Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

Holiday Closure

The OREA office will close for the holidays at 12 p.m. Tuesday, December 24th.  Normal business hours will resume on Thursday, January 2nd.  Happy Holidays!

July 1st - 2011

LEGAL BEAT: Do your homework on owner’s equity before listing property

When you meet your sellers, go over their financial position and ask some basic questions and confirm their answers. Here are some suggested questions to ask them before listing.

Is there any equity in the property you’re listing?

When you meet your sellers, go over their financial position and ask some basic questions and confirm their answers. Here are some suggested questions to ask them before listing.

How many mortgages/charges/liens do you have? Do you have the last statements? Will you sign these authorizations in order for me to get more information? Do you have any judgments filed against you? I will do a search at the sheriff's office just to make sure.

Are there any other encumbrances? If you did some renovations, were the bills paid? I will check some of that with the Registry/Land Titles office as will any buyers. How about municipal taxes and condo fees? May I see the last bills? What are your utility costs, and are there any rentals? Can I see your last bills?

Based on all of that, you can then inform them to expect to receive the amounts you will show in your Sellers' Work Sheet as their approximate net equity. Of course, those numbers will change if the sellers’ financial position changes, so instruct them to keep you informed of any changes. By the way, the buyers may want to insert some clauses in any offer that could deal with any shortfalls. Here is a typical OREA one:

The Seller hereby acknowledges that the real property is subject to registered encumbrances that may, given the Seller’s obligation to pay commissions and other related closing costs, exceed the available proceeds of sale from this transaction. This Offer shall, therefore, be conditional upon the Seller obtaining the written approval of all Chargees/Mortgagees and other registered encumbrances as to the final acceptance of this Offer and their agreement to discharge their encumbrances without payment in the aggregate of more than the available proceeds from this transaction. Unless the Seller gives notice in writing delivered to the Buyer or to the Buyer’s address as hereinafter indicated not later than ______ p.m. on the _______ day of ___________, 20____, that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. This condition is included for the benefit of the Seller and may be waived at the Seller’s sole option by notice in writing to the Buyer within the time period stated herein.

Also ask the sellers: Do you have sufficient other funds that are readily available to deal with any negative position in the equity in your property?

Merv's Comments
After doing your homework, you as a careful REALTOR® should do some checks to confirm the information that the sellers have supplied to you before taking the listing, getting them to acknowledge the work sheet and marketing the property.

Yes, all of these steps cost money; and yes, they take time. However, they may save the deal and your commission. Protecting both should be part of the plan.

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