Anxious to close the book on your home sale already? If only you could seal the deal with a handshake and a smile, and be on your way.
Ha, ha, ha, quite the contrary—real estate transactions call for stacks of paperwork as tall as Mount Everest. We’re talking about 180 sheets give or take in some states (sorry, trees!) While your buyers sign (and sign, and sign) their life away to their lender, you’ve got your own mounds of documentation to round up and face head on.
So grab your lucky pen, stretch those hand muscles, and do some mental flossing to make space in your brain for fun stuff like “mandatory disclosures.” Because when you take the time to gather all the proper forms to sell your home from start to finish, the transaction will go smoothly, and you’ll rest easy knowing your sale is airtight and 100% legally sound.
Here we’ve done the research to round up the key documents needed to sell a house and even run them by licensed, professional real estate agents who understand the difference between a deed and a title—and let’s be honest, have seen these forms countless times.
(But please note! The paperwork required for your home sale varies by state and county, so check with your real estate agent, attorney or on local government websites to see which ones are must-haves for your location. Some of these might not be required but could be useful when navigating paperwork or preparing for the sale.)
Documents You Need to Gather Before Listing Your Home
Original Sales Contract
It’s the circle of life… at one point in time, you bought the house that you’re now selling! And there should be a record of it.
The original sales contract is the agreement you made with the previous owner of your home when you bought it. This contract outlines the terms of the purchase and maps out the “who”, “what”, “where”, “when”, and “why” of the transaction. This way, the buyer makes no mistake about who has previously owned the house, and the terms and conditions under which it was transferred to a new owner. The sales contract notes the price at which the house was sold, and elaborates on any disclosures about the property that were made before the sale.
Professional Appraisal From The Original Purchase of Your Home
An appraisal is a professional assessment of the fair market value of your home that determines how much a mortgage lender will lend to a buyer. To go forward with the sale, you’ll need a brand new appraisal (unless you’re working with a cash buyer who doesn’t need financing, and we’ll dive into that below).
But first, another flashback! You need to provide the buyer with the appraisal report from the time you purchased your home as well as any documented updates since the original appraisal (such as in the case of a refinance).
Mortgage Statement (Payoff Amount)
If you’re selling before you pay off your current mortgage in full, contact your lender or servicer and request a statement showing your payoff amount. The payoff amount is the total you’ll have to pay to satisfy the terms of your mortgage loan, including any interest you owe until the day you plan to pay your loan in full.
The payoff amount is not the same as your current balance, which will appear on your most recent account statement and may not include interest. Your lender is required to provide your payoff amount to you, according to the Consumer Financial Protection Bureau, so don’t be shy about asking. With that information, you’ll be able to calculate your estimated home sale proceeds.
Homeowners Insurance Records
Before you sell your home, you want to be transparent with your buyer about any damages and repairs made to your home. You’ll need to provide the buyer with proof of your homeowners insurance information as well as a claims report or a list of all the claims on your home since the time of purchase.
This will also give the buyer an idea of how much their homeowners insurance will cost when they move in.
Homeowners Association Documents
If you want to sell property that is part of a development, odds are you’re already part of a Homeowners Association (HOA) that runs the whole thing.
The HOA—which sometimes acts as the fun police, and other times takes care of all your yardwork, both!—has certain guidelines about the appearance of your home, what you pay for assessments of your property, and if you can rent your home to other parties.
These are all key pieces of information the buyer will need to know before they make a purchase. They will need the following governing HOA documents:
- Articles of incorporation
- Rules and regulations
- Homeowners dues amount statement
- Copies of the minutes from the Association’s meetings of the past two years
- The Declaration of Covenants, Conditions and Restrictions
Home Repair and Maintenance Records
Home repair and maintenance records are hard evidence of all that work you’ve done to your home while you’ve proudly owned it. These records also let the buyers know what needs immediate attention when they move in. Your home repair and maintenance records should contain the following:
- Maintenance receipts such as roof repairs, chimney cleanings, appliance warranty plans, etc.
- Dated records of your most recent painting, gutter cleanings, window washings
- Utility maps for your electric and gas systems
Receipts for Capital Improvements
Capital improvements are things like kitchen and bath remodels, or big additions like a swimming pool or new roof. They mitigate the capital gains taxes you owe on your home sale by adding to your adjusted cost basis.
Figuring in capital improvements come tax time will be much easier if you’ve kept a record of improvements you made over the course of ownership of the house, so make sure you always hang onto those receipts. Don’t forget that capital improvements do not include items necessary for the maintenance and repair of your home—only those improvements that have added to or increased your home’s value.
Manuals and Warranties
Like the home repair and maintenance records, appliance manuals and warranties let the buyer know what shape they’re inheriting these items in when they move into their new home. You’ll want to provide the buyers with manuals and warranties for things like:
- Washers and dryers
- Garbage compactor/disposals
Past Utility Bills
Buyers will be curious to know how the electricity, gas, water, and sewer bills for your house shake out each month so they can budget accordingly. You’re not required to provide this information, but you can expect them to at least inquire about it. Consider offering them a copy of whatever records you’ve got handy, whether it be hard or digital copies.
