04 Feb 10 Frequently Asked Questions by Sellers
Previously, we’ve written about the benefits of engaging a real estate attorney as soon as you decide you’re ready to sell your home. Such a significant transaction means you’ll have a lot of questions. Fear not, because we have the answers!
1) Am I required to disclose defects in my home?
Yes and no. Illinois law requires you to make certain disclosures to prospective buyers that currently affect the physical condition of your property such as flooding in the basement, and issues with windows and doors. However, you are not required to disclose every problem you know about the home. Defects which do not materially affect the health and safety of those living in the home need not be disclosed. You are also not required to disclose defects which have been fixed prior to offering the home for sale. You do need to answer questions honestly about the significant issues.
2) What happens if the appraised value is lower than the sales price?
Thankfully, this is a rare situation, but if it happens, you have options to save the deal. You can work with your real estate agent to challenge the appraisal, though that can be difficult. Worst case option is you lower the sales price to match the appraised value. The best solution is a compromise where you lower the sales price, and the buyer makes a concession as well, such as reducing or eliminating a previously agreed upon credit.
3) Do I need to pay my mortgage/assessment for the month of closing?
The answer depends on your closing date. Most likely, your mortgage payment is due on the 1st of the month and is considered late after the 16th of the month. If your closing date is on or before the 14th of the month, there is no need to make your mortgage payment prior to closing. Assessments, with very limited exceptions, must be paid in full through the month of closing.
4) Am I required to pay any closing costs before the closing?
Usually, you don’t have to, but there are exceptions. If your home is part of a Homeowner’s Association, you will be required to provide the buyer with the Association’s governing documents before closing, and your Association will require payment upfront. Even if you have these documents from your purchase closing, you will still be obligated to purchase current documents. Another exception is municipal transfer tax stamps. If your Village has a transfer tax (except for City of Chicago), it must be paid before closing, and the transfer stamp needs to be brought to the closing.
5) Will we absolutely close on the date in the contract?
The vast majority of deals will close on the date written in the contract, but the transaction may be delayed. The most common delay is when the buyer’s lender requires additional time to qualify the buyer and approve their mortgage loan.
6) Is it best for me to attend the closing?
Seller beware; it may not be a good idea for you to attend the closing. The seller runs the risk of saying or implying something that could give the buyer cold feet. For example, seller’s remorse may surface, or the seller may make small talk about a shortcoming of the home or a critique of the neighbors. Why jeopardize the sale? It’s advisable to keep the closing between the attorneys and agents.
7) Is it possible to close on the sale of my current home and buy my new home on the same day?
Yes. Attorneys can coordinate scheduling the times of both closings as close together as possible and the purchase closing at a location nearest your new home. You and your attorney can meet at your purchase closing with your sales proceeds in hand.
8) How much will I net from the sale?
The seller’s closing costs typically include:
- A realtor commission
- State, county, and municipal transfer taxes
- Title insurance
- A survey for single family homes and Homeowner Association fees for condominiums and townhouses
- Government regulatory fees
- Attorney fee
9) Will the earnest money be automatically paid to me if the buyer defaults?
Although you may have the absolute right to retain the earnest money, the escrow agent, by law, will not release the funds to you unless and until authorized to do so by the buyer. The Buyer may be bitter the deal did not work out and decide to take it out on you by not letting you retain the earnest money. Unfortunately, your only recourse in this situation is to file a lawsuit against the buyer if all attempts at an amicable resolution have failed.
10) How often will my attorney be communicating with me?
You should expect your attorney to communicate as often as it takes to keep you informed every step of the way. You and your real estate agent should be copied on all emails and updated on all developments. Make sure your attorney will answer emails and phone calls on the same business day and that they are available outside normal business hours.