This article helps you understand:
This article helps you understand:
- Common issues associated with the real estate transaction process.
- Some things to look out for when closing a real estate transaction.
- The role a real estate lawyer plays in the process and how one can help you.
What Are Some Common Issues That Affect Or Delay A Real Estate Transaction?
Perhaps the most common issue is a discrepancy between the person listed on the title and the individual claiming to be the owner.
More often than not, this is not done with criminal intent, however. Rather, it is more an innocent ignorance of the law where a family member lived with the legal owner who has died or moved. The supposed owner is unaware that they are not legally the owner since they never amended the title. This is often referred to as the probate process
in the real estate world.
In real estate, you do not become a property owner by word of mouth or assumed inheritance. Instructions for dividing or disbursing assets must be left in a will. If this is not the case, there will be significant delays in your real estate transaction. In order to proceed, you must go through the probate process, which can be very involved and time-consuming. An alternative way is to obtain permission to waive all interest from all heirs of the deceased. Via a form called an affidavit of heirship
Another very common issue that affects real estate transactions is the discovery of financing issues in response to your pre-approval letter to your lender. These often come 20-30 days into the process. A prevalent reason for this is the monthly liability from making large purchases on credit after being pre-approved.
People failing to file the previous year’s taxes is also a common issue we come across. This tends to be an issue more when closing, unfortunate as it may be. For example, suppose you started your real estate transaction in January but are still under the contract in March or April. While your most recent taxes were not necessarily due to the government, the lender may want your most recent tax returns.
Understandably so, property rehabilitation is another common issue. If you buy a house with the understanding that it will be rehabilitated, but the rehabilitation is not done, that can hold up the process quite a bit.
Many people fail to have sufficient funds to close, usually 3%, 5%, or 10%, for one reason or another, which can significantly delay things, if not outright, end the process.
Lastly, issues that come from SBA PPP loans, or paycheck protection grants. Many get these under the false pretense of “owning a business.” This can be equally problematic for those who do not do this but receive it as a sole proprietor business and did not correctly report to the government. Your lender will eventually get access to your bank statements and transaction history. When they see a massive sum of money deposited into your account, you will be left to explain where the money came from. Failing to verify this can cause your lender to immediately cease service to you and your pre-approval to be revoked partially, if not entirely.
What Is The Closing Process For A Residential Property Sale In Illinois Like? How Can A Chicago Area Real Estate Attorney Make This Process Go Smoothly?
A typical real estate transaction (from the seller’s perspective) goes as follows:
First, you meet with a realtor. They will perform a market analysis. This is essentially just a way in which they can get an assessment of the value of the property according to other properties in the vicinity.
Next, you and your realtor will most likely decide what price to list your property for. Most typically list higher than the valuation determined by the market analysis because buyers usually naturally bid lower than listing prices. Doing this is a way to ensure you get as close to your desired price as possible.
Your realtor may have you do an open house after deciding your listing price. Other realtors will come with potential buyers to view the property. If you need to make any updates to the property in preparation for this, your realtor will usually tell you beforehand.
After this, the bidding war begins, where you will ideally get many offers for the property. Your realtor will receive these offers and negotiate with potential buyers’ realtors to eventually accept one. This is when the attorney’s name is put on your contract.
At this point, you may find yourself waiting a lot on the buyer to do an inspection and ask you to do any repairs or issue them any credits in lieu of repairs. Once you receive the response from the buyer based on their inspection, you will work with your attorney
to see what is fair in terms of dollar amount and time for you to make the deal happen. You will most likely have to wait for the buyer to get their pre-approval as well.
You may want to get a survey of your property at this point, as Illinois requires them unless your buyer waives it. You may also want to get the title situated and make sure it is clean or that there are no outstanding mortgages on the property. If there is an outstanding mortgage on the property, you need to get a mortgage payoff letter through your lender. This is something the seller will handle and share with their attorney. You might have to let the buyer in a few times, including for the appraisal, as their lender will likely need to do an appraisal.
There may be further steps depending on whether a homeowners association is involved or you are selling a condo. If you live in an Illinois village, then you will most likely have to do a village inspection. Single-family homes have requirements pertaining to zoning certificates.
To wrap up the process, you will need to make copies of keys and have things like warranties for appliances organized as you actually transfer ownership over to the buyer. You will be responsible for executing three major documents:
- Affidavit of title;
- Bill of sale.
Lastly, you will attend the real estate closing, where you actually sign these documents, issue keys to the buyer, and receive your check.
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