quickly. But when you place your house for sale by owner, you become responsible for a lot of paperwork. But don't let it discourage you.
There are several things to understand when it comes to selling your home on your own. Here is the paperwork for selling a house by owner.
Paperwork for Selling a House by Owner
The paperwork listed below was organized based on when it is needed. The paperwork required before you list your property includes the items you'll need in order to create the listing. Additional documents are necessary to sell or launch your listing into the marketplace.
Once there is activity, the paperwork listed is related to receiving an official offer, and the documents required before the closing and at closing. Here are the lists of how to sell your home yourself paperwork.
Before You List
The below lists will help you gather information associated with your original purchase of the property. The lists also include the actual operations and upgrades that you've made to the property.
Original Sales Contract
The original sales contract is needed to prove ownership and previous ownership. It reveals the terms and conditions of the property's transfer to you. And more importantly, it elaborates on all disclosures about the property prior to the original sale.
While you or the bank may hold the title, a title search is common to make sure there are no other claims against the property and you own a legal or equitable interest in the property.
The plat of survey or property survey shows the exact legal boundaries of the property. This will quickly settle any hearsay rumors surrounding the property. An example might be a neighbors fence that was erected three feet into his yard, leaving three feet of his yard on your side of the fence.
If you don't have a current copy, then the buyer will most likely pay for a copy of it from the local housing authority for their lender to confirm what the property is that is being financed.
Original Professional Appraisal
The original professional appraisal used to determine lending value will need to be provided. Also, if there were any subsequent appraisals in the case of a refinance or after having made any property improvements. You can also use a free online home value estimator to get an idea of what your property should list at.
Blueprint or Floor Plan
A blueprint or floor plan brings a significant amount of confidence to the buying decision. Most reveal the history of the building and any alterations captured over time. This also becomes a great tool to facilitate an inspection.
Mortgage Statement and Payoff Amount
When selling your house before the mortgage is paid off, you'll need a mortgage statement and a written statement from the lender that includes a pay-off amount. The mortgage statement will disclose the terms of the loan and the interest owed up until the date the agreement is paid in full.
Since the current balance is a different number than the pay-off amount, due to the final payment being moved up to closing, the lender will have to calculate the difference from the original agreement. This practice is common and required of lenders.
Homeowners Insurance Records
Damage and repairs must be disclosed in real estate deals. A copy of your homeowner's insurance report will provide the needed transparency for the sale. The report proves that you had homeowners insurance and gives information about all claims since the purchase of your home. This will help the buyer understand approximately what homeowners insurance will cost them.
Homeowners Association Documents
Homeowners Associations (HOA) have rules and regulations, fees, and voting privileges that the buyer must be made aware of if your home is a condominium, townhouse, or part of a housing development. While each state has its own HOA laws, federal laws also impact how HOA's operate.
The governing documents required include articles of incorporation, bylaws, rules and regulations, dues/assessments, two years' worth of minutes, and the Declarations of Covenants, Conditions, and Restrictions.
Repair and Maintenance Records
Home repair and maintenance records prove the consistent upkeep of the property. The documents also inform the buyer of what will need to be taken care of next. The documents include maintenance receipts, major repairs, and appliance warranties.
It is also prudent to have dated records of major annual upkeep like window washing, painting, and gutter cleaning. Any utility maps for electrical lines and gas lines are also beneficial.
Capital Improvement Receipts and Permits
Capital improvements are not items that can be categorized as maintenance or repairs. Capital improvements include only major work that upgrades the value of the property like bath and kitchen remodels, the moving of walls or building of additions, a new roof, an added summer room, or a swimming pool.
Keeping the work orders, receipts, and permits gives validation to any upgrades that you've had done. You'd also want to include any related warranties for the work done, especially warranties that are attached to the property rather than the owner.
Manuals and Warranties
Since appliances are typically transferred with the property and hold a percentage of value at the purchase price, you'll need to provide all manuals and warranties. this would include washers, dryers, dishwashers, refrigerators, stoves, garbage disposals, trash compactors, freezers, and any other large ticket items included in the sale.
Bills are a bit more personal and therefore optional. However, when you provide a year or two of bills, the buyer is able to see what it costs to run the house and how often increases show up. This will help them determine their operating budget and give them a sense that you are disclosing everything.
The below lists are all about the dollars associated with a sale. These lists will help you gather items to properly price the property and list it.
Comparative Market Analysis
The comparative market analysis compares the selling price of similar homes in the area and recently sold homes. Reviewing the documents will give you a sense of the selling price of your home.
For instance, if you are selling a condominium in a 40 unit building, it will be easy to see the approximate price range the units are selling for or have recently sold for. If you know the condition of the units and the upgrades, it is easy to determine where your unit lands in the overall value the market bears.
A unit with fewer upgrades will not sell for a higher price tag because the buyer will see that the unit is overpriced.
A listing agreement is needed if you'll be using a real estate agent to list your house. The document gives the agent the right to use photos, graphics, videos, written descriptions, and other selling tools related to the property. This agreement is a standard one based on the National Association of Realtors language.
