The Home-Selling Process in Utah
Initial Consultation with a Realtor
The first thing we would like to do is to tour the property together – Please show me the home as if I were a buyer. Point out all the positive features and improvements you’ve made.
This is important for 2 reasons:
- We need to see your home and understand its features to help you select the highest realistic asking price – so that you don’t underprice it and give it away, or overprice it and scare buyers away;
- It is important we see ALL the good features of your home so that we can enthusiastically promote your property to the other Realtors and the buyers in the marketplace today
The second thing is I need to understand your needs and objectives by asking you some questions. This is important because the more I know what you want, the better I can determine if, and how, I can help you
Next, we’ll go through our research on price. Together we can see what the market tells us you should ask for your home. Along with the price, we will discuss how much you will walk away with from the sale. All this information will help you make a GOOD DECISION when you decide on a pricing strategy. How does that sound?
Then, we would like to discuss our marketing plan. This is important because you should feel:
- That we are competent and that you understand each of our responsibilities in the sale process;
- That you are doing business with the best Realtors; and
- That you are getting your money’s worth from your agents.
Finally, we will decide if we were meant to work together and if we are right for each other. You will decide if you feel comfortable and confident with me, and we will decide if we can do what you want and need.
We want to help you make good decisions. If we get the opportunity to work with you, we want it to be because you based your decision on our integrity, our skill, and on the strength of our marketing system. If for some reason you don’t feel comfortable and confident with me at that point, NO PROBLEM. Just point me to the door and I will be on my way!
If at this point everything seems fine, we will explain the forms to you and we can get you on your way.
Determine a Pricing Strategy
Utah Home-Pricing Strategy
Pricing your property accurately requires you examine the facts of the marketplace and not rely on your personal emotions. This is a difficult and sometimes an almost impossible task for some home sellers. Nonetheless, it is important to realize that Buyers have no interest in your need or desire for additional money nor your emotional attachment to your “home”. To them it is just a house competing against all other houses in the area and all buyers are determined not to pay more than similar nearby houses are going for in the current environment.
Several specific things influence the selling price of a property. Some of the most influencial are:
The Location – Virtually nothing trumps a properties location. In some areas of Utah County a townhome can sell for more than a large home in a different neighborhood.
Size of the Home – Living space is an important consideration for buyers and bank appraisers. Unfinished basements count as square footage in Utah but are far less valuable than when finished. A larger home will almost always sell for more than a smaller home.
Age and Condition – In most cases now days, the buyers are working full-time and don’t have a lot of time or energy to put into repairing or upgrading their new home. As a result, most of today’s buyers want a home that is in “move-in” condition. An older home where the systems and appliances have not be updated will sell for less than a newer home. Most buyers will want a hefty discount when purchasing a home in need of lots of upgrades or repairs.
Finishes – A home with a high-end kitchen and modern elegant bathrooms is highly desirable and will usually sell for top dollar. New carpets, wood and tile floors, and fresh paint help you reach the highest realistic price.
Interest Rates – For every increment interest rates rise, the buyer’s affordability lowers. When interest rates go up the housing market inevitably slows. When interest rates go up one or more percent, homes sales can dramatically slow down meaning you will have to lower your price to attract buyers.
Economy and Job Market – The general economy, both locally and nationally, effects the number of buyers looking for homes and the fewer home buyers the lower selling prices will be.
Finalize the Required Documents
Complete the Utah Paperwork
Selling real estate is a paperwork intensive excercise – for both the Seller and the Buyer. We will explain what you are signing in as much detail as you desire.
Paperwork necessary to market your home:
Utah Listing Agreement – A listing agreement is an employment contract that creates a special agency relationship between the property owner and the Brokerage rather than a real estate contract. It is a contract for the personal professional services of the Brokerage.
In an exclusive right to sell listing, only one Brokerage is appointed as the seller’s sole and exclusive agent. The Brokerage is given the exclusive right (or authorization) to market the seller’s property. If the property is sold while the listing is in effect, the seller must pay the Brokerage a commission, regardless of who sells the property, even if it is the Seller.
This assurance gives the Brokerage the confidence to spend the time and money necessary to market the property and properly protect the Sellers interests.
Utah Seller’s Property Condition Disclosure – Sellers are required to disclose material facts about the property for sale, anything that could affect the sale price or influence a buyer’s decision to purchase a home. The Seller’s Property Condition Disclosure is a comprehensive checklist provided by Realtors to help you not forget any details.
Generally, you only need to disclose information within your personal knowledge. If you’re wondering whether something should be disclosed, ask yourself if you’d want to have the information if you were the buyer. If the answer is yes, then disclose. It could save you a lot of trouble down the line.
UtahRealEstate.com MLS Listing Input Form – This form is where we record all the details of your property for entry into the Realtor Multiple Listing Service (MLS). The MLS is a central database used as the source for all Realtors to find properties for potential buyers. This form is also where the list price is deliniated.