“During the negotiations, the buyer will also, of course, ask for a record of [the seller’s] utility bills,” says Jacki Shafer, a top real estate agent in the Louisville, KY area. “They will want a 12-month average; they want to see the detail of each and every month, what the seller paid going back a year. Sometimes they ask for two years, just to get a really good idea of what utilities are going to cost them.”
Documents Needed To Launch Your Home Sale Into Action
Comparative Market Analysis
Not sure how much your house could go for on the current real estate market? That’s why you hired an agent, and they will generate a comparative market analysis report for you.
A comparative market analysis compiles all of the information about home sales in your immediate area including homes that are currently for sale, homes midway through transactions, and homes that sold recently.
Your agent will scrutinize all of this data and be able to tell you how much you should sell your home for. This information is imperative before you put your home on the market, as a bad pricing strategy spells doom for your sale.
A listing agreement makes the arrangement between you and your real estate agent official and gives your agent the exclusive rights to sell your home within a given time frame.
The contract lays out the terms of how the real estate agent can promote your home. You will also grant the agent the rights to use the listing content which includes photos, graphics, videos, drawings, virtual tours, written descriptions, and any other copyrightable elements relation to the property, according to the National Association of Realtors.
The terms involved in the agreement serve as the foundation of your entire real estate transaction, so read each line carefully.
Proposed Marketing Plan
Much like the listing agreement, the proposed marketing plan lays out how your agent will go about marketing and selling your home. The marketing plan offers a game plan for home showings, open houses, social media marketing, and promoting your home across the top real estate websites to capture buyers’ attention.
Seller’s Net Sheet
A seller’s net sheet is an organizational worksheet that your agent will fill out to show you how much you’ll pocket from your home sale after factoring in expenses like taxes, your real estate agent’s commission, your remaining mortgage, and escrow fees.
You might receive a seller’s net sheet more than once over the course of your transaction—most likely at the time of listing your property, and after you receive an offer, as the numbers will shift depending on how much your house sells for.
Documents to Have at the Ready While Your Home’s on the Market
Preliminary Title Report or “Prelim”
A preliminary title report, or in real estate speak a “prelim” is a financial and legal summary document that tells you, the seller, if there’s anything outstanding on your property before you put your house on the market. In other words, it’s a precautionary report.
A “prelim” shows you what taxes are owed on the property, what kinds of conditions and restrictions are recorded on your property, etc. A “prelim” also preps you for disclosing these restrictions and information to your agent and your potential buyers. You can get a title report using the one of the four biggest title companies for a couple hundred dollars:
When you come to an agreement on a price with a buyer, transparency is important. You don’t want your buyer to move in unaware that the house you sold to them has lead-based paint or asbestos.
That is a lawsuit waiting to happen.
You are required to follow “mandatory disclosure” laws and make known to the buyer any hazards affecting the property before the sale is official.
Some examples of mandatory disclosures include:
- Lead-based paint
- Environmental hazards such as oil, gas, or toxic chemicals
- Water damage
- Defects/malfunctions of major appliances or systems
- Neighborhood nuisances
- Past disputes over things like property lines or fencing
You have the option to hire a home inspector for a pre-inspection to get ahead on any material defects that might come up later.
If you’re selling an older home, a pre-inspection can save you from any big surprises down the line. However, a pre-inspection can also open a can of worms, and it means you have to disclose whatever you find to buyers (in writing) before they make an offer.
Transfer Disclosure Statement (CA)
A transfer disclosure statement is a bit like a mandatory disclosure, but more “in-depth” and is required only in the state of California. A transfer disclosure statement describes the condition of the home, and its purpose is to help buyers decide whether or not they want to move forward with the transaction. A transfer disclosure statement includes information pertaining to the following items:
- The date of the disclosure (the date that you’ve filled out your form completely)
- The presence and condition of appliances like washing machines, gazebos, sump pumps, etc.
- Defects and malfunctions on the property and the infrastructure of the house.
- Flooding, drainage, and other material facts about your home.
- Smoke detector installation and function
Please also note that you, the seller must complete the transfer disclosure statement in your own handwriting. Failure to do so is legally dangerous.
Natural Hazards Report (CA)
Put simply, the natural hazards report is a one page form containing “yes or no” questions about how hazardous your land and property is.
