Prospective homebuyers often search online on their own to find homes that are for sale. However, homes listed for sale can sometimes sell for more money than the asking price within hours, largely due to various economic factors.
As a result, prospective homebuyers often try to lock-in a home purchase before a home even hits the market. Similarly, some home sellers try to line up a purchaser on the seller’s own in order to avoid paying a licensed real estate agent, broker, or salesperson Those are commonly known as realtors, even though “realtor” is a term reserved for real estate professionals who are a part of a certain national trade association.
Initially, it is important to note that homes that are listed with a real estate agent tend to sell faster and, on average, sometimes sell for higher prices than homes that are sold by owners without a real estate agent’s involvement. Real estate agents tend to charge a commission of 3% to 10%, which does not usually include most advertising costs but which does include advice on listing prices, some staging/presentation and delivery of documents between the buyer and seller.
Nevertheless, a real estate agent is not legally required to be involved when a home is bought or sold. Particularly if a buyer and seller have already agreed to a handshake deal, a sale or purchase without a real estate agent can sometimes save a lot of money.
If a home buyer and prospective purchaser find themselves without a real estate agent, three documents are initially needed.
First, if the house or any part of it was or might have been built before 1978, the seller must provide the buyer with a one-page lead paint disclosure form indicating whether the seller has any knowledge of lead paint in the property.
Second, the seller must provide to the prospective buyer a certain property disclosure form. This form consists of five pages and any additional attachments. The property disclosure form asks about every aspect of the house, like plumbing, foundation, heating, air conditioning, and utilities, and requires the seller to identify any problems that the owner actually knows. Notably, the owner is not required to do any inspecting of the house’s condition. The seller only must disclose what the seller actually knows about those various components of the house.
Third, the seller and buyer should hire an attorney to prepare a purchase agreement. A purchase agreement is the document that legally commits the buyer and the seller to eventually complete the sale or purchase. The purchase agreement must be in writing and should include terms like the purchase price, any deposit — called “earnest money” — , who pays which portions of the closing costs, a definition of what “closing costs” means, how soon the literal sale or purchase (“the closing”) will occur and any contingencies or events that might allow the seller or the buyer to “get out” of the deal.
A copy of the three documents are provided to the buyer’s lender so that the preparation for the closing, like an appraisal and title examination, can begin.
