Selling a house in the Empire State.

Precontract Inspection and Repairs:
Typically, once you have decided to sell your home, you will engage the services of a realtor. Once the realtor has presented you with an acceptable buyer, the buyer will conduct a home inspection by means of a home inspector. After the inspection, the inspector will prepare a report stating the condition of the home. The potential buyer will then alert you as to which repairs he would like made. If such request is acceptable to you, your obligation to make those repairs may be included in the sale contract.

Prepare the Contract of Sale:
Once you have selected an attorney to represent you in the sale of your home, your attorney will draft the contract of sale. After the contract is drafted, your attorney will send the proposed contract to your buyer’s attorney either by mail or by email. Upon receipt of the contract of sale, the buyer’s attorney will review it with the potential buyer. The buyer and attorney will either find the contract acceptable as written, or more frequently, send proposed changes to your attorney. Your attorney will then discuss these changes with you, the seller. Your attorney will then contact the buyer’s attorney and inform the attorney as to which changes you agree with and those changes that are unacceptable to you. Once the parties mutually agree to any contract changes, the buyer typically signs (or executes) three to four copies of the same contract and returns the contracts signed by the buyer to the seller’s attorney, along with a “contract deposit,” usually five to ten percent of the sale price. Upon receipt of the buyer signed contracts and contract deposit, your attorney will then go over the contract with you one last time. If the terms of the contract are acceptable to you after your review with your attorney, you will sign the contracts, any attached riders, and the lead paint disclosure. You and the buyer are now “in contract” or “under contract” and are contractually bound to each other by the terms of the agreement.

Your attorney will then return two fully executed contracts (meaning that both the buyer and seller have signed the contracts) to the buyer’s attorney, and your attorney will keep two contracts, one for you and one for the file. Your attorney will then place the contract deposit into the firm’s trust account. It is also known as an “escrow account” or an “IOLA” account. This account is held separate from the attorney’s operating account. It is where an attorney holds “other people’s money” and is to only be drawn upon at appropriate times. It is highly regulated and there are serious consequences for attorneys who violate this “trust.” These consequences can range from disbarment to prosecution.

Buyer To Obtain Mortgage Funds and Provide You Proof of a Mortgage Commitment:
As the seller, you now wait for the buyer to obtain a mortgage from a lender. This process can take anywhere from 45 to up to 90 days. The mortgage approval process includes a review of your buyer’s tax returns and other essential financial records. It also includes an appraisal of the value of your home. That means that at some point, an appraiser from the lender will visit your home to physically inspect it and conduct an appraisal. Once the lender has agreed to provide your buyer with mortgage funds, the lender will issue a mortgage commitment. A mortgage commitment is a promise from a lender to lend a certain amount of money at a certain interest rate over a certain period of time. The buyer is contractually obligated to give a copy of the mortgage commitment to you, through his attorney, who will then send it to your attorney. This lets the seller know that the buyer is moving along the purchase process and has obtained the necessary funds to complete the transaction. This is very important because you have stopped showing your house to other potential buyers and are looking forward to completing the sale with this buyer. The sale can only happen if the buyer has the necessary funds.

Address Issues Raised in the Title Report; Order a Payoff Letter; Order a Water Meter Reading:
The buyer’s attorney will also order a title report from a reputable, licensed title insurance company or one of their agents, commonly known as an “abstract company.” The title report compiles information about your property such as ownership and liens on the property, including outstanding mortgages. The title company or the buyer’s attorney will forward a copy of the title report to your attorney. Your attorney will review the title report for any possible issues. If there are issues with respect to your ownership, or if there are judgments or other outstanding monetary matters, your attorney will discuss them with you. It will then be your obligation to clear those matters, with the help of your attorney. If you have a mortgage on your property, you will need to order a “payoff letter.” A payoff letter is a statement from your lender stating how much is owed on your mortgage to pay it off by a certain date. The payoff amount is not the amount stated on your last mortgage statement. The payoff amount will be higher, as it will include interest through the closing date, plus any other sums due. Ask your attorney when you should order the payoff letter. Upon your receipt of the payoff letter, send it to your attorney without delay.

Closing Preparation:
While you are waiting for the buyer to obtain their mortgage commitment from their lender, prepare to move by lining up your movers and cleaning the home so that there are no issues when the buyer does their “walk through” or final inspection of the home, typically a day before the closing, or just prior to the closing on the same day.

The Closing:
On the day of the closing, you will meet at an agreed location, usually the office of the attorney who is representing the buyer’s mortgage lender. Bring a pen with you, preferably black, and your driver’s. On that day, you will sign transfer tax forms and pay transfer taxes to New York State, and to New York City, if applicable. You will also sign an affidavit (a sworn statement) that there is a smoke detector in the home. You will also pay off your mortgage and any other outstanding monetary amounts owed so as to transfer title of the home to the buyer free and clear of any of your debts of public record that may relate to the home. You will also have to pay your realtor and your attorney. All these funds will be paid at the closing out of the amount owed to you by the buyer. You will also sign a deed which your attorney has prepared, transferring ownership from you to the buyer. In exchange for that deed, your buyer will give you a bank check (never a personal check) for the amount that is due to you after your mortgage, transfer taxes, realtor, attorney, and any other monies, are paid. At that point, transfer of title is “closed” and you have sold your home.

Congratulations!