The agreement gives the agent exclusive rights for a specific period of time. You may also include a marketing plan that specifies home showings, open houses, and social media marketing.
If you are self-listing, other agreements are signed based on promotional sites and listing sites you choose to use. If interested, you can learn about selling without a realtor.
Seller’s Net Sheet
A seller’s net sheet is a worksheet that shows how much you’ll pocket from the sale after expenses. Deductions include taxes, commission, your remaining mortgage, and escrow fees. this sheet is refreshed with each offer so you know where you'll stand financially.
A preliminary title report summarizes any legal or financial claims against the property. The report can include taxes owed, conditions and restrictions recorded to the property, and any existing liens.
Mandatory disclosure laws are in place to protect the seller and buyer from lawsuits. this encompasses hazards affecting the property like lead-based paint, asbestos, environmental issues with gas, oil, and toxic chemicals, water damage, defects in appliances or heating/cooling systems, neighborhood nuisances, and past disputes.
What is disclosed is determined by each state where the property resides. You'll do well to research the latest list for your area.
For states that require hazard notice, you'll want to report on how hazardous your property is concerning its potential for mudslides, brush fires, seismic activity, floodplain, radon gas exposure, etc.
Since home inspections are relatively inexpensive, especially if you are hiring an inspector for a preinspection report. The report will provide a heads up on the property so you're not caught off-guard when the full inspection is conducted.
You'll also be able to create a punch list of items to repair or notate for a buyer before listing the property. The downside is that anything you find will have to be disclosed before an offer is received.
When Buyer Makes Offer
The negotiation process begins when the first offer is made. The below lists will help you address the forms needed to negotiate your final sales price.
Purchase Offer and Counteroffer Forms
Forms are used by the buyer and seller to make an offer and counteroffer on the property. It is important that the back and forth of negotiations is documented. Once the purchase offer is signed, it becomes an agreement or contract.
Should additional activities drive alterations to the purchase agreement, like negotiating issues found by an inspection, amendments are drafted and signed. Each form is specific in its transaction to bring clarity to the purchasing process.
Final Purchase and Sale Agreement
Once all is agreed to and negotiations come to an end, a Final Purchase and Sale Agreement is written. This agreement states the selling price, the terms, the earnest money, and the closing date. It also covers or makes room for contingencies. Both the buyer and the seller sign the agreement.
Paperwork Before Close
The below lists are about the current state of the property. Everything that is a part of the sale needs to be fully disclosed as it is.
Home Inspection Report
One of the most expected contingencies is having an inspector evaluate the property before the deal can close. The inspection only takes a few hours, but the 30-50 page report takes a couple of days. Many reports include pictures of the items being discussed in the report.
The result is a report listing out any broken, defective, or hazardous issues. It includes issues with plumbing, electrical, heating, air conditioning, fireplaces, chimneys, the footings or basement structure, and much more. Some use the findings to break the deal, negotiate the price, or negotiate requested repairs to be covered by the buyer.
Home Appraisal Report
A professional appraisal must be conducted to determine the fair market value of the property. The actual appraisal includes photos and a comprehensive report that is ready 3-4 days later. The document also contains comparable properties in the area and the considerations given to the home value.
The below lists help make sure that you have no nightmares at closing. Most of it makes sure the right dollars are transferred to the right categories and people.
Recent Tax Statement
The latest property tax receipt is provided to calculate any outstanding taxes you need to pay at closing. It is also used to determine an estimate of what the buyer will owe once they take over the property as the new owner. Both calculations are based on the assigned closing date. Should the date change, the tax amounts will change.
In the case of a prepaid tax escrow, the calculations determine your refund.
The Closing Statement
The closing statement reveals the closing costs, taxes, and other transaction fees related to the sale. This can be generated by a closing agent, attorney, or title company. The statement clarifies who owes what and what each person pays to whom.
The deed is a legal document that officially transfers ownership or title of a house/property from the seller to the buyer. The deed identifies both parties and gives a thorough description of the property. The plat of survey is compared to the deed to make sure the property in question is accurate.
Exclussion v. 1099-S Tax Form
The IRS has a provision for those who show a capital gain from the sale of your primary home. You may qualify for a $250,000 exclusion from your income, of $500,000 if you file a joint return with your spouse. Publication 523 "Selling Your Home" shares the rules and worksheets to determine if you qualify.
The bottom line is that you must meet the ownership and use test. You're eligible if you used your house as your main house for 2 out of the last 5 years that you've owned the house. This is excluding any other capital gain issues that might impact the qualifications.
If you receive a 1099-S form, "Proceeds From Real Estate Transactions", you must report the sale of the home even if it is excludable. Reporting is also necessary if you can't exclude all of the capital gains from the house. You'll want to check with your tax accountant on which additional forms are right for you.
Paperwork Relief and a Quick Sale
The number of documents required to sell your house on your own is staggering. But it's clear that selling through a real estate agent can eat up too much time. The best compromise is for you to consider a company like ibuyer.com who handles most of the paperwork and closes your deal quickly.
You are worth the time to investigate the possibilities. Compare traditional real estate sales to iBuyer sales and see why iBuyers enable you to sell your house faster. See if they are in your area and will work for you.