| There are many important home selling terms to know when
the time comes to put that sign in the yard. The real estate
market can be tricky, and costly if you make a selling
mistake. There is so much to know: legal/real estate terms,
contracts, listing agreements, disclosure statements, title
documents, etc. Be sure to get as much home selling advice
as possible, as becoming an intelligent seller homebuyer can
help you avoid making costly mistakes. 1031 Exchange
A 1031 Exchange is a tax aspect of the Internal Revenue Code
to allow a real estate investor who meets all the
requirements to sell their property and defer paying taxes
on the gain. By completing an exchange, the owner can
dispose of their
investment property, use all of the equity
to acquire replacement investment property, defer the
capital gain tax that would ordinarily be paid, and leverage
all of their equity into the replacement property.
Breach of Contract
A breach of contract occurs when a party is in violation of
a direct obligation or failure to perform provisions in the
contract agreement. In the world of real estate, a contract
breach occurs most often in two ways:
(1) A failure to perform in the property listing agreement
between the broker and the seller.
(2) A violation of terms in the sales contract between the
buyer and the seller.
Contract Contingencies
Contingencies in real estate contracts are the specific
clauses in the contract that must be fulfilled by either the
buyer and seller, or provide a way to void the contract. For
example, a current home sales contingency is often used when
a buyer is making an offer on a home before selling the
existing home. The buyer may need to sell the present home
before being qualify and afford the purchase. Therefore, the
offer is contingent upon the sale of the existing home. Key
standard contingencies include home inspections, financing,
and appraisal.
Due on Sale Clause
The alienation clause (Due-on-Sale Clause) is the specific
verbiage in a mortgage or deed which asserts the lender's
option to force that the balance of the secured debt becomes
immediately due and payable if the property is sold by the
borrower, thus preventing the homeowner/borrower from
assigning the debt without the lender's approval. Comes from
the term alienate, which means: to transfer or convey the
title to a property from one party to another.
Exclusive-Right-to-Sell
Exclusive-Right-to-Sell is a common type of real estate
listing agreement. A specific broker is given the exclusive
right and authorization to market the seller's property. A
key to this agreement is that if the property is sold while
the listing is in effect, the seller must pay the broker a
commission regardless of who sells the property. Therefore,
this type of listing agreement offers the best opportunity
for brokers to earn a commission. Also known as an exclusive
agency listing.
Earnest Money
Earnest Money (escrow deposit) is the specific monetary
funds provided to bind an real estate sales agreement or
some other transaction requiring a deposit. The deposit acts
as evidence of good faith in purchasing real estate. The
amount of earnest money varies based on the type of property
being purchased and local market conditions, but is truly
one mort part of the sales contract that must be agreed to
by both parties. The seller or broker places the money in an
escrow or trust account until closing, when it becomes part
of the funds applied to the purchase price. Earnest money is
forfeited by the buyer if they fail to carry out the terms
of the contract agreement. In the event the property does
not close, the sales agreement spells out the conditions
under which buyer would forfeit the earnest money.
Lead Paint Disclosure
In March of 1996, the Environmental Protection Agency (EPA)
and the Department of Housing and Urban Development (HUD)
published a final rule, Lead; Requirements for Disclosure of
Known Lead-Based Paint and/or Lead-Based Paint Hazards in
Housing, (61 FR9064-9088). This final rule requires persons
selling or leasing most residential housing built before
1978 to provide purchasers and renters with a federally
approved lead hazard information pamphlet and to disclose
known lead-based paint and/or lead-based paint hazards.
Proration
Proration is the process to allocate between two or more
parties, the proportionate share of each. For example, the
prorated adjustments of interest, taxes, and insurance, etc.
on a pro rata basis as of a certain date between the buyer
and seller.
Sellers Disclosure
In the purchase and sale of an existing home, the sellers
must complete a seller's disclosure statement regarding the
home. Disclosures cover a variety of topics, including the
condition of title, the availability services, flood issues,
easements, zoning, and details regarding the history and the
condition of the house. Unless the buyer waives review of
this statement, the seller must deliver a completed
statement to the buyer for review prior to or within a
certain time after the purchase and sale agreement has been
signed by both parties. The buyer then may elect to
terminate the transaction by giving timely and appropriate
notice to the seller. If the buyer does not object, then the
disclosures are deemed to be acceptable to the buyer.
Most state laws mandate that disclosures be on special
forms the seller must sign and date. Also note, that if
there is a real estate broker or agent involved in the
transaction, and if they have personal knowledge of any
latent defects, the agent is legally obligated to disclose
those defects to the potential purchaser, regardless of
whether the seller discloses or disclaims.
Contributor:
http://www.HomeBuyingIntelligenceMagazine.com provides
articles, guides, and quizzes about home buying and selling.
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