How is the list price set?
It is important to set the price of your home based on current market conditions, including recent sales, pending activity, and active listings in the area. The comparative market analysis provides key data on which to base your list price decision. With this information, you and your agent can arrive at a list price range and weigh the pros and cons of listing at the high or low end of that range.
What do I need to disclose?
There are numerous statutory and other disclosures involved in the sale of a home. These include: Transfer Disclosure Statement, Agent Visual Inspection Disclosure Statement, Seller Property Questionnaire, Supplemental Statutory and Contractual Disclosures, Natural Hazard Disclosure Statement, Lead-Based Paint Disclosure Statement, Water Heater and Smoke Detector Statement of Compliance, Residential Earthquake Hazards Report, and Special Assessments/Mello-Roos. Sellers of homes in Los Angeles are required to provide a Report of Residential Property Records and Pending Special Assessments Liens (also known as a Residential Property Report, RPR, or Form 9A).
The following disclosures also are recommended: 10-page Buyer and Seller Advisory, Local Area Disclosures, and the Structural Pest Control Report. Depending on the property, there may be additional disclosures as well.
How do I determine what I will net from the sale?
Net proceeds can be determined by looking at sales price minus loan amount, taxes, and other costs. You will want to obtain your loan payoff amount and the amount of any liens such as property taxes. In addition, there may be transfer taxes due at time of transfer. There also may be other costs associated with the sale such as a structural pest (i.e., termite) control report.
What contingencies do buyers usually request?
The California Residential Purchase Agreement contains contingencies for loan, appraisal, and physical inspection and review of the preliminary title report. The seller's agent provides guidance on the average length of time for removal of these contingencies and helps to negotiate and monitor the timely removal of the contingencies.
How do I choose among different offers, if multiple offers are made on my home?
As a seller, you want to consider not only the price offered by the buyer, but also the buyer's ability to pay as well as other factors. A good agent educates the seller about the important considerations and at times can facilitate obtaining more information so that the seller is able to distinguish among several offers.
What is escrow?
In real estate transactions, escrow refers to the process in which an independent, trusted third party receives and disburses funds and documents for buyer and seller. The timing of disbursement depends on the fulfillment of contractual obligations by buyer and seller.
What taxes will I pay on the sale of my home?
In addition to property, city transfer, and county transfer taxes, you may also have capital gains tax due on the profit ("gain") made on the sale of your home. The gain is determined by the difference between the sale price and the cost basis of the home.
Cost basis may be adjusted upwards by amounts paid for capital improvements made to the home (e.g., home additions, roof replacement, installing central air, rewiring the home, assessments paid for local improvements). Also, certain items reduce the basis of the property (e.g., insurance reimbursement for casualty and theft losses, easements).
If the home is your principal residence, you may qualify to exclude some or all of the gain from the sale if during the five year period ending on the date of sale you owned the property for at least two years, lived in the property as your principal residence for at least two years, and did not exclude gain from the sale of another principal residence during the two years ending on the date of sale. The two year ownership and "use" requirements do not have to be continuous. Currently, an individual can exclude up to $250,000 (or $500,000 for a married couple) from the sale of the home.