Part 2 of 5 – Do you understand what you’ve just signed?
You’ve decided the time is right to sell your house and MOVE.
Because you don’t sell houses every day, your first call should to a Real Estate Sales Professional to schedule an appointment for a consultation.
The agent will come to your house and will walk through it with you and then will sit down with you to discuss the process.
For sure, there’s plenty to do.
The first order of business will probably be to make sure everyone is on the same page with respect to your goals associated with the move.
- Are your financial expectations in alignment with the reality of today’s real estate market?
- What is the probability that you’ll net enough $ from the sale of your house in order to fund your move to a new place?
- When is your optimal time frame for making your move?
- Are you willing to do what it takes to prepare the house for the market?
- Will you be willing and able to keep your house available a “Showing Ready” until it sells?
All of the above checks out, and it’s now time to complete the paperwork.
This is the point at which many Home Sellers mentally check out . . . but might be the most important time for them to tune IN.
The most important document relating to the selling of your house other than the Purchase and Sale agreement is your agreement with your Listing agent.
Commonly known as a “Listing Agreement,” this is a CONTRACT between the Seller and the Listing Firm.
Here in Tennessee, that agreement is 7 full pages of very small font language.
Any 7 page legal document is mind numbing for just about anyone who’s not an attorney.
Most Home Sellers have no interest whatsoever in reading every word of this agreement because they know that even after reading it all, they’re likely not to comprehend what it all means.
Regardless, I think no one should sign any such agreement without understanding the terms and conditions to which they are agreeing.
I acknowledge the mind-numbingness and therefore offer the following tips:
- Ask your agent to lead you through the agreement section by section and explain what each section means.
- Is the person who is authorized to sell the property in the room?
- Are there any other people who have an ownership interest in the property that should be in the room?
- Is the description of the property clear?
- Are there any liens or encumbrances?
- What’s included? (House, Out-buildings, Appliances, Fixtures, Equipment, Pets, Livestock)
- What’s NOT included that the average Buyer might think would be included? (Heirloom Chandelier, Draperies, Mirrors)
- Listing Price? (Seller and Agent determine this TOGETHER based on a recent Market Analysis of nearby home sales in the past 6 months (or year)
- Listing term? How long will the Seller agree to allow the agent to sell the house? (Varies based on market conditions)
- Possession: When will the Seller commit to have the house “empty and free of debris” – Often, this is “Date of Deed”
- Acceptable Financing terms? Is seller agreeable to FHA, VA, Conventional loans?
- Compensation: Normally, the Listing agency “Charges” a fee for selling the house. Often, this fee is a percentage of the final selling price of the house. In the event another agent brings the Buyer, the Listing agency will share a portion of this fee with that other agent (AKA “Cooperation”). These fees are in no way “Standardized” meaning that different agencies may have different fee structures. The Principal Broker of each firm determines this fee structure and may or may not allow the individual agents to charge differently. The fees are usually earned upon execution of a Binding Purchase Agreement and paid at closing.
- Responsibilities of the parties: What are the obligations of the Agent with respect to marketing and selling the house? What are the Seller’s obligations to participate in the marketing by maintaining the house in good form, available for showings, and reasonable cooperation with completing contractual documents
- Hold Harmless: This language delineates many of the potential pitfalls that could arise throughout the transaction over which that agent may have no control and therefore limited liability
- AGENCY – This one is VERY important and is well worth a 10 minute conversation for complete understanding. It is essential that the level of representation is clear. Broker. Designated Agent for Seller. Facilitator/Transaction Broker. Dual Agency.
- Earnest Money – In most areas when a Buyer submits an offer, that Buyer also submits “Consideration” which the Listing or closing agency holds in a dedicated Escrow account until closing . . . That money is usually returned to the Buyer at closing . . . In the event the Buyer defaults, Buyer may lose that money to pay commissions and/or other incurred expense
- Seller is required to provide a clear Title at closing
- Will Seller provide a “Home Protection Plan” for the Buyer? These “Warranties” cover the various “Systems” in the house (Appliances, HVAC, Water Heaters)
- Legalese – Every contract ends with a litany of additional verbiage just for the purpose of confusing the parties to the contract.
What I’ve offered above is a VERY abbreviated walk-through of a Listing agreement solely for the purpose of emphasizing the importance of understanding what you’re signing when you “List your House” with a Real Estate Sales Professional.
In my 21+ years of selling houses and managing agents, I have literally had my hands in thousands of real estate deals.
I can honestly say that, when there’s trouble, it’s because of a lack of communication and/or understanding.
PLEASE – Take whatever time is necessary to KNOW what you are signing when you list your house for sale.
Of course, here in Middle Tennessee, I and the “Vital Few” agents of Pareto Realty stand poised and ready (and trained) to guide you through this process with complete understanding.
and besides . . . our market is short on available houses, so we’re ever hopeful that you’ll decide to move soon 🙂
I’m always available to ‘splain things you encounter that baffle ya.