Walking Through the Legal Steps: How to Sell a House in New York
In recent years, New York has become a buyers’ market when it comes to real estate as sellers are more empowered than ever. Figuring out how to sell a house in New York is more complicated than in other places because there are legal hoops to jump through. Thankfully, the goal is to protect all parties, so it works out in everyone’s favor.
Here are the steps for selling your house in New York.
Getting to Work with a Real Estate Agent
While you can always list and sell your home as the owner, it’s hard to do this well without a lot of foreknowledge about how the system works. If you don’t follow trends and don’t know what kinds of pricing is on the market, you might have a tough time selling your home. You might also get lost under all of the bureaucracy and paperwork that comes along with selling a home.
When you get together with a real estate agent, you’ll need to sign a “listing agreement”. In this agreement, you’ll be giving the agent the right to market and sell your home on your behalf. There are standard forms created by the NY State Association of Realtors to help guide you and your agent.
The agreement will cover the terms of commission related to selling your home. You’ll likely have to pay them 5% to 6% of the final price of the home when it sells. You also need to know the type of listing that your agent is putting out there, often agreeing that they get paid even if you find the buyer.
There will be a time period on the listing that sets the duration for how long it’ll be up. You’ll also have to include the price of the home at the time that you list it to ensure that there’s legal documentation of the amount of money you’re agreeing to.
The agreement will cover property included in the sale like any built-in appliances or structures on the property that are or are not part of the price.
Disclosures are Important
When you’re listing a property in New York, the law requires you to have a disclosure statement. This statement is where buyers can find all the pertinent information they need about a property before they invest. Rather than buying a property and finding out about problems later, they can be informed in advance.
If the statement isn’t made, the seller can instead credit the buyer $500 at closing. However, this might not be an ideal situation for all buyers, so it’s often better to put together the disclosure.
In this statement, the seller needs to note the presence of any hazardous or toxic substances within their knowledge. If there are major material defects to the plumbing, structure, HVAC, or other systems, the seller needs to let their buyer know. They also need to inform buyers of any pest issues like rodents, insects, or wildlife that have infested the home.
If there are any elements that are commonly owned between multiple neighbors, like a driveway, or if there are homeowners’ association fees, let buyers know. There’s also a section in disclosure forms for sellers to let potential buyers know about water source information.
Making a Purchase Agreement
Any buyer looking to get a home in New York will have to submit a written offer to the seller. This agreement will include the price but isn’t required to be a complete contract that’s ready to sign like what is required in California.
If the seller agrees, which can be done verbally, the buyer is then allowed to conduct inspections as they please. Once these inspections are completed, there’s a short window for then adjusting the price accordingly based on what’s found. If the seller offers to do some repairs, the buyer might not ask for a change in price.
No one is under contract yet nor are they bound to the contract. The next step requires the seller’s attorney to help compose a final contract to be negotiated over and then signed by both parties. The buyer pays a percentage as a down payment to secure the home and set the contract in motion.
There’s a 72-hour review period for attorneys to look over the contract. There can be last changes made and if there’s an extreme situation, one party can walk out of the deal in this period.
Then a final agreement is created with all of the terms of sale, pushing the transaction into escrow.
Escrow is when the purchase agreement has been signed but the house hasn’t closed yet. The seller’s attorney becomes the “escrow” or the title agent for the property and supervises the whole process. They prepare title reports and get title insurance to settle property liens and prepare the final closing documents.
During this period, the buyer needs to hustle to finalize financing and remove all of the buyer’s contingencies. The property should be appraised and title insurance should be obtained to secure the home and the deal.
Sellers need to help to make the property available for inspections and a final walkthrough.
If the buyer struggles to get financing, they have the right to back out. They may get to keep their down payment even if they back out of the deal after it’s been paid.
If you’re worried it’ll take a while, read more here to understand the process better.
How To Sell A House Is All In The Closing
Now that you’ve sold your house, you need to go through the process of closing. There’s a formality in how to sell a house and so you’ll be expected to go to an in-person meeting with the buyer, seller, and their lawyers. Here is where everything is signed and final things are exchanged.
If you’re thinking of adding an extension to your home before selling, check out our guide for tips on getting it done right.