The state of California is more prone to mudslides, brush fires, seismic movement, etc. you can understand the necessity of this document. You must check off which hazards apply (if any) to your property so that the buyer knows what kinds of damage the house has endured (and could face in the future). You don’t want to surprise buyers with a house right on the California fault lines. These hazards include:
- A Special Flood Hazard Area
- Dam Inundation
- Very High Fire
- Wildland fire
- Earthquake fault zone
- Seismic hazard
- Radon Gas exposure
- Airport influence area
- Megan’s Law disclosures
- Military ordinance
Documents That Come Into Play Once a Buyer Makes an Offer
Purchase Offer and Counteroffer Forms
A purchase offer is a documented first step to a buyer closing on a home. The purchase offer lays out an acceptable agreement between the buyer and seller that is subject to amendments once the transaction moves into the latter stages. The purchase offer elaborates on details of a purchase such as the identification and specification of the property as well as the price the buyer has offered to the seller for the house.
Final Purchase and Sale Agreement
Together the buyers’ and seller’s real estate agents/real estate attorneys draft up the Final Purchase and Sale Agreement, a contract that states the selling price of the home, the terms of the purchase, the earnest money amount, the closing date (that’s a big one, as you’ll need to be 100% moved out by that date!) and any contingencies. Both the buyer and the seller need to agree to the terms and sign the document before they can move forward with the sale of the house.
Contingency Removal Form
A contingency is a clause in your real estate contract that needs to be met before the deal closes or the contract becomes “binding.” However, a contingency removal is a document that shows which contingencies have been removed from the contract. In other words, to remove a contingency, you’ll have to get the removal writing.
Documents That You’ll Receive Between Contract and Close
Home Inspection Report
You can count your buyers putting a home inspection contingency in the contract, which means they’ll arrange for an inspector to come through and evaluate the house before the deal can close.
A typical home inspection takes a few hours for a regular house, then the report takes about 3-4 days to complete. The home inspector goes through the interior and exterior of the house to record any broken, defected, or hazardous issues with the house and surrounding area.
Then, the inspector drafts up a home inspection report that spans about 30-50 pages in length (with pictures). The document details the state of your home’s structure, the electrical system, plumbing, heating, fireplaces, etc. Separate inspections and inspection reports like pool and pest inspections should also be included in your paperwork if your home requires them.
Home Appraisal Report
If your buyer is financing their home with a mortgage, the lender will require an appraisal to determine your home’s fair market value. After the appraiser evaluates your home, the appraisal report should come back in less than a week.
As the seller, you won’t automatically get a copy of the report, but you can request one and the lender will have to provide it to you in 30 days time.
If the appraisal came in under the offer, your real estate agent will be able to fill you in on the details right away.
The report, which is typically about 10 pages or less (though some can stretch to 100 pages), will contain local comparable properties with photos and details of each property including the home being appraised, the appraised value, how the appraiser determined the value, and what factors the appraiser took into consideration.
Final Documents Needed To Close the Deal
Most Recent Tax Statement
You must provide property tax receipts to calculate any outstanding property taxes you owe on your house so the buyers can estimate the cost of taxes on their new property at the time of closing.
Whether or not you (or the buyers) will have to pay property taxes at the time of your home sale depends on your municipality’s real estate tax schedule. In some instances, cities and towns will collect taxes for the upcoming year, meaning that the sale of your home midway through the calendar could result in a refund.
In other states, homeowners pay property taxes “in arrears,” meaning you’re paying taxes for the time period leading up to the billing cycle. That could leave you with unpaid property taxes, and you are responsible for paying property taxes on your home up to (but not including) the day you close.
Seller’s Estimated Settlement Statement (aka the Closing Statement)
Near the end of your transaction, a seller’s closing statement shows you how much money you’ll receive after accounting for closing costs, taxes, and other transaction fees on your home sale. The closing agent or title company will generate the closing statement.
“Deed” is not just an old-timey term that’s thrown around in Western films from the ’60s. A deed (not to be confused with the title, which isn’t a physical document but a legal concept that grants someone ownership of the home) is a physical legal document that officially transfers ownership (title) of a house from the seller to the buyer. The deed includes the identification of both parties as well as a thorough description of the property itself.
1099-S Tax Form
If you don’t qualify for the capital gains tax exclusion (which covers up to $250,000 of the net profit on your home sale, or up to $500,000 if filing jointly), then you will have to fill out a 1099-S form to report taxes owed to the IRS on the sale of your home come tax season.
Congratulations! You’ve Got All The Right Documents To Sell Your Home
Phew! We never said selling your home would be easy, but we did say it would be worth it (just ask your bank account). The documents needed to sell a house are extensive and complicated. You’ll want an experienced real estate agent—and in some cases, a trusted real estate attorney—who’s decoding the jargon throughout the process. That way, all you have to do is “sign here.”
Don’t forget that every state has different home sale paperwork requirements, so working with an agent who has that local expertise will be a godsend. Just take this example from Shafer:
“We sell in the country a little north of Louisville, where many of the homes are on septic tanks. So there are very thorough septic inspections that take place and we also provide a sketch to let the buyer know just exactly where the septic tank is and the lateral lines.”
We couldn’t possibly account for every piece of paper specific to selling your home, so get the right professionals to do the heavy lifting, and let them cross every t, and dot every i on your behalf.
Article Image Source: (smolaw/ Shutterstock)