Updated: Dec 24, 2019
John and Mary have lived in a big old house at 10 Maple Street for 20 years. Now that their kids are grown and gone, they want to downsize. They’ve been watching the newspaper and Internet ads, and they’re ready to take action. They lack experience in selling and buying real estate, but they figure, how hard can it be? Well, they are about to enter into what could be one of the most exciting but potentially trying times of their lives.
To mitigate stress, it will help them to know what to expect from the process of buying and selling a house. Who will be involved? How long will it take? Will they need help from a real estate agent? What about a good real estate lawyer?
Let’s walk through this home buying and selling process in depth.
Selling Your Home in Vermont
First things first. John and Mary need to sell Maple Street to free up cash for a purchase. They could put a sign on the lawn that says, For Sale By Owner (realtors derisively call these fizzbos), but most people go to a real estate agent, chosen more often than not from an ad or a neighbor’s For Sale sign on the lawn. John and Mary are simultaneously home sellers and home buyers, but the steps are similar even if they were only doing one or the other. On the sale side, the listing agent will show them comparable sales to help establish the asking price. Then, the agent will present them with an “exclusive listing agreement.” The listing agreement obligates them to pay a fixed percentage commission on the sale price of Maple Street. It’s binding for a period of time, maybe six months or even a year. The agent then usually submits the property to the local Multiple Listing Service (MLS), where all member realtors have access to the information and can show the property. If another realtor helps make the sale, the selling agent will share the commission. The realtor will also ask John and Mary to complete a “property information report” to be given to prospective purchasers.
Usually, the real estate agent will recommend that John and Mary do some cosmetic fixups and other changes to the house to improve its “salability.” 10 Maple Street is now “on the market.” Listing and selling agents will start “showing” the property, perhaps host an “open house.” (The agents prefer that the sellers are not present for these.) John and Mary anxiously wait for an “offer” from a buyer.
Purchasing a New Home in Vermont
On the purchase side, John and Mary will hook up with their favorite realtor and start looking at houses in their price range. They’ll look through the realtor’s MLS book to spot likely candidates. They’ll choose a few and the realtor will give them the property information report. Showings will be arranged. When and if they find their dream house, they’ll make an offer to the seller. They may contact a lender/bank to get a “pre-approval letter” showing they’re qualified.
What Happens after an Offer Is Made on a House?
In either a sale or purchase, the time after an offer is made can be the start of the more stressful part of the process. To officially make an offer, the real estate agent will write up a “Purchase and Sale Contract”on standard forms that are used by the Vermont Association of Realtors. (In John and Mary’s case, the contract offer will contain an unusual clause about the need to sell Maple Street before purchasing the dream house.) The agent will present the offer to seller or buyer, as the case may be, and take a deposit from the buyer. Sometimes, realtors include language in the contract that it is subject to attorney review, sometimes not. It is always advisable that a local attorney review the contract before it is signed.
The contract will contain contingencies for a purchaser to inspect the property, to obtain financing and other special conditions. A purchase price must be agreed to by both seller and buyer and the two must choose a closing date. All of these matters are subject to negotiation between seller and buyer, which can often be a source of stress. But eventually, if a deal is struck, a contract is signed by all parties.
Once signed, a contract is like an engagement before a marriage. The haggling is over and everyone’s looking forward to the ceremony. Now, one hopes, all that is necessary is for the parties to prepare for the closing. Buyers apply for financing, arrange inspections and hire a real estate attorney to search the title and provide title insurance.
Preparing Your House for New Owners
From their end, sellers fix any problems revealed by the inspections, although there can be wrangling over this issue. Sellers hire an attorney to prepare the deed and other closing documents. Sellers prepare to move out of the house and leave it vacant, and “broom clean” on the day of closing as required by the contract and the buyer will usually inspect the house on the day of the closing. (Note: While there is no legal definition of “broom clean” it generally means that the house will be free of all of the previous owners belongings. It should be vacuumed, swept and free from visible dust and dirt.)
The attorneys for buyer and seller interact frequently to bring the deal to a close. The broker gets figures to the closing agent including fuel adjustment, water, sewer reading and others. These are called “pro-rations.” The whole process usually takes six to eight weeks, if no snags appear. If they do, the attorneys and realtors will jump on them and move the process forward.
Moving into Your New Vermont Home
Finally the big day arrives. In the case of John and Mary, if all goes well, they will sell Maple Street in the morning and buy their dream house in the afternoon. At each closing, buyer and seller appear face-to-face with their real estate attorneys and the bank acts as settlement agent. (This is different than so-called “escrow closings” which are common in the western US.) The buyer will sign bank documents including the note, mortgage and a ton of other stuff. The sellers will sign the deed and hand it over for the purchase price, as adjusted by the pro-rations and the payoff of existing mortgages. The expenses of the sale will be paid: For the seller, that means the commission to brokers. The buyer will have expenses for title insurance, attorney fees, bank fees, recording fees and others.
Handing over the Keys to Your New Home
At last, the ceremony is complete. In a symbolic act reminiscent of ancient custom,* the seller hands over the keys to the new owner. Title has passed. If the attorneys and brokers have done their jobs well, all will be smiles. That’s certainly the goal when we represent a client in a real estate transaction.
Need legal advice in buying or selling your home near Rutland, VT?
*The conveyance or delivery of possession, known as livery of seisin was effected generally on the site of the land in a symbolic ceremony called "feoffment with livery of seisin." In the ceremony, the parties would typically go to the land with witnesses "and the transferor would then hand to the transferee a lump of soil or a twig from a tree -- all the while intoning the appropriate words of grant, together with the magical words 'and his heirs' if the interest transferred was to be a potentially infinite one. Wikipedia