Selling a house is a very difficult job. You want to sell your home as quickly as possible and at its full value. You must also be aware of state & federal laws and how they affect your sale, such as Wisconsin’s Seller Disclosure Law & Federal Lead-Based Paint Rules This involves a lot of time, effort, and patience, as well as specialized skills and knowledge. That is why most people turn to a REALTOR® for help.
When you sell your home, the REALTOR® will work for you as a client. You sign a contract with the agent, called a listing contract. The agent then works for you and receives an agreed commission when the house is sold.
In a seller/client relationship, the agent guides you throughout the real estate transaction, providing information on such issues as pricing your home, which purchase offers are fair, and how to structure a purchase contract to your advantage. It is the business of the REALTOR® to help you sell your home with minimum delay and to help you realize every dollar it is worth.
Although the REALTOR® works for you and owes you additional services, called fiduciary duties, the REALTOR® must also treat his or her buyer customers fairly. The buyer is generally the customer. There is no contract between the buyer and the REALTOR®.
Today, however, many home buyers use a buyer’s agent – a specialized REALTOR® who is the home buyer’s client and works for the interests of the buyer. This makes it even more important for you to have an expert on your side looking out for your best interests.
Homeowners are winners under the Taxpayer Relief Act of 1997. Under the new law, up to $250,000 ($500,000 for a married couple filing a joint return) of gain realized on the sale or exchange of a principal residence is not taxable – not just deferred. In addition, the new law reduced the capital gains tax rate. Any gain from your home sale in excess of $250,000/$500,000 is taxed at the new lower rate.
Homeowners qualify for this tax exclusion if two requirements are met:
The home must be used as a principal residence for two of the preceding five years. This law does not apply to vacation or second-home properties. There are some exceptions for those who cannot satisfy the two-year use requirement.
No more than one sale or exchange can take place every two years.
If you are selling your home, you should contact a tax advisor for details on how this new law applies to your sale.
In Wisconsin, a homebuyer can choose to work with a buyer’s agent or a selling agent. Either way, your agent is a specially trained professional, licensed by the state of Wisconsin, who is obligated by law to treat all parties to a real estate transaction fairly.
If you work with a selling agent, there is no contract between you and the agent, and you are not the agent’s client. You will, however, receive a Broker Disclosure to Customerform that lists the fair treatment duties owed to you and indicates that the selling agent is either an agent of the seller or an agent of the listing broker (subagent).
If you work with a buyer’s agent, you are the buyer’s agent’s client. You and the buyer’s agent sign a WB-36 Exclusive Buyer Agency Agreement that includes a Disclosure of Real Estate Agency. The Disclosure lists the fair treatment duties owed to all parties and the duties owed to you as the client, and indicates that the buyer’s agent is the agent of the buyer.
The buyer’s agent works for the interests of the homebuyer, but also must know how to work with the listing agent. A buyer’s agent can:
Recommend or suggest an offering price or give you an opinion about whether a particular house is priced too high or too low.
Structure the offer and draft offer provisions with the buyer’s best interests in mind.
Recommend and assist the buyer with negotiation strategies for the best price and terms.
Research and disclose information and research a property’s history title and liens so the buyer can make a better informed decision.
Give advice within the scope of the agent’s expertise as a licensed real estate professional.
Your REALTOR® can recommend home repairs or cosmetic work that will significantly enhance the salability of your property. Your REALTOR® acts as the marketing coordinator, disbursing information about your property through a variety of mediums – placing strategic property ads, holding open houses, using the MLS – only available to REALTORS® – to quickly reach a large number of home buyers, as well as networking with other REALTORS® and business contacts.
Home Selling Tips
A REALTOR® can offer you many suggestions to prepare your home so it looks its best when being shown to a buyer. Use the following checklist as a guide when preparing and showing your home for sale.
Do everything you can — inside and outside –to make your home as attractive as possible in the eyes of the buyer. First impressions last. Homes that look their best tend to sell faster and command every dollar they’re worth.
Lawn trimmed, clear of debris.
Tidy front entrance. Door brass polished, worn trim or rusty mail box painted.
Painting inside walls can pay dividends far beyond the time, effort and expense involved.
All windows, doors and drawers should open and close easily. Fasten loose tread plates, clean soiled carpeting.
The bathroom gets close scrutiny, too. Keep it spotless. Tiles scrubbed and grouted, faucets polished, toiletries and medicines in their chest. Laundry items in closed hamper.
Clear out accumulated items from closets, cabinets and under counters-also from the garage. Consider holding a garage sale prior to showing your home.
Keep pets out of the way. Soft background music can contribute to a relaxed mood, but a loud radio or TV, like pets, will tend to be distracting.
Let your broker work for you. This real estate professional can answer questions on price, terms, possession, etc., and maintain objectivity in responding to buyer objections.
