Before you make any large transaction, some documents should accompany it. When you are involved in a real estate transaction, you need to have the proper documents too. Whether you are the buyer or the seller, you need the appropriate documents.
Most people don’t know what kind of documents they need to have when they are involved in a real estate transaction. And this may leave them vulnerable to unscrupulous people or delay their transaction. Here are some of the documents that you need to have for a real estate transaction.
For Starters
Seller
A listing agreement is crucial for the agent to get started on the selling process. It should contain some key terms, including:
- Duration – this should be three to nine months. It shows the time of the agreement
- Exclusive rights – the agents get the exclusivity to sell your house
- Duties – what the realtor can and will do to market the property
- Commission – This is crucial as it states how much the realtor gets from the sale proceeds; typically, 5% – 7% should be sufficient.
Buyer
For the buyer, one that is getting the house through a mortgage, there are some documents that you need to have. You need to have:
- Bank and investment statement for at least two previous months
- Tax returns for the last two years – this should include the W-2s
- Valid photo ID
- Payslips for the last two or three months
Offer
Seller
The seller will need to sign a Sales contract – here, they can either accept or counter with a new price. This will then kick off the negotiating face of the wholesale.
Buyer
The buyer will have to sign a Sales Contract with an offer and submit it to the realtor. The buyer can also opt to include a loan pre-approved letter. It will make their case much more vital. According to a company that issues RPR in Calgary, they also need to ensure that they get a real property report before making an offer. This is the only document that will protect them, as it ensures they know exactly what they are buying. This letter should be provided by the listing agent and should indicate what the buyer is getting.
The buyer can also make their case even more robust with a check for earnest money. Earnest money is the money you are willing to pre-pay. If you renege on an accepted offer, the money is forfeited to the seller. It would help if you were sure about your capabilities before you make the offer.
Offer Accepted/Before Closing
Once the offer is accepted and the deal is ready to close, there are two key documents that the buyer and seller want – or are waiting for.
Inspection Response
This is a letter you both get if the buyer asks for an inspection. This report will clearly outline any deficiencies the house may have. It’s more the buyer now “asking to see what’s under the seller’s skirt.”
With this report, the buyer gets to see the undisclosed problems and if they are a cause for concern. If the seller doesn’t make any effort to repair the damages, the buyer is free to walk away from the deal. If there were earnest money involved, it would be returned.
Appraisal
This is a fair value of the house. A professional valuer should only present it. It ensures that the contract price for the home is appropriate. The key determining factors are the condition, location, and features.
If the buyer is getting the house through a mortgage, the lender will need to see this document.
Closing
Seller
Need only to have the documents to transfer the ownership of the property. The documents include:
- Seller’s Affidavit – a sworn statement that confirms the ownership. It also declares any leases.
- Deed – legal paper that records the change of ownership. It should indicate how the buyer will hold the title, for example, joint or individual
- Tax declaration – how the property taxes are to be paid
- Title insurance – a search done through the property record to ensure there are no clerical errors.
Buyer
There will be more on the loan paperwork when buying the property through a mortgage. The documents include:
- Mortgage – this is the agreement by the buyer to pledge property collateral for the loan
- Loan application –the final copy of the loan application information
- Note – describes loan terms, default consequences, and so on
- Truth-in-lending – a form indicating APR, financing, total payments, and such
There are several legal documents that you need to possess when you are involved in a property transaction. If you had no idea the kind of documents you need for such transactions, you could find them above. They ensure both the buyer and the seller are covered during the sale.
