What Documents and Paperwork Do Sellers Need When Listing Their Home for Sale?
Call Them Documents or Paperwork - You Still Need a Copy
I don’t know how many trees are logged to produce the amount of paperwork that goes into every real estate transaction. And, I don’t know about other states, but I do know that in California, every real estate transaction requires approximately 180 sheets of paper. And, if you’re my client, I’m going to make sure you have every piece of paper you’re entitled to have, and then some.
In today’s world, a lot of transactions can be handled digitally, nevertheless everyone is entitled to receive the information they need in order to make the best decisions possible.
A Short Story About Paperwork
I'm big on getting everything in writing and handing a copy to my client. I had a client once who was an amazing guy. At the same time, he was an experienced investor who had his own ideas of how things should be done. We were sitting in the conference room discussing a particular matter that had to do with a transaction he was considering. He explained how he wanted to proceed with the transaction. I mentioned that he probably shouldn’t make a certain decision because XYZ might happen. He said, “Yeah, but what are the odds of it happening?” I told him that it could, indeed happen and if it did, it would be tragic. The client made his decision against my advice. I then signed and handed him some paperwork which noted that he acted against my advice. Well, guess what? “It” happened! A lawsuit ensued. Everyone who was a party to the transaction was named in the lawsuit except me. It was a case that made the national news headlines. The result of the lawsuit is that some people went to jail, some people lost their license, and some people incurred monetary penalties.
In this story, I represented the buyer who was the person who initiated the lawsuit. The seller was the party who incurred monetary damage. The buyer was able to win the lawsuit because he had every piece of paper imaginable to prove his case. Let me also point out that the buyer didn't walk away overly compensated. In fact, he wasn't even 100% whole after the transaction. The point is, the buyer had a ton of paperwork to support his claim.
That’s the short version of the story. There are details about this story too intrinsic to explain, but I mention this story to reiterate the fact that a lot of paperwork comes out of every transaction, and as a seller you want every piece of paper that is due to you, because you never know what might happen at the end of a transaction. You want to be prepared to show paperwork that supports your position.
Make Sure You Get a Copy!
Agents are required by law to keep documents for a prescribed minimum time, but it’s a good idea that you, the seller, have your own copy in your files.
What Sellers Need Before They Decide to List the House for Sale
Sellers, before you make the decision to list your house for sale, you need your agent to provide very important documents. For starters, you need to see a Comparative Market Analysis, Preliminary Title Report, Seller’s Net Sheet, and Proposed Marketing Plan.
- Comparative Market Analysis ( also known as CMA)
The comparative market analysis is a report that your agent generates for you. This document contains information about other homes in your neighborhood that are similar to your home. The comparative market analysis shows homes that are currently for sale, homes with sales pending, and homes that have sold. Averaging up all the numbers, the comparative market analysis is used to give you a general idea of what your house might be worth on the real estate market if it is listed for sale in the immediate market.
- Preliminary Title Report (also known as Prelim)
The Preliminary Title Report is a document that shows who the owners are, what taxes are owed on the property, what type of liens are recorded on your property, and any type of covenants or conditions recorded on your property. There may be other important information reported about your property. Basically, you need the Preliminary Title Report to know ahead of time, whether there is anything reported as negative or needing attention on your property before you begin the sales process.
- Seller’s Net Sheet
The Seller’s Net Sheet is a document that sums up all of the expenses and money to be received at the time your house is sold. The result of the Seller’s Net Sheet is just an estimate, but the information should be reliable enough to give you an idea of how much money you can expect to receive at the end of the sale.
- Proposed Marketing Plan
The Proposed Marketing Plan is something every seller should receive from their agent. This document lets the seller know all of the activities involved with selling the house. The Proposed Marketing Plan lets the seller know how often the agent intends to hold open houses, broker tours, advertising, and virtually everything the seller needs to know about how the house will be marketed.
Get Your Paperwork Before You Put Your House on the Market
What Sellers Need When They Decide to List The House for Sale
It would seem obvious that the seller would have a listing agreement, but I know of a case right now where one of the executors of a property has not even seen the listing agreement, yet the house is on the market being sold. It happens! Make sure you get a copy of the Listing Agreement, Mandatory Disclosures, Contingency Removals, and Inspection Reports.
- Listing Agreement
The listing agreement lists all the terms of the agreement between you and your agent, along with other brokers and agents (considered sub-agents in California) who will be showing your house to potential buyers. The Listing Agreement includes the price, commission to be paid, how the property will be showed, whether or not there will be a lockbox and signage. Virtually everything you need to know about the selling aspect of your house should be contained in the listing agreement.
- Mandatory Disclosures
I cannot state factually for other states, but in California all sellers are legally required to disclose information that may be of interest to the buyer. Make sure that you receive your copy of all disclosures signed by you, your agent, and the buyer’s acknowledgement that he or she received a copy of the disclosures.
Contingencies are specific issues in the contract that could hold up the sale.
- Contingency Removals Contingency removals are documents which show that contingencies have been removed. You want written proof that contingencies are removed and you want a copy for your files.
- Inspection Reports Inspection reports are reports such as home inspections, pest inspections, pool inspections, basically, any inspection that has been completed on the house during the time the house has been for sale. Even if the buyer pays for the report, as the seller, it is wise to obtain a copy of the report for your files.
What Sellers Need When the House is Sold
At the end of the sale, your state or region may have different procedures for getting the Seller’s Closing Statement. Depending on where you reside, this document may be called by a different name and may come from the Escrow Company, Title Company, or your real estate attorney.
- Seller’s Closing Statement
The Seller’s Closing Statement shows the net result of the money the buyer paid for the house minus the cost of selling your house. The net result is how much money you get to put in your pocket.
Table of Documents or Paperwork at a Glance
It is likely that if you’re working with a competent REALTOR®, you will receive all of the documents required. Your state or region may have different names for each document. Regardless of what the document is called, the information contained in the document is what is important.
What the Seller Needs…
Before The Seller Decides to List the House for Sale
When The Seller Decides to List the House for Sell
When the House is Sold
Comparative Market Analysis (CMA)
Seller’s Closing Statement
Preliminary Title Report (Prelim)
Seller’s Net Sheet
Proposed Marketing Plan
More Information Leads to Better Decisions
It might seem overwhelming to see all of the paperwork involved in listing your home for sale, and while you may receive additional paperwork throughout your particular transaction, the paperwork mentioned in this article is the minimal amount required to:
- Determine if you want or need to sell your house
- Know how much it will cost to sell your house
- Know how much money you will receive when your house is sold
Before Listing Your House, Get the Paperwork in Your Hands
Keep the above-mentioned things in mind when you’re thinking about selling your house and even if you don’t remember the document by name, remember to ask your agent to show you how much it is going to cost to sell your house and how much you’re going to receive when the house sells. Ask your agent to put it all in writing. It is the act of putting things in writing that gives you the best chance of obtaining all the paperwork you’re entitled to receive.
Video: In the Market - Out of the Market
This is absolutely the BEST explanation about why some houses sit on the market for a long time, and why some houses sell quickly.
Is Your Home In or Out of the Market?
I’d like to mention that no trees were harmed in the creation of this hub!
Marlene Bertrand is a Broker/REALTOR®.
Calif. Bureau of Real Estate Lic. #01056418.
Questions & Answers
© 2013 Marlene Bertrand