Cuddle Up with Winter and Prepare to Move! (Hot Tips for Sellers)
ALL HAIL WINTER! LET’S MOVE, MOVE, MOVE!
Well hello, Winter! Here in New England, we have no other choice but to embrace the cold temperatures, snow, wind and ice. For many, that means skiing; for others, that means staying inside and relaxing; and for some, that means moving. Yes, moving. Maybe even not out of New England. Thoughts of clearing out the house and preparing for a spring move are commonplace. I know this because it’s generally during this time of year when I receive many phone calls from clients, “I’m thinking about moving. What should I do?” Since this year is no different, here are a few hot tips to think about as you prepare to sell your home – from a legal perspective:
1. Buyer Beware.
In Massachusetts, there is not a whole lot that you are legally required to disclose when selling property, other than the existence of lead paint and presence of a septic system. That “Seller’s Disclosure” your broker gave to you? Not required. The onus is on the buyer to perform his or her due diligence by asking the right questions and performing a home inspection in order to determine the condition of the property. However, if you are asked a question by the Buyer or his/her agent relative to a specific aspect of the property, you are required to provide an honest answer. If you don’t, you could later be found liable for any damages as a result of your misrepresentation.
I literally just had a client contact me about flooding in the basement of her newly purchased home. During the purchase process, she inquired with the Sellers’ agent about the propensity for water to enter into the property. The agent indicated that water had never been an issue for the then property owners. Well, just a couple days after they closed on the house, the basement flooded. It required my client to tear up the basement and reinstall a new sump pump system, which not only cost approximately $15,000.00 to remediate, but also revealed that the basement had previous occurrences of flooding. The Seller’s agent completely falsified the truth of the matter and we are now in litigation. Lesson here, don’t lie. As I tell my kids: big or small, lies are lies. You will get caught and bear the consequences.
2. Closing Costs.
I am often asked the question by Sellers: what will my closing costs be? This is an easier question to answer than that of a Buyer because often Buyers receive financing and different lenders have different costs associated with their lending. So here is a breakdown of what you can expect to pay as a Seller on a typical closing:
a. Real Estate Agent Fee: typically around 5% of the total selling price, but here’s a hot tip: this can be negotiated down. Brokers and Agents may hate me for writing this, but the truth of the matter is, everything in your real estate transaction is negotiable, even the broker’s commission.
b. Attorney’s Fees (see below why this is worth it): Typically starting around $1,000.00, depending on the complexity of the sale. I have done hundreds of sales and I find that most attorneys charge in this range, give or take a few hundred bucks.
c. Massachusetts Tax Stamps: This is the tax to transfer property in almost all states which is assessed to all Sellers of property, and Ms. Taxachusetts is no different. For any sale over $100.00, you will pay approximate $4.56 per thousand (in most counties; Barnstable is a bit higher). That means on a sale of property, say in Middlesex County, for $500,000.00, you will pay $2,280.00 in transfer taxes.
d. Registry and Recording Fees: This will be completely dependent on your property (condominium or single/multi-family home), if the property is owned by a Trust, and if you have a mortgage remaining on the house which will be paid off at closing. But these fees can add up to another few hundred dollars, again, dependent on your circumstances.
e. Smoke and Carbon Dioxide Certificate and Septic Expenses: As your broker will inform you, Massachusetts requires that you provide a Smoke and Carbon Dioxide Certificate of Compliance to the Buyer as well as perform any repairs, pumping or inspections of your septic tank, if applicable, in order to obtain a Title V Certificate. Assuming your Smoke and Carbon Dioxide detectors are all set, this is a nominal fee; getting your septic up to compliance, and even the inspection, can come with a hefty price tag, dependent on how much repair and/or digging is needed. In any case, be prepared to shell out hundreds of dollars to take care of that sh*t.
3. Hire an Attorney.
Really. Do this. Real Estate Agents may present Offers and Purchase and Sales Documents to you, but they are not lawyers. The documents presented to you will be completely boilerplate and without specific protections that you may need. For example, is this an “AS IS” sale? This will prevent the Buyers from coming back prior to closing with lingering complaints. Do you want to make actual warranties about the property or would you prefer to say that the representations made in the Purchase and Sale Agreement are made without independent investigation and to the best of your knowledge? (The answer is the latter.) I could go on about additional protections attorneys provide to Sellers in Purchase and Sales Documents, but just trust me on this one. Besides, you are going to have to provide a proper Deed to convey the property, and without some knowledge surrounding title and deed preparation, you probably will need an attorney to do this anyway. Start the relationship early so you know you are protected.
In any case, and again from a legal perspective, Selling is much easier than Purchasing. It generally requires less paperwork and less burden. I mean, you still have to pack and move, which is no walk in the park. Plus, if you are Selling, you are probably also Buying. . .okay, maybe it does come with its set of complications, but it’s bearing the struggles that often get us into a better place – in life and in home - and another good reason to give ol’ man winter a giant bear hug!