NORTH CAROLINA REAL ESTATE
COMMON SELLER QUESTIONS ON CLOSINGS
(c) 2009 - The Connor Law Firm, PLLC
www.connorlaw.com
E-mail: gc@connorlaw.com
1. What does MLS stand for and how does it work?
3. Who prepares and completes the Offer to Purchase Contract?
4. Why do I need to pay for the Buyer’s Real Estate Agent when I already have to pay for my own?
1. What does MLS stand for and how does it work?
The Seller hires a Real Estate Agent to help find her a Buyer for the home she is selling. On the Seller’s behalf, the Real Estate Agent then “lists” the Sellers’ home with a Multiple Listing Service (MLS). MLS is a service through which all Sellers’ Real Estate Agents publicize and advertise their client’s listings. The goal is that other Real Estate Agents who represent Buyers and who also subscribe to the MLS, will see a particular listing that their Buyer might like. If that Buyer Real Estate Agent’s efforts contributed to the sale of Seller’s home, then the commission that the Seller’s Real Estate Agent receives from the Seller at closing will be split with the Buyer’s Real Estate Agent.
2. I am trying to sell my house and I’m not sure if I need a Real Estate Agent or not because I’ve seen other Sellers just post “For Sale by Owner” signs on their lawns.
It is certainly possible and more economical to try and sell the property on your own. However, you must rely on potential Buyers who happen to drive by your house and see your sign, and any other methods you come up with to get the word out.
Most Sellers end up seeking the services of a Listing Agent/Agency because of the connections the Real Estate Agents have with other Real Estate Agents who represent Buyers and the opportunities available through the MLS System [make this a link to the answer to number 1 above]. Real Estate Agents will do all the marketing and hunting so that you do not have to. Real Estate Agents are also beneficial because they a) help negotiate the purchase price between you and the Buyer, b) prepare and/or help you complete the necessary paperwork to close the deal, and c) see you through all tasks before, during, and after the closing.
3. Who prepares and completes the Offer to Purchase Contract?
Real Estate Agents as well as the closing attorney have a standard fill-in-the-blank template for the Contract. Usually one of the Real Estate Agents will have it completed and then you and the Sellers will sign it. The Contract includes, among other things, the parties names, the property address, the names and contact information of the Real Estate Agents, deadlines for inspections and repairs, conditions that must be satisfied before the Contract is deemed accepted, and breach of contract provisions.
4. Why do I need to pay for the Buyer’s Real Estate Agent when I already have to pay for my own?
The reason the Seller pays for the Buyer’s Real Estate Agent in addition to its own is because the Buyer’s Real Estate Agent helps the Seller find the Buyer. The Seller hires its own Real Estate Agent to help find her a Buyer for the home she is selling. On the Seller’s behalf, the Real Estate Agent then “lists” the Seller’s home with a Multiple Listing Service (MLS). MLS is a service through which all Sellers’ Real Estate Agents publicize and advertise their client’s listings. Then the Buyer’s Real Estate Agent, who also subscribes to the MLS, sees this particular listing and presents it to prospective Buyers. Since the Buyer’s Real Estate Agent’s efforts contributes to the sale of the Seller’s home, then the commission that the Seller’s Real Estate Agent receives from the Seller at closing should be split with the Buyer’s Real Estate Agent.
5. The closing attorney who represents the Buyers wants my SSN. Do I need to provide that confidential information?
Yes. First of all, this information assists the closing attorney in obtaining payoff statements for your current mortgages that you wish to pay at closing. In addition, at the end of the year, the closing attorney must file special tax forms demonstrating that it issued income to you (i.e. sale proceeds), and the form calls for the recipient’s SSN.
6. I’ve heard that most of the closing costs are borne by the Seller. Are there any fees that I should expect to pay at closing?
• Real Estate Commission(s) (usually 5% or 6% of the purchase price)
• Payoff amounts for your current Mortgages and/or Equity Lines, if any
• Document Fee for preparation of the Deed and Lien Waiver (you can choose your own attorney, or just have the closing attorney do it)
• Revenue/Tax Stamps—This is a tax you must pay for conveying title, which comes out to be $2 for every $1000 of the purchase price
(or .002 multiplied by the purchase price)
• Property Taxes for the current year, prorated for the period of time you are responsible for the property (i.e. January 1st of the current year through the day after closing). This is only the case if the taxes have not been paid yet (either by you or your current Lender out of your escrow account), which is normal because although the tax bills come out and are “due” around August of each year, the tax bill is not late/delinquent until January of the following year.
• Prorated amount of Homeowners Association dues that are due for the current month or quarter which you have not already paid
• Any Homeowners Association special assessments which have been approved by the Association, but not yet paid by you
• Invoices for recent work done that you agreed to pay for, such as repairs
• Any closing costs of the Buyer that you agreed in the Offer to Purchase Contract to pay for.
7. Why do I need to pay for a proration of the Property Taxes at closing when part of my mortgage payments all year have been going into an Escrow Account for the same purpose?
Unfortunately, even if you have a substantial balance in your current Escrow Account, your current Lender will not refund that to you until 20-30 days after the closing and the loan is paid in full. Therefore, even though technically you may have been contributing to the Escrow Account all year, which were to ultimately go towards the annual Property Tax payment, you will have to pay your portion up front at closing (January 1st of the current year through the day after closing), and just get reimbursed after the fact.
8. Do I need to attend the closing?
Sellers are more than welcome to attend the closing, but as you may remember from when you first bought your house, virtually all the documents and paperwork at closing are executed by the Buyer because the main purpose of the closing, aside from conveying title and keys from the seller to the buyer, is for the bank to issue a loan to the buyer. Because there are only 2 or 3 documents that the seller needs to sign, the seller often arranges to sign those ahead of time at the closing attorney’s office or perhaps their real estate
(c) 2009 - The Connor Law Firm, PLLC
www.connorlaw.com
E-mail: gc@connorlaw.com