Selling a home can be a daunting task for anyone to undertake. Selecting the right real estate broker is the best place to start. A real estate broker is an invaluable resource, one who will not only guide you through the process, but most importantly will find you a qualified buyer and get you the best price for your home. As you begin to work with your real estate broker, it is important to also think ahead to the contract and escrow stage for the sale of your home. To do that, you must discuss with your broker and decide on what terms and conditions you would like incorporated in the contract.

7 Things To Think About Before And After You List Your Home For Sale In New York

The On Or About Date

Typically, a contract for the sale of a home contains an on or about date. This is the date that will be set forth in the contract which states when the home will be sold. It is important to know that in New York State, the case law states that on or about means the closing will take place within thirty days from the on or about date set forth in the contract. It is rare for a closing to take place before the on or about date. For example, if it is agreed that the on or about date in a real estate contract is April 30th, absent other complications and agreements, etc., the closing must take place by May 30th.

The Deposit

Upon signing a real estate contract, a buyer gives a deposit which is held in your attorney’s escrow account. Typically, this deposit amount is 10% of the purchase price of the contract. Not only is this deposit held as partial payment of the purchase price, but it also serves as “liquidated damages” in the event the buyer breaches the contract and improperly backs out of the deal.  In other words, most often, that is the amount you get to retain as damages if the buyer breaches the contract and doesn’t go forward with the sale. If a potential buyer advises you that they wish to put down less of a deposit, this should raise a red flag, indicating that maybe perhaps they cannot truly afford the home, may have insufficient cash reserves and may have trouble getting a mortgage, or have some other motivation.  In any event, if this situation comes up, you should discuss this with your broker and lawyer, try to ascertain the true reason, and make a decision.

Mortgage Contingency

In its simplest terms, a Mortgage Contingency is a clause in a standard real estate contract which allows for a buyer to back out of a contract if they are unable to obtain the amount of financing set forth in the contract by a certain date, typically 30 or 45 days from the date the contracts are signed. If, after diligent efforts, a buyer is unable to obtain a mortgage within that period of time, the buyer can back out without penalty. Knowing this, it is important to decide how much of a mortgage contingency you are willing to give. For example, some buyers will want it in the contract that they wish to finance 90%, some 95%, while others will only seek to finance 80% of the purchase price. This is important because, especially in todays mortgage market, it is much more difficult to get a mortgage for 90% or 95% than it is for 80%. You want to know that if you have a contract, there is a high probability that the buyer is going to get a mortgage for the amount agreed upon.

What Is Staying And What Is Going With You

When selling your home, you should consider what items you are leaving behind and what items you are taking with you. It is best for your real estate broker to know this information as they show your home so as to avoid any potential disputes later on. Some examples of more unusual items that people do sometimes choose to take are washer/dryers, carpets, and mirrors. The more common items are fixtures and window treatments. Very often, people have certain light fixtures, chandeliers, or sconces that they wish to take with them when they move, due to their financial or sentimental value. In the case of these fixtures, it is important to articulate which items you are taking with you so there is no surprise. A buyer expecting to see a grand chandelier in a foyer will be quite surprised and most disappointed if that beautiful grand chandelier is just not there at the walkthrough. Most often, you must replace those fixtures with basic substitutes. The term window treatment has varying meanings. Sometimes it refers to anything covering a window, and other times it refers only to drapes and curtains, and not blinds or shades. Regardless of the definition of the term, if you have any of these items that you intend to take with you, it is important that it be properly incorporated in a contract and once again, let your broker know the details. Believe it or not, there have been instances where both buyers and sellers have spent thousands in legal fees fighting over custom blinds, curtains, drapes, and shades.

Condition

Unless otherwise specified in the contract, the law generally assumes that everything in the home is in working order, including appliances, heating and cooling systems, boiler, the roof, etc.  If there is anything in the house that is not working properly, or that you know needs replacement or servicing to be in working order, you should decide whether you will be making the repairs prior to the closing, whether you intend to give a credit at closing or adjust the purchase price, or wish to sell the home as is. Typically, a buyer will have a home inspector come to the home and write a report with regard to its condition. Should any items be brought to the attention of the buyer, those items will need to be addressed in one way or another.

Improvements/C.O.

One sticky point that arises in many real estate deals is when there have been improvements done on a home without proper permits, certificates of occupancy, variances, or documentation. Whether you are dealing with a swimming pool, tall fence, or added deck, it is important to know where you stand and whether the improvements are legal. Often, the parties become aware of these problems after a title report and/or inspection is obtained. Typically these issues need to be resolved, either before the closing or after the closing, and quite often money is required to be held in escrow until any issues are resolved.

Attorneys

Choosing an attorney is an important decision when you are selling your home. Your attorney will be responsible for drafting the contract of sale, incorporating all of the necessary terms, working with the buyers attorney, coordinating the many aspects of a closing, scheduling the closing, and finally conducting the closing itself. Some sellers consult with an attorney before they have an offer while others wait until after. If you know who you are using before the offer however, there is more likelihood that there will be little delay getting a contract drafted and out to your buyer. Whenever you decide to retain a lawyer, one important thing for you to consider is accessibility. Many people would prefer to deal primarily with their attorney, who is assisted by a paralegal, and not visa versa. You want to know that you can get your attorney on the phone if you need to. Do not choose an attorney solely on price it can cost you way more in the end.

Matthew W. Greenblatt