These real estate transactions documents tips save agents time.
So many legal documents, listing data, disclosure forms, inspections, and files take up a lot of paperwork for listing and buyers’ agents in a transaction.
These tips should help you become more efficient in your next transaction.
Real Estate Transactions Documents Tips
MLS Information
Listing agents must require the seller to verify and sign all information submitted to the MLS.
This protects you from sellers complaining about incorrect MLS information. Also, make the seller sign the MLS report before placing the listing on “active” status.
Always include these signed verifications in your transaction file.
Property Profile
Get a Property Profile from a title insurance company before meeting with a seller for a listing. Always check the names on the title (legal owners). Make sure all the legal owners attend your listing presentation.
The listing agreement must include the legal owners’ full names to avoid confusion with someone else. The same goes when the legal owner is a legal entity (corporation, LLC, etc.). This prevents you from getting an offer and opening escrow using incorrect names.
Check the loan amount owed on the listing. This lets you know if the loan amount exceeds the value leading to a “Short Sale”. Good to know before taking the listing.
Use DocuSign CC
If you use an electronic signature system (like DocuSign or another E-signature program) take advantage of the routing system.
Add the names of all essential parties to the bottom of the routing as a “CC”. Let the DocuSign system do the work for you routing future signatures to all parties. This comes in handy when a buyer or seller electronically signs a document which is automatically routed to your office, teammates, or other agents.
Use a good subject line so documents signed late at night or from another city gets delivered at that moment to the parties knowing what it is for. This saves you time and increases your efficiency.
Essential Real Estate Transactions Documents You Keep for Clients
Agents should get, organize, and keep real estate transactions documents for clients.
What types of documents do your real estate clients need to keep? While escrow companies must keep certain legal documents by law, their closing documents do not include everything.
Besides keeping documents for your buyers and sellers it’s smart for you to keep important ones for yourself. Especially, if later on a buyer or seller decides to file a claim against you and your brokerage. May never happen. But, wise to do.
So, which ones are the most important documents to keep?
Buyer’s Agent Agreement
When acting as a buyer’s agent, a written buyer’s agent agreement sets forth your duties towards your buyer, your commission (or fee), and how the agreement terminates.
Why keep it? This contract details your fiduciary duties towards your buyer.
Seller Disclosures
California (and other states) require sellers to disclose known defects and environmental hazards (or potential) with a home. This includes present and past which affect the home’s value.
Such disclosures include pest infestations, lead-based paint, and renovations performed without a permit.
California laws require the following seller disclosures:
Transfer Disclosure Statement (TDS) disclosing problems or defects with the home’s structure, included appliances, past renovations, additions, damages, neighborhood noise problems, and if a death occurred on the property during the last three years.
Natural Hazard Disclosure Statement (NHD) regarding if the property is in a special flood hazard area, or substantial forest fire risks, or in an earthquake fault zone.
Extra disclosures include any purchase money liens, special study zones, and location of registered sex offenders as available from local law enforcement agencies. The California Megan’s Law website provides this information.
Why keep them? If the seller fails to fully disclose any of these, the buyer can cancel the purchase or try to rescind after the closing.
Purchase Agreement
Your transaction begins with the signed purchase agreement. The buyer and seller sign it which instructs the escrow company how to close the purchase. The sellers and buyer’s rights and remedies if violated spelled out in this contract.
Why keep it? A legally binding purchase contract requires fulfillment of duties by all parties. Many lawsuits get filed over violations of this agreement.
Amendments, Riders, and Addenda
Legal documents often get amended or new terms added on at a later time.
For instance, a home inspection discovers a material defect with the plumbing in a house. The purchase agreement needs an amendment so the seller can fix the plumbing and the closing date delayed until a second inspection approves the seller’s repairs.
Why keep them? Amendments, riders, and addenda often relate to appraisals or home inspections. They change the terms of the original contract. That requires holding on to them. For example, future plumbing problems may show faulty repairs by the seller.
Home Inspection Report
After the buyer’s home inspection, the report details any potential problems.
Why keep it? This report lists all discovered potential problems along with photos. Keeping this report creates a record of needed repairs.
Title Insurance Policy
Title insurance protects against claims challenging the buyer’s title to the home. The title insurance report details any encumbrances and liens against the property. Also protects against any fraudulent signatures in the ownership documents.
Why keep it? If a previous owner (like a partner, ex-spouse, etc.) tries to claim title to the home it protects the buyer and the lender. Since two policies exist (one for the buyer and the other for the lender) it’s a good idea for the buyer to get a copy.
Mortgage Disclosure
The Mortgage Loan Disclosure Statement (MLDS) required by California law for the escrow closing. The MLDS details important things like the loan term (15 or 30 years), loan type (adjustable-rate or fixed-rate mortgage), interest rate, and closing costs.
Why keep it? The MLDS itemizes all costs associated with the mortgage and closing. Useful for future reference. Also, important for buyers to file their income tax returns to use the deductions.
Closing Costs
The California real estate closing costs itemized for the escrow closing contains all costs related to the transaction. Separate ones for the buyