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What Every Seller Should Know About Closing

What Every Seller Should Know About Closing

In July 2020, the housing market recorded 900,000 sales. The number of homes sold this year was 36% higher than 2019’s record. The increase can be attributed to the stay-at-home order issued across the country to control the coronavirus. This led many working individuals to ponder upon the viability of their living space as a long-term workspace.

Since statistics also show that 40.6% of homeowners in the country are under 35 years of age, it’s understandable why they’re eager to move places and find the right home. This demographic has the mind and energy of a young body that allows them to take on mega projects.

They might be planning to start a family (or already have) with their partners. They need a permanent space that they can call home. As for work, their careers might also be at an all-time peak, and to maintain their performance, they need a home-cum-office that fulfills their needs.

Since 73–75% of home buyers are millennials, sellers have to up their game to compete with other property listings on the market. Staging is crucial for the selling process since it increases the chances of selling up to 5%, especially with most buyers being younger individuals.

Research shows that 26% of home sellers are willing to pay from their own pockets to stage their house before an evaluation. The median cost incurred in this process is $400. However, with COVID-19 taking over the housing market, buyers and sellers have to resort to virtual staging to avoid physical contact.

Staging is not the be-all-end-all of property sales; closing is fundamental to the process, but sellers barely know about it. 43% of the property sellers are millennials and GenXers, who report that job postings or changes are the primary reason for selling their place. But before their real estate agent finds a buyer who will agree to meet their quote, they need to know a few things about closing. Let’s look at those.

Closing Costs

As a property seller, you might think you’re about to get rich overnight. And that’s right, for the most part. But there are hidden costs involved in the closing process that you need to be prepared for. This can add up to a substantial amount because they’re proportional to your house’s selling price.

They’re usually up to 10% of the closing cost absorbed in the proceeds deposited in your account. This means that you may not have to pay this price upfront; it’ll be deducted from the amount that the buyer pays to you.

The Spouse’s Consent

In legal terms, the seller’s spouse has a marital interest in the seller’s property. Before the seller can sell their property, they need their spouse’s signatures on the documents. This testifies that the spouse is withdrawing their interest from the property, and it’s free to sell. It’s essential to clear any complications with your spouse regarding the property before it’s shown to the buyers.

In case the spouse is unavailable to sign the final documents, you can still proceed with the sale if you have a signed marital release document. This confirms the spouse’s consent in the property selling process and nudges you one step toward closing.

Paying Off Liens Against the Property

A lien is a legal right granted to a creditor against an asset used as collateral to fulfill the requirements of a debt. It’s a security interest over things such as the lienee’s (the owner who grants the claim) house.

If you’ve used the house you want to sell as collateral, your attorney is responsible for clearing all the pending payments before it can be sold. Paying off tax liens is more manageable than paying off mortgage or Deeds of Trust; make sure you clear this clause with your attorney before listing your house on the market.

This also applies to any equity line against the property that needs to be closed. These procedures demand time, so you must sort these out much in advance.

Reporting to the IRS

Once you’ve found a buyer for your house, your closing attorney is obliged to report it to the IRS. For that, they’ll give you a 1099-S form once the deed is signed.  You’re required to provide a forwarding address and social security information in the form. The property’s sale is lodged in the IRS’ records at the end of the year when the 1099 form is submitted.

Once you’ve registered your property sale with the IRS, you’d know if you’re liable to pay taxes from the income made from the sale. You may have to pay capital gains taxes or nothing at all; your closing attorney will be able to confirm that. Make sure you consult a tax expert before finalizing the deal.

Closing Meeting

This is a common misconception that sellers need to be present at the time of closing.

Closings don’t happen like round-table conferences where all parties need to be seated. This myth has led many sellers to delay or postpone (even indefinitely) their plans of disposing of a house if they’re out of station permanently.

In the seller’s case, the closing documents will be few and scarce, whereas, for the buyer, the bundle might be substantial. Since the discussion that ensues discloses the particulars of either party’s finances, it’s better to conduct that in private. However, the parties can meet if they wish, but there’s no obligation to do so.

Time of Payment

One thing most sellers are concerned about is receiving the payment for their house. Naturally, they expect it to be made as soon as possible, and more so, if they have to invest the sum elsewhere.

However, the State Bar has disallowed the disbursement of funds until the documents have been registered and finalized. The proceeds may then be deposited in your account a few days later. Your closing attorney should be able to guide you further about this.

Before you get into the selling process, you’ll need a realtor to find a buyer willing to pay the best price for your house.

Phillip Fehler is a real estate broker at Fathom Realty. His experience in the real estate industry has granted him expert knowledge of the property market. He has offered his real estate brokerage services to many residential clients in Fayetteville and Fort Bragg in North Carolina.

His clients have always returned with positive reviews for his work ethic, commitment, knowledge, and service quality.

Call at (910) 381-1341 or email us at phillipsellsnc@gmail.com. We’re looking forward to helping you sell your house and make a big profit!

 

 

 

By |2020-10-21T13:21:55+00:00October 21st, 2020|Blog|0 Comments