A fresh coat of paint for home, garage, even fences-may be the one improvement that creates the most positive first impression.
Gutters sealed and downspout clean.
Storms and screens cleaned. New doormat put out. If possible, keep curbside free of parked cars.
Tend to “little things”-oil squeaking doors, tighten loose cabinet knobs, take out removable stains, replace damaged floor tiles.
The kitchen is one place in the home that buyers look at closely. Tighten leaky faucets, repair or replace faulty wall switches, outlets, light fixtures and any appliances that will “go with the home.”
Cleaned windows and clear, uncluttered closets and basement contribute to a more attractive home.
Make home as light, airy and spacious as possible. Draw back drapes. Turn on a few extra lights.
Fresh bread or cookies baking in the oven help create a “homey” atmosphere.
Pricing Your Home
Your REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
Your REALTOR® is familiar with real estate financing and can help pre-qualify buyers to see if they can afford your home. This is information you want to know upfront because if potential buyers can’t afford your house, you don’t want to spend a lot of time and energy on them.
Every lender requires title insurance. The company issuing the title insurance policy will research legal records to make sure that you are receiving clear title, or ownership, to the property.
Problems with title can limit your use and enjoyment of real estate you have purchased, as well as bring financial loss. Each year, millions of dollars are involved in title disputes.
Basically, title insurance protects you from losses as the result of claims on the ownership of your real estate. Unlike other insurance policies, such as homeowners and auto, title insurance protects you from things that may have happened in the past.
Title insurers, through an extensive search of the public records, provide you with a detailed list of the claims that other parties may have in the real estate, such as:
→ Loans on the property
→ The rights of others to use the land
But even the most careful preventative work cannot locate hidden hazards of title. Hidden hazards can show up after you buy your real estate, causing an unpleasant and costly surprise. Title insurance offers you financial protection against these hidden hazards. Examples of hidden hazards are:
→ A forged deed that transfers no title to real estate
→ Previously undisclosed heirs with claims against the property
→ Instruments executed under expired or fabricated power of attorney
→ Mistakes in the public records
The cost of title insurance varies. It is a one-time payment that safeguards you against loss arising from hazards and defects already existing in the title. You are protected by title insurance for as long as you own the real estate.
The lender will require you to have homeowners insurance on the property that covers the amount of the replacement cost of the property.
Survey or Plot Plan
The lender may require a survey, or plot plan, of the property to confirm that the property’s boundaries are as described in the sales contract.
Water & Sewer Certification
If the property is not served by public water and sewer facilities, you will need local government certification of the private water source and sanitary sewer facility. Properties with well and septic water sources are usually governed by county codes and standards.
If the lender or the appraiser determines that the property is located within a defined flood plain, the lender will require a flood insurance policy.
Certificate of Occupancy or Building Code Compliance Letter
If your home is newly constructed, you will have to have a Certificate of Occupancy, usually from the city or county, before you can close the loan and move in. The builder will obtain the certificate from the appropriate authority.
Final Walk Through
Within 24 hours prior to your closing, you and your real estate agent should make a final inspection of the property to make sure any required repairs have been completed, all property included in the purchase contract, such as kitchen appliances, carpeting and draperies are present and that no recent fire or storm damage has occurred.
Negotiating and Closing
Your REALTOR® can help you objectively evaluate every buyer’s proposal without compromising your marketing position. Your REALTOR® can help you write a legally binding, win-win agreement that will be more likely to make it through the process.
Your REALTOR® can help you resolve questions that arise between the initial sales contract and closing. For example, unexpected repairs that may be required in order for the buyer to obtain financing or a cloud on the title is discovered. The required paperwork alone is overwhelming for most sellers.
Your REALTOR® will help relieve your anxieties about the closing procedures by explaining them in advance, and making sure everything you need for the closing is ready.
The mortgage loan closing (or settlement) is the final step to transferring ownership of your house to the home buyer. Even though the purchase contract has been signed and the homebuyer’s loan request has been approved, the homebuyer has no rights to the property, including access, until the legal title to the property is transferred to the buyer and the loan is closed.
Every area of the country has its own unique closing customs. Your REALTOR® can guide you through this process and make sure everything flows together smoothly.
At closing, you will execute the deed to the property, and the homebuyer will sign the mortgage loan documents, and the closing agent will record the necessary instruments to give the buyer legal ownership of the property.
Closing costs must also be paid. Closing costs vary widely depending on the home’s price tag, location and other factors. Overall, the costs will probably be between 1 and 3 percent of the sales price.
There are standard documents and exhibits that are commonly required for a loan closing. Some of these will be your responsibility. Some of these will be the responsibility of other parties to the transaction, such as the homebuyer and lender.