Both the agent and the seller can be held liable for any inaccurate data that is subsequently delivered to the Buyer.
Utah Wire Fraud Alert Disclosure – A disclosure form provided to Sellers to warn of a growing and devastating fraud problem.
According to the Utah Division of Real Estate, there are a few ways wire fraud happens, but the initial transaction starts with a hacker who gain access to either a real estate agent’s email account, a Title Company’s or an Escrow Officer’s email account, or a lender’s email account.
What they will do is they will just monitor emails between a Buyer or a Seller and the hacked email address. Then when it’s a couple of days prior to Settlement of that transaction, the scammer will send a fake email to the Buyer changing the wiring instructions of where their down payment should go.
If this buyer believes the email and sends this money, more often than not that money is gone. It’s usually wired outside of the country. The FBI has had very limited success recovering any of these funds.”
Utah Lead-Based Paint Disclosure (if older than 1978) – Before ratification of a contract for housing sale or lease, sellers and landlords must:
- Give an EPA-approved information pamphlet on identifying and controlling lead-based paint hazards (“Protect Your Family from Lead in Your Home” pamphlet.)
- Disclose any known information concerning lead-based paint or lead-based paint hazards. The seller must also disclose information such as the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.
- Provide any records and reports on lead-based paint and/or lead-based paint hazards which are available to the seller.
- Include an attachment to the contract which includes a Lead Warning Statement and confirms that the seller has complied with all notification requirements. This attachment is to be provided in the same language used in the rest of the contract. Sellers and agents, as well as homebuyers, must sign and date the attachment.
- Sellers must provide homebuyers a 10-day period to conduct a paint inspection or risk assessment for lead-based paint or lead-based paint hazards. Homebuyers may waive this inspection opportunity.
Other documents required once a REPC is signed:
Your agreement with the Buyer requires you to provide several documents and disclosures, if applicable. The earlier you gather these items and have them ready, the easier it will be for you when you are under the pressure of a transaction.
- a copy of the most recent minutes, budget and financial statement for the homeowners’ association, if any;
- a copy of any long-term tenant lease or rental agreements affecting the Property not expiring prior to Closing;
- a copy of any short-term rental booking schedule (as of the Seller Disclosure Deadline) for guest use of the Property after Closing;
- a copy of any existing property management agreements affecting the Property;
- evidence of any water rights and/or water shares;
- written notice of any claims and/or conditions known to Seller relating to environmental problems and building or zoning code violations;
- FIRPTA – In general, the sale or other disposition of a U.S. real property interest by a foreign person is subject to income tax withholding under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). A “foreign person” includes a non-resident alien individual, foreign corporation, partnership, trust or estate. If FIRPTA applies to Seller, Seller is advised that Buyer or other qualified substitute may be legally required to withhold this tax at Closing. In order to avoid closing delays, if Seller is a foreign person under FIRPTA, Seller shall advise Buyer in writing.
Complete Necessary Repairs
Make Necessary Repairs
Sometimes something as minor as a burnt-out light bulb can distract a buyer and result in a lower offer or a request for you to pay for a licensed electrician to inspect the electrical systems of your property.
We strongly recommend you complete as many repairs as possible to prevent discounted offers or negotiations after the Buyer’s Due Diligence inspections.
Common issues that Buyer’s ask to be repaired:
- Plumbing leaks, including in fixtures such as faucets and jetted tubs
- Roofing problems such as missing shingles or damaged flashing
- Unpainted, damaged,or rotted damaged trim or siding
- Loose handrails or deck rails
- Cooling and heating system deficiencies
- Brokern, unsealed, or non-working windows and screens
- Loose door knobs, hinges, or handles
- Non-working switches or plugs
- Do doors, cabinets and drawers open smoothly and quietly?
- Are the toilet seats presentable?
- Do any switch or plug plates need to be replaced?
- Do all drains empty quickly?
- Are all filters new and clean?
Prepare for Showings by Staging
Stage Your Utah Home
The goal of staging is to leave each room feeling as open, light-filled, and welcoming as possible. Unlike everyday decorating, you’re not trying to show off your style or the decor – you’re trying to show off the actual house itself. So you never want to overfill a space and detract from features like hardwood floors, large windows, light filled nooks, built-in storage, or any of the other things that come with the house.
The biggest segment of home buyers is the Millennials, those born between 1980 and 1995. They don’t have the same skills and interests of their parents or grandparents. As a group, they don’t have discretionary income nor the desire to spend their weekends fixing-up or modernizing their home. How do you make your home appeal to Millennials (and other buyers)? Stage your home.
Pack-away dated decor. Please remember, showing your home to attract buyers is different than living in your home. Your collections and knick-knacks are important to you but they distract and turn-away young buyers. Items that should be boxed or removed include:
- Old recliners
- Copper, bronze, or brass accessories
- Heavy drapes and curtains
- Floor-to-ceiling mirrored walls
- Old wallpaper and borders
- Bold colored painted walls and rooms
- Brass or gold light fixtures
- Wood-paneled walls
- Popcorn Ceilings
For many more staging tips, see Staging Your Utah Home.
Prepare for Us to take Photographs
Prepare for Photography
Great photography has become one of the most powerful marketing tools in our arsenal. Virtually every home-shopper in today’s market begin their home search online. They search for properties in areas they have an interest in, with the required features, and in the price range they feel comfortable with.
The two most influencial elements of an online listing are first, the photographs and second, the property description. These are key in the home-shoppers decision to preview a home in person and must be high-quality and compelling.
For that reason, preparing your home for our photographer is essential. Your home needs to look its best and be staged specifically for photography. Here are a few tips to help you prepare:
- Remove all clutter and pack it away or hide it out of sight. This includes blankets draped over chairs, stacks of magazine and newspapers, and collections.
- Ensure all surfaces are clean, tidy, and empty of disorder. Focus on the kitchen counters, bathroom counters, and any end or coffee tables.
- Make sure all curtains and blinds are open and all lights are turned on, including lamps.
- Ensure that your yard is free from any larger items that may get in the way, such as children’s toys, bikes, and trash.
- Ideally, park your car out of the way while we take exterior shots. Shut the garage door.
We Begin Our Highly Effective Marketing System
Sold By Denise Marketing System
A great marketing system’s result is to place your home in front of every active buyer in your area searching within your price range. Our Sold By Denise marketing system gets those results and encourages offers from qualified buyers within your time-frame.
1. Our reputation for being nice, easy-to-work-with, and professional encourages the enthusiastic cooperation of the hundreds of area Realtors working with Buyers to show your home to qualifying home-shoppers.
2. We spend a great deal of effort to create effective neighborhood marketing in order to attract drive-by home-shoppers, neighborhors, and people neighbors may know who would be interested in moving into the neighbhorhood. We create beautiful flyers and place them in flyer boxes, we publish a 24/7 info line to send text messages and a website exclusive for your property, and hold open houses to attract active home-shoppers.
3. With virtually all home-shoppers searching the web for homes, we make sure your home is displayed on every site they may come across. This includes all the sites that appear on the first page of Google searches (Zillow, Trulia, Realtor.com, etc.), online classified sites including KSL.com and Craigslist.org, and on litterally thousands of Realtor websites including all the large franchises (Coldwell Banker, Re/Max, Century 21, etc.) and individual agent’s personal websites. No matter where a buyer is looking, your home will be there.
Make Your Property Available for Showings
Property Showings in Utah
Make it easy. Make sure every aspect of the showing is as easy on the buyer as possible. Where will the buyer and agent park? Where will your pet stay during the showing? Is there a keybox installed?
When a buyer is looking at several similar homes, ease of showing can make the difference.
Consider the Buyer’s Availability. Many buyers have limited time to view homes. If your home requires a 24-hour appointment or doesn’t have a lockbox, the real estate agent may have no option but to show different homes.
Give options on showing times. Many home-shoppers are unable to preview homes until after they get off work or on weekends. If possible, make your home available for showings from 8 a.m. to 8 p.m.
Don’t be too restrictive with showings. If a home-shopper wants to come on short notice, at a time that’s inconvenient, ask if it’s possible to reschedule. But keep in mind that some of the best buyers are relocating from elsewhere and may not have much flexibility in their schedules.
Stay Sane. Make your property easy to show but don’t sacrifice your sanity. You don’t have to show your home during special occassions or during your baby’s nap-time. When a requested time is a sacrifice, just let me know and we will try to reschedule the appointment.
Showing Procedures in Utah
Buyer’s Agent – When an agent is working with a home-shopper who wants to see your home, they are instructed through the MLS instructions to call us to set an appointment.
Appointment – We will then call you with the requested time. Usually, agents will ask for a one-hour to two-hour window to bring the buyer through.
Prepare – Pick-up, make beds, do the dishes, and make your home as show-ready as you can. Home-shoppers will only come once so first-impressions are critical.
Children – Prepare a get-away bag with snacks, books, games, or other entertainment. Plan different locations to go such as a park, the library, the mall, or a family member or friend’s house during the showing window.
Pets – Many home-shoppers are repelled by pets. Do everything you can to remove your pets from the property during showings, even from the yard.
It will be over soon – It can be frustrating trying to live your life when you must always be ready to leave the home for a showing. However, it won’t be forever. Your home will sell. You will move on and make the life changes you seek. It does take patience, but it will happen. The more that you prepare yourself to make it easy for you, the better you’ll be able to deal with it.
We Will Present All Offers Received
The Utah Real Estate Purchase Contract (REPC)
When a Buyer makes an offer, it will be done through the Buyer’s Agent. Typically, this will be a different agent than us simply because of the shear number of other Realtors working with Buyers.
The offer is typically emailed to us. We will immediately reach out to you. Upon your instructions, we can then either print it and bring it to you or email it to you to review. In either case, we will walk you through the offer pointing out its benefits and drawbacks.
It is our fiduciary duty to present all offers to you, no matter how ridiculous or unreasonable, until you instruct us to do otherwise.
By law, all offers will be written on the Utah Real Estate Purchase Contract (REPC) when the Buyer is represented by a Realtor. This agreement has been approved by both the Utah Attorney General’s office and the Utah Division of Real Estate.
Click here to download a copy of the Utah REPC to review ahead of time.
Typical Utah REPC Conditions
Most offers will come with conditions (contingencies) that need to be met before closing. In Utah, the most common conditions are:
- Buyer Due Diligence Contingency – Buyers are given time (usually 10-20 days) to do their due diligence through inspections, surveys, and review of the Seller’s Disclosures and Preliminary Title Report.
- Financing Condition – Most offers come with a pre-qualification letter for the buyer (unless they are paying cash). This letter does not mean they are formally approved for the loan or have even completed a loan application and obtain formal loan approval. Once the agreement is signed the buyer has several days to make a formal mortgage application. If they are unable to secure financing by the “Financing & Appraisal Deadline”, they will be able to cancel the agreement.
- Appraisal Condition – When the buyer is obtaining financing, their bank will require an appraisal to verify that the home is worth the contract price. The appraisal must be completed by the “Financing and Appraisal Deadline.” If the home appraises at or above the purchase price, the deal will move forward. If the home appraises low, the buyer will not be able to get the full amount of loan expected.In this case, either the Buyer needs to bring more money to closing or the Seller will need to lower the price or the deal can be terminated.
- Subject to the sale of real estate – Some buyer’s will need to sell their home (or other real estate) prior to purchasing. An offer with a home sale contingency will require the status of your home to be changed to “contingent” (which will likely result in fewer showings) while you wait for the buyer’s home to sell. This type of contingency usually has a “time clause” that will allow you to accept another offer, should one come in.
- Lead-Based Paint – Sellers with properties built prior to 1978 are required by Federal law to provide a “Lead-based Paint Disclosure and Acknowledgement.” This is simply a statement by the Seller informing the buyer of any knowledge of lead-based paint at the property. As part of this disclosure, the buyer must be provided the EPA pamphlet, “Protect Your Family from Lead in Your Home.” If the Buyer concerned about lead-based paint, or the Seller discloses they are aware of lead-based paint in the property, the buyer can condition the sale upon a Lead-based Paint clearance with a Lead-Based Paint Addendum.
- FHA/VA Loan Addendum – When the buyer is using a government-backed mortgage such as an FHA or VA loan, the mortgage lender is required to inform you of the home’s appraised value before you sign the sales contract. If not, an FHA/VA amendatory clause is required. This clause essentially ensures that the home is worth enough to secure the loan.
We Will Negotiate on Your Behalf and at Your Direction
Negotiating the Offer
Upon receipt of an offer, and any subsequent counter-offers, you will have three choices:
Accept the offer. You do this by signing the offer or counter-offer before the expiration date and delivering it to the Buyer (through us).
Reject the offer. You can reject the offer and take no further action. At this point, the offer is no longer valid and can only be reactivated by the Buyer making a fresh offer.
Counter the offer. You can make a counter-offer (or even a second, third or fourth until you reach an agreement.) Most well-advised buyers and sellers reach an agreement after one or two rounds of negotiation.
In real estate, negotiations take the form of counteroffers. All negotiations must take place in writing to have any validity. Verbally going back and forth almost always ends in faulty memories and failure.
Denise is a Certified Negotiation Expert who provides several benefits to you:
1. Unemotional Negotiation. Unfortunately, it is easy to make emotional decisions when negotiating the sale of your home. Many negotiations for half million dollar sale have failed over a $200 item because of the heat of the moment. Using us act as an unemotional buffer has saved many a negotiation.
2. Market knowledge. We are in the housing market everyday and are accutely aware of current pricing, the direction the economy, the buyer demand, and neighborhood particulars.
3. Knowledge of Typical Concessions. Because we deal with offers and counter offers on a regular basis, we are very aware of what negotiating concessions are typical and acceptable.
4. Understanding of the Buyer. We are usually successful in learning the details of the buyer’s situation by consulting with the cooperating Realtor. This helps us respond in ways to gain a favorable result.
5. Confidentiality. When negotiating without a Realtor, it is easy to slip-up and disclose to the buyer information detrimental to your position. We know what to keep secret and how to put you at an advantage.
We Will Construct and Present Counter-0ffers
The Real Estate Counter-Offer
If you find the offer acceptable, you sign the REPC and we are “Under Contract.” Neither you nor the buyer can back-out after this except under the conditions outlined in the Agreement.
When you do not agree to the terms of the offer, a counter-offer is generated and presented back to the Buyer. A counter-offer states that the Seller has accepted the Buyer’s offer subject to certain changes.
The following items are frequent subjects of a counter-offer:
- The offered price
- The amount of the earnest money deposit
- Requests for the Seller to pay closing costs
- Requests for the Seller to pay for inspections or reports
- Requests for the Seller to pay HOA transfer fees or unpaid Assessments
- Buyer Due Diligence deadline
- Financing and Appraisal deadline
- Settlement, Closing, or Possession date
- Requests for personal property (such as the refrigerator or pieces of furniture)
- Early release of deposits
- A Home Warranty
- Contingency for the sale of the Buyer’s property
- Fixing a buyer’s agent REPC composition mistake or inadequate language or description
Remember, a counter-offer constitutes a rejection of the Buyer’s offer and the Buyer is free to walk-away upon presentation of the counter-offer. If the buyer does not respond by the counter’s expiration date and time, the counter-offer expires. You have now ended the negotiations with that particular buyer. New negotiations can only be reactivated by the buyer submitting a fresh offer.
Escrow is Opened
Escrow is a neutral depository for funds and documents needed to complete a real estate transaction. In Utah, the escrow service is almost always provided by a Title Company.
Once a buyer and seller have signed a real estate purchase contract (REPC), a copy of that agreement is provided to the Title Company’s Escrow Officer, followed shortly by the buyer’s earnest money check. The Escrow Officer is a “disinterested third-party” who follows the instructions of the principals of the transaction.
This constitutes “opening of escrow” and the Escrow and Title Officers begins to manage the process as follows:
- Opens an escrow file
- Searches records and delivers a “preliminary title report” (PR) to the Seller and/or Buyer, the Realtor, and the Lender
- Examines and prepares to clear any outstanding liens or encumbrances and clears any other issues with the title
- Sends pay-off demands to all lien holders
- Gathers all required documents from the lender, homeowner’s insurance company, buyer, and seller
- Balances and collects necessary funds from buyer and/or seller
- Prepares a Settlement Statement
- Meets with the Seller and Seller’s Agent to sign all closing documents
- Records Deed at County Recorder’s Office
- Disburses funds
Note: “Escrow” also refers to your bank collecting funds to pay real estate taxes, homeowner’s insurance, and private mortgage insurance. Any excess balance in your escrow impound account should be returned to you within 20 days of closing.
Seller Provides Disclosures
As agreed upon in the REPC, you will need to provide several disclosures regarding the property. We will provide you with the standard Seller Property Condition Disclosure used in Utah to complete as part of our documents when we put your home up for sale.
In the Utah, the courts have ruled that home sellers must provide full-disclosure of defects known to them that a reasonable and prudent buyer wouldn’t discover during a normal inspection. This means it isn’t required to disclose a broken window or a clearly visible hole in the wall but you must disclose if you know about mold on a basement wall behind some boxes or a hole in the carpet under a chair.
Nonetheless, it is in your best interest to disclose all defects and deferred maintenance, whether it is easy to see or not. This will prevent both cancelled contracts several days or weeks after going under contract and/or expensive lawsuits after your transaction has closed.
Your duty to disclose is another very good reason to make as many repairs as you possibly can prior to putting your property on the market.
According to Utah State law, a seller does not have to disclose that a home was the location of a homicide, a suicide, a decontaminated methamphetamine lab, or residence by a person with a life-ending disease such as AIDS.
Buyer Performs Due Diligence
Buyer Due Diligence
The Utah real estate purchase contract (REPC) contains a Buyer Due Diligence condition giving the Buyer the opportunity to review and approve your “Seller Disclosures” and perform any other tests, evaluations, and verifications deemed necessary or appropriate.
Almost always, the buyers will conduct physical inspections. Inspections are usually conducted by a professional inspector (or inspectors). Any and all inspections must be performed and approved (or negotiated with the Seller) by the “Due Diligence Deadline” time-frame negotiated within the REPC
It is the Seller’s obligation to provide the buyer access to the property during this due diligence period for whatever inspections the buyer requires, including:
This inspection can encompass inspection of plumbing, electrical, heating, A/C and any other accessible area of the property.
- A detailed report(s) will be written by the inspector(s) with recommendations for repairs and delivered to the buyer.
- Subsequently, the buyer will accept the current condition or request the seller to make repairs or even lower the sales price.
- The seller can then agree to make some, all, or none of the repairs or to adjust the price.
- Any agreed upon repairs would need to be completed prior to the closing.
- All these negotiations must be in writing.
Structural Pest Control
- To determine any active infestation by wood destroying organisms.
- To determine whether there is any earth to wood contact, cellulose debris, or faulty grades on the property.
- In the event that there are wood destroying organisms or secondary issues with regard to the property, generally, these issues must be addressed prior to the close of escrow.
Other Common Inspected Items Might Include:
- Well and Septic System
- Radon, Meth, Mold, or Asbestos
- Lead-based Paint (if older than 1978)
We Negotiate Requested Repairs and/or Price Reductions
Negotiating After an Inspection
Buyers will usually perform one or more inspections during the Buyer’s Due Diligence period. They then use inspection reports to determine if they will proceed with the sale. Many Buyers will request certain items to be repaired or replaced prior to closing. You then have 4 choices:
- Agree to make all requested repairs/replacements
- Negotiate to make some repairs but not others
- Negotiate to give the buyer a credit or price reduction
- Refuse to make any alterations
Since there is no such thing as a perfect property, most Realtors will advise Buyers not to expect small items to be addressed but, rather, to focus on large items effecting the health and safety of the home or other major issues. Unfortunately, some Buyers will not listen to the Realtors and use the reports as a “laundry list” of items to be fixed. This is a leading cause of transactions falling-apart.
Be aware, most every Buyers will request the repair or replacement of items such as an actively leaking roof, inoperable furnaces, water heaters, or AC units, electrical problems, structural problems, gas leaks, sewer problems, wet basements, mold, and termites.
Please also realize that once you and your Realtor are aware of problems, they all must be disclosed to any subsequent Buyers. It is unlikely the next Buyer will overlook these same problems; therefore, it is usually best to negotiate a solution both parties can live with.
Hint: Making repairs prior to actively marketing the property can save hundreds or even thousands of dollars in repairs after the inspection. Buyers usually demand a professional licensed contractor perform any repairs, no matter how minor, or vastly over-estimate the actual cost of repairs.
Title Insurance Issues Resolved
Clear Any Title Issues
There are two basic kinds of title insurance:
- Lender or mortgagee protection
- HomeOwner’s coverage
Most lenders require mortgagee title insurance as security for their investment in real estate, just as they require fire insurance. When title insurance is provided, lenders are willing to make mortgage money available. This policy is paid for by the Buyer but does not protect the Buyer.
Therefore, Buyers will request a Home Owner’s title insurance policy in the REPC to be paid for by the Seller. It lasts as long as the buyer – or their heirs – have an interest in the insured property.
Prior to issuing a title insurance policy, a Title Company searches all public records to find – and remedy, if possible – any ownership issues.
First, the Title Company searches to determine exactly who owns the property. If your property is held in a trust or corporation, the correct signatures will be sought. If you are in divorce, probate, or bankruptcy proceedings, court approval records will be required.
However, even with the extensive research, title professionals may not find all problems associated with a property’s title. So after the Title Company finishes its searching, it also provides a title insurance policy that will help protect the buyer from a variety of issues that might be uncovered later, such as:
- Errors in public records
- Forgery or fraud
- Unknown or unpaid liens
- Illegal deeds (undocumented immigrant, minor, unsound mind, reported single but actually married, etc)
- Missing heirs
- Easements or rights of way limiting use of the property
- Boundary/survey disputes
- Undiscovered wills
Buyer’s Lender Appraises Property
Preparing for an Appraisal
The Buyer’s lender agrees to lend a percentage of the sale price based on the Buyer’s income, credit history, and employment record. Lenders in Utah typically take 30 – 60 days to approve and close loans from the time the transaction is started. Prior to approving the loan, an appraisal is ordered by the lender and paid for by the Buyer.
An appraisal is an independent valuation of your property by a Utah State licensed appraiser to ensure the value of the property is the same or higher than the amount of the loan. This is to make sure there is enough value in the property to assure the lender gets reimbursed in case the lender must repossess and resale the property if payments are not made.
About 24% of loans are government-backed by the Federal Housing Administration Mortgage (FHA) or the Department of Veterans Affairs Mortgage (VA). FHA and VA mortgages have more stringent appraisal requirements to protect the purchaser. The following are common areas of focus for FHA and VA appraisers:
- Heating system functions properly
- No exposed electrical wiring
- Exterior walls free of damage
- Exterior walls and windows free of chipping paint
- No safety hazards
- No sign of lead-based paint
- Quality roof with no peeling or missing shingles. Roof must have at least 5 years of deterioration left before obsolescence
- Water, sewer, gas, and electric utilities available
- Fire detectors in every bedroom, and one common area on each floor. CO2 detector on each floor
- Railings on steps of 3 or more
- Hot water tank has a discharge pipe
- Ground Fault Circuit Interrupter (GFCI) outlets near water faucets
How to best prepare for an appraisal
Appraisers are people too. While appraisers are supposed to only be concerned with the “cold hard facts”, they have emotional responses to properties like buyers. Here are a few suggestions to help maximize the appraisal value:
Start at the Curb – The appraiser’s first impression may influence his/her overall opinion of your property. Even doing the basics before the appraiser arrives can make a big difference: Mow the lawn and edge the entire yard, even if you have to borrow an edger. Trim the bushes to below the windows and trim the tree limbs to above the windows. Clean any trash or extra materials from around the house and remove all the loose toys, bikes, and hoses.
Make the Entry Welcoming – A dirty doorbell and a front door with scuff marks and grime not only turn-off buyers but give the appraiser the feeling your property is not maintained.
Clear Out the Clutter – A crowded home with every nook and cranny filled with your stuff creates a feeling that your home is smaller than it is. Since you will be moving soon, pack-up as many knick-knacks, books, collectables, family pictures, and decorations as you can bear and put them in storage or your garage.
Scrub it Down – We’ve told you this before but it’s worth saying it again. Clean your kitchen and bathrooms meticulously. Make sure the kitchen sink is empty and the toilet seat is down. Clear everything off the counters to make them feel bigger and cleaner.
Type Up an Information Sheet – To make sure the appraiser has accurate information, provide him/her with:
- Exact street adress (with all the Easts and Wests)
- Year Built
- Number of Bedrooms and Baths
- Replacement windows, floors, roof, or countertops
- Replacement of appliances and major systems such as HVAC, plumbing, or electrical
- Remodels, including copies of the permits
Being prepared can help maximize your home’s value in the eyes of the appraiser and reduce the chance of being forced to choose between lowing your price or canceling the transaction.
All Paperwork and Monies are Available for Settlement
Utah Settlement Documents
In Utah, there are three separate events in the closing process. First, there is the Settlement. Second, there is the Closing. Finally, there is Possession. At Settlement we will meet the Escrow Officer at the Title Office where you will typically sign several documents:
Seller’s Closing Disclosure – As a part of the closing process, all parties in the transaction used to receive a HUD-1. This document showed all money exchanging hands to any party for both the buyer and the seller. Today, those forms have been divvied up into a Buyer and Seller Closing Disclosure ( or”CD”.) With each party receiving their own government mandated document, everyone can clearly see the charges they must pay and understand their bottom line.
A Warranty Deed – The Seller conveys ownership to the Buyer by signing a Warranty Deed. This is the official document is recorded at the County Recorder’s office to place the Buyer in the property’s chain of title.
Bill of Sale – A Bill of Sale transfers any personal property being sold along with your property. Personal property can include the refrigerator, washer/dryer, furniture, and even farm equipment.
Settlement Statement – This document spells out the financial disbursements and obligations of the Seller and the Buyer. It is required by Federal law. It includes the purchase price, real estate brokers’ commissions, escrow fees, title insurance fees, county recorders fees, credits for tax payments, unpaid utility bills, and agreed repair credits. Both you and your Realtor should double-check all figures and look for clerical errors before signing the HUD-1 form. You’ll need this form for your federal income taxes.
Escrow Instructions – This is a grouping of disclosures about the final sales process.
Seller’s Affidavits – Statements swearing you are who you say you are, that you have the right to sell the property, and that the property will be free of known liens and encumbrances.
Please Bring the Following to Settlement:
- Government issued photo ID
- Certified Funds, if necessary (Escrow Officer will notify you of the amount)
- Your checkbook in case small adjustments are needed in payoffs.
- Any additional paperwork requested by the Escrow Officer
Final Closing and Possession Turned Over to Buyer
Closing and Possession
In Utah, Closing is the act of recording the Warranty Deed you signed at Settlement at the County Recorder’s office. The recording of the Warranty Deed must take place within 4 calendar days although it usually happens by the next day. Upon recording, the property is officially the Buyer’s.
Possession is negotiated in the REPC. Frequently, possession is turned over upon closing. However, many times possession is set for a day or two later.
There are many factors, details, and potential issues in the transaction process. We can’t answer all your questions in this forum and are happy to answer additional questions you might have. Just call, text, or email us.
Should I make a counter-offer?
If you are selling your home in a “Buyer’s market,’ the buyer may have his pick of suitable homes in your area. There are more homes for sale than buyers. Making a counter offer — even one that seems reasonable — may drive the buyer towards the second home on his list, and you may end up with no deal.
Conversely, in a seller’s market with a shortage of homes for sale, the buyer may be prepared to hang in through two or three rounds of counter-offers to secure your home.
What do I leave behind after closing?
As a general rule, you’ll be expected to leave behind all “fixtures”. Fixtures are things that are affixed, fastened to, or an integral part of the home or landscaping.
For example, light fixtures, built-in dishwashers and other kitchen appliances, window shades, curtain rods (and sometimes the curtains), built-in bookshelves, and all trees, plants, and shrubs with their roots in the ground instead of in pots are all normally considered fixtures.
To avoid conflict after the closing, remove and/or replace any fixtures that you plan on taking with you prior to marketing your home.
Does it cost more to sell to an FHA Borrower?
HUD allows sellers (or “interested parties”) to contribute money toward the buyer’s closing costs. Whether or not you choose to do that is up to you. Those details are typically determined during the negotiating stage and written into the real estate purchase agreement.
Generally speaking, HUD allows sellers to contribute up to 6% “of the sales price toward the Borrower’s origination fees, other closing costs and discount points.” All of this is outlined in HUD Handbook 4000.1, also known as the Single Family Housing Policy Handbook.
The handbook goes on to explain that the 6 percent limit also includes:
- “Interested Party” payment for interest rate buy-downs, and other payment supplements
- Payments toward mortgage insurance for fixed-rate loans
- Mortgage payment protection insurance
- Payment of the borrower’s upfront mortgage insurance premium (UFMIP)
Other important notes from the HUD handbook:
- Seller contributions can be applied toward the buyer’s closing costs, but they cannot be used for the borrower’s minimum required investment (or down payment).
- Payment of real estate agent commissions or fees, which are typically paid by the seller, is not considered to be an Interested Party Contribution.
The other important consideration is the FHA appraisal:
When an FHA loan is being used, the appraiser has two objectives. The Department of Housing and Urban Development (HUD) requires him to determine the current market value, as with any appraisal. But they also require a property inspection to make sure the home meets HUD’s minimum standards for health and safety. This is the “double duty” mentioned earlier. It’s what makes the FHA appraisal process unique.
So the primary difference between FHA and regular appraisals is the level of inspection that is required by HUD. If the HUD-approved appraiser flags certain issues — such as peeling paint, loose handrails, or other safety issues — those issues must be corrected before the loan will be funded. In other words, the transaction will be put on “hold” until the discrepancies are resolved. That is not the case with a regular appraisal used for a conventional home loan.
All of this is not a problem for a newer or well-maintained home but may be an issue if your home is older or in disrepair.
Does it cost more to sell to a VA Borrower?
Negotiation between VA loan homebuyers and sellers dictates who pays how much of the closing costs. There is no VA maximum concerning how much sellers can cover in terms of loan-related closing costs, so buyers can ask home sellers to pay for everything.
In addition, sellers can pay up to 4 percent of the loan amount in concessions. These concessions can go toward paying costs like prepaid property taxes and homeowners insurance and more. Sellers are not legally required to pay for any closing costs, but it’s not uncommon for VA buyers to need at least some assistance on this front.
The fees which the VA prohibits from being charged to the veteran buyer are called “non-allowable fees.” Though these will vary between lenders and title companies, there are two primary fees you as the seller should be aware of.
Most lenders charge a fee called a processing or underwriting fee. This is different from the origination fee. It is typically between $300 and $900. The is a non-allowable cost. Some lenders waive it on VA loans, but many will charge it to the seller. The other fee is from the title company and will be called an escrow, settlement, or closing fee. Not to be confused with the title insurance cost (which the buyer will pay) this escrow fee is also a non-allowable cost. These typically range anywhere from $250 to $550.
Why should I strongly consider the first offer?
Some Sellers are taken aback when an offer arrives within a few days or even a few hours after putting their home on the market.
Please recognize that before your home is made available for sale, we will perform a thorough pricing analysis and you will determine a pricing strategy based on good information. As a result, you can be comfortable that your property is not under-priced.
When your property is new on the market, there exists a back-load of home-shoppers who have seen all the available homes and either not found a home that meets their needs or they lost out to a different buyer in a multi-offer situation.
This pool of shoppers and their Realtors watch for new listings every day and actively search for anything that may meet their needs. When they do find something, they immediately make an offer.
This offer typically is a fair market price since they have been searching for homes for weeks or months and are very familiar with current home prices.
Consequently, it is usually a bad decision to reject the first offer with the hope of getting a higher price.
When to wait:
If the offer is an unreasonably low-ball offer, you may want to simply reject it. We will advise you on any offer you receive in ensure you only accept the best offer possible.
Should I pay for a Home Warranty?
Home Warranties are insurance policies designed to protect a seller during the listing period and a buyer for one year after the close of escrow against repair costs for mechanical systems and major appliances. The cost of a home warranty policy is a one-time fee which either the buyer or the seller can pay at the close of escrow and which is renewable annually.
If your home is less than 10 years old, it probably isn’t necessary to pay for a home warranty. However, any older than that, it can be a wise choice to include a Home Warranty. Why?
- Offering a Home Warranty with the purchase can increase a Buyer’s confidence in choosing your home.
- Many of the lawsuits involving Sellers are the result of something breaking down shortly after the Buyer moves in. A home warranty can prevent these lawsuits.
- Even if there is no lawsuit, Sellers don’t want to be called and harassed after closing over a stove burner that quit working.
Home Warranties are paid for at the close of escrow. The company will present an invoice to the Escrow Officer prior to closing.
Consumer Reports lists the life of appliances:
|Water Heater||11 (Electric)|
|Water Heater||10 (Gas)|
|Water Heater||20+ (Tankless)|
When should I expect my sale proceeds?
On the date of recording (no more than 4 calendar days after Settlement,) you may request that your escrow officer either cut you a check for your proceeds or wire the funds directly into your bank account.
When do I get a refund of my impound account?
After your escrow officer sends your pay-off check to your existing lender, you can expect to get impound account back direct from your lender within 30-60 days. If you have any questions after that time, we suggest calling your lender.
When should I cancel my Homeowner's Insurance?
Please do not cancel your homeowner’s fire insurance until you have confirmed that your transaction has closed.