Real Estate Is One Big Paper Trail
When you are buying and selling a home, what’s on your mind is usually where you will live and how much you’ll make and spend to get there. But, the home buying and selling process is carried out on a wave of paperwork. Today, Duc Ong takes a look at many of the documents that you will need and offers tips on how to stay organized so that you don’t miss an offer or lose the home because of a piece of paper.
Organization in the Digital Age
Before we get started with the types of documents that you’ll need, it’s good to know how to keep them organized. In the digital world, most of everything we do is done online via email. Thankfully, this process is fairly simple, and you can even scan papers with your phone and add them to a single document (usually a PDF, which compresses easily without losing data) that you can share with your realtor and/or mortgage company. To easily add a page to PDF documents, look for a tool that lets you edit, reorganize, and share directly from the cloud or your email.
Documents to Sell
Selling a home involves many moving parts, and you have to have documents for all of them. Before you list your home, your real estate agent will likely ask you for your original sales contract, mortgage statement, proof of insurance, and, if applicable, a copy of your HOA bylaws. When it’s time to list, you’ll also be presented with a packet that includes market analysis, your listing agreement – eForms describes a listing agreement as a document that outlines the commission you’ll pay your agent – a marketing plan, and a net sheet showing how much you can expect to get from your home if it meets listing price.
Further into the process, you’ll be required to provide disclosures of the home’s current state, including whether or not there are any known defects, such as water damage, nonfunctioning windows, radon, or electrical issues. Once an offer has been made, you’ll then be presented with a purchase offer, which you can then counter until you get to the final purchase and sales agreement.
On the Buying Side
When you buy a home, you have to show that you have enough money to do so. This will include tax returns, all of your bank statements, proof of employment, a balance sheet of debt, and your credit report. Many homeowners will also require that you obtain a preapproval letter from your lender, which may also include a loan estimate if you already know the purchase price. You do not have to wait until you make an offer to get your pre-approval, and Lenderly actually recommends doing it beforehand to make yourself a stronger buyer.
If you are self-employed, such as if you own a sole proprietorship or are a freelancer, they’re even more documents that you’ll need. Since you won’t have W-2 forms, you will need to give your lender a profit and loss statement, and, in some cases, you’ll be required to present written statements from clients of their intent to keep you on as a consultant.
Before closing, but after you’ve made an offer, you will also be presented with a purchase agreement, a list of seller disclosures, a home inspection report and appraisal – you are responsible for paying for the home inspection and appraisal – and information on the title. A quick tip here: a home inspection is not legally required, but it’s still a great investment that iBuyer notes can help you uncover issues with the home.
Finally, once everything is agreed upon, you’ll be presented with a sales contract and other forms, which you will sign either digitally or in person at the closing title office.
Buying and selling real estate is not like handing a physical product over to someone. These are in movable swatches of land, and ownership is traced based on dozens of documents. Keep them organized by saving them digitally as a PDF, and don’t forget to talk to your realtor and mortgage lender well ahead of time to determine if you are self-employed or have other circumstances that might mean more documentation is required.
Guest blogger: Katie Conroy
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