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Buying or selling a home is the one of the largest transactions that the average American will undertake. In the Rock River Valley, it is often possible, though not recommended, to conduct a home transaction without the assistance of legal counsel. Real Estate lawyers can add value even in a transaction that seems simple because many real estate buyers or sellers are not always aware of the issues in a home transaction. Here a few points to remember the next time you consider a home transaction:
- Home Inspections (Buyers). Most residential sales contracts provide for a period of time for buyers to conduct a home inspection and void the contract if the results aren’t satisfactory. Having an inspection identifies the potential physical problems with your purchase. If the inspection reveals a large problem with the home, such as a leaky roof or problems with the foundation, it will be well worth the effort if you are not in a position to remedy those problems, or if you are, that you can properly budget for them. Complying with the home inspection timelines or terminating the contract on your behalf are things your WilliamsMcCarthy LLP attorney can work through with you.
- Attorney Review Period (Buyers & Sellers). Most residential sales contracts provide an opportunity for buyers and sellers to review an executed residential sales contract with an attorney, to ensure that it reflects all of the terms of your transaction. Tell your attorney what the terms are (price, timeline, items included in the purchase, any contingencies such as financing or the sale of your current house, and any peculiar terms that are not clearly identified in the contract) and consider their recommendations regarding how to structure the deal for your protection. It may be that the timeline is unrealistic (i.e., a mortgage approval cannot typically be obtained in 14 days), a particular provision in the contract is not standard, or that there is something nuanced in the Real Property Disclosure that concerns the attorney.
- Clear Title (Sellers). Depending on how long you’ve lived at your home, you may be surprised to find what has been recorded against its title over the years. In most transactions, sellers are responsible for removing any liens or title encumbrances on their home. For many sellers, this may be only a mortgage or a home equity line of credit. For others with a long history in their home, there may be the current mortgage, your old mortgage that you refinanced years ago, tax liens, and municipal liens. These liens can take weeks to remove, so it is worth it to have an attorney working to negotiate and obtain the necessary lien releases on your behalf.
- Home Condition (Buyers & Sellers). Chalk it up to the “now” generation, but buyers are becoming pickier than ever when comes to the condition of a home. We see more home deals fall apart over home condition than any other issue. There, of course, is nothing wrong with voiding a contract because of a bad roof, but buyers should remember that, unless it is new construction, you are buying a ‘used’ home. Like a used car, chances are it will not be unblemished or made for your order. When buyers are looking, budget for minor things that you may have to fix (i.e., a window that will not latch) or will want to change (a lime green accent wall). For Sellers, it makes good sense to take care of that deferred maintenance you have been putting off. An attorney can help you to determine what constitutes a major problem versus a minor blemish, and to negotiate with the other party to ensure a favorable outcome for you.
- Sale Proceeds (Sellers). The reverse of sticker shock occurs occasionally with Sellers. Leaving closing, they are disappointed with the proceeds that they received from their house. Now, you cannot magically increase market value in a home, but you can adjust your expectations when it comes time to sell. First, if you are using a Realtor, budget for a commission of 7% off the home price. Second, subtract your mortgage balance and any other monetary liens you may have on the property. Third, subtract a pro-rated portion of your current year’s real estate taxes. Remember, we pay taxes in arrears, so the tax payment you make in 2016 is really for taxes in 2015. Finally, title insurance (which is typically at the Seller’s expense) is not free. Expect a $1,000 to $2,000 charge from your proceeds depending on the contract price of your home.
The matters above are just a few of the issues where your real estate lawyer can add value and help you navigate in a home transaction. WilliamsMcCarthy LLP has been representing the business and personal needs of the Rock River Valley for over 85 years, including their home transactions. We hope you will consider us the next time you buy or sell a home.