So, you’re ready to list your home for sale. Are you sure? It’s not as simple as scheduling an open house and staging the furniture. There are several key legal requirements to selling a home in California. From the documents you must produce to important disclosures, the legal must-dos can hold you up if you’re not prepared. Here are five things to know about your obligations as a home seller in Sacramento.
1. Disclosures of Material Matters
There are certain things you must tell potential buyers about your property. You can’t, for instance, fail to mention that there is a mold problem or that you did not get a permit when you added an extra bedroom a few years ago. Basically, you need to report anything that might be considered “material” to the buyer.
Material disclosures are things that could make a difference in the buyer’s decision to purchase you home. Determining what is material is somewhat subjective, but many items are specifically required by law. If someone died on the property within the last three years, there are frequent plumbing issues, or the city has issued a code violation, you must tell buyers. In California, most sellers are asked to fill out a Transfer Disclosure Statement (TDS) which asks you about various parts of your home. If you fail to disclose something, you could be hit with a serious fine.
2. Presentation of Important Documents
Selling a home in California also takes a lot of paperwork. In order to sell your property, you must produce your original sales contract (from when you acquired the home), HOA documents, and your TDS. You may also want to get an official appraisal to have on hand and show potential buyers who question the asking price. If you have built home additions or had major repairs conducted while you owned the property, you may be asked to produce records as proof.
3. Using a Title Company
According to NOLO, California home sales are legally required to involve a title company. The title company will do a search of the home’s title history and produce a Preliminary Title Report (PTR). California allows the buyer and seller to negotiate who pays for the following title insurance, which is often a condition for lenders to fund a loan.
4. Utilizing an Escrow Company
California home sellers must also use an escrow company. This neutral party facilitates the transfer of money from the buyer to the seller, and the transfer of the title from the seller to the buyer. In Northern California, the title company often acts as the escrow company as well. However, you may also use a different escrow company as long as both parties agree. Though there are additional fees involved, using an escrow company ensures that everything about the sale is on the up and up — and that all steps of the sale are well documented so both the buyer and seller are protected.
5. Negotiating Closing Costs
There are always closing costs associated with selling a home in California. These costs relate to the Realtors’ fees, attorney’s fees, home inspections, title insurance, and other related costs. Many of the fees are incurred by the buyer, who is the party dealing with a lender and all the related loan costs. However, many buyers will ask that sellers pay some or all of their closing costs.
If you’re working with a market that is hot for sellers, you may be able to turn down any offer that requires you to pay more than your share of the closing costs. On the other hand, if you’re trying to sell fast or working with a buyer’s market — you may want to agree to pay the closing costs to ensure a quick and smooth sale. In any case: when you’re selling a home in California, someone has to cough up money to pay everyone who is assisting in the transaction.
Are you trying to sell your Sacramento home fast? Working with an all-cash buyer expedites the process and lowers the closing costs. Many investors will buy your home as-is — so they’re not scared off by disclosures.
Contact California Family Homebuyers online today or call us at 916-496-3737 to see if we’re buying homes in your neighborhood!