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Here are five legal mistakes to look out for whether you are selling your home on your own or with the help of a real estate agent.

  1. Failing to review the Settlement Statement before closing.

When a contract of sale is signed, the seller usually hires a title company to perform a title search. This will help determine the liens and judgments on the property. Make sure you get your draft of the settlement statement at least 3 days before closing date. There you will see all the fees that are going to be deducted from the purchase price. Not going through the draft might result to some nasty and expensive surprises. Prepare yourself by double checking everything to see if it matches up to expectations. After all, the closing date is looming and you want to see this sale through without a last-minute hiccup.

  1. Not disclosing property defects.

As a seller, you are required by law to make certain disclosures that concern your property. This includes water and sewer systems, structural systems, land use matters, and material defects. Failing to disclose all known defects to your buyer creates opportunities for liability. It can lead to a lawsuit being filed against you. To avoid this, simply be transparent to your buyer and disclose all of your property’s known defects. By known, I mean material defects that pose a serious risk to the health or safety of your buyer or the home’s future occupant, and defects that can not be ascertained by a simple visual inspection.

  1. Agreeing or accepting a lower-than-customary earnest money deposit.

There is no agreed rule in the real estate industry as to how much a buyer should offer as their earnest money deposit. Most of the time it should be at least 1% of the asking price. Some sellers and their agents believe it should be more. If you want the home in question and have the funds, this should not be an issue. The buyer can always get the excess funds back when their loan comes through.

Sometimes a buyer makes an earnest money deposit that is lower than the widely accepted 1% to 3%. You should not consider this as a red flag as there are loans where no down payment is necessary. Simply asking for proof or source of funds will address this concern.

  1. Not screening your prospective buyer.

As a home seller, you should exercise due diligence and screen your prospective buyer before the contract of sale is signed. This protects you from a number of issues, but particularly financial ones.Make sure your buyer has already gotten pre-approved by their lender. Do not accept an earnest money deposit below the 1% to 3% range. You do not want to waste your time on a seller who can not afford your property, especially if there are other buyers who are better prepared financially.

  1. Not providing a complete resale package.

If your property is part of a Home Owner Association, you are required to provide copies of several documents, including covenants and restrictions, articles of corporation, bylaws, and other rules of the development. You are also required to provide disclosures regarding monthly fees and assessments, both current and those charged during the previous fiscal year.By not providing a copy of these documents, the buyer can terminate the contract and get a full refund of the earnest money deposit.

These are just five of the common legal mistakes sellers make. If You would like to know more, get in touch with me today at 760 622 5087 or click here.

legal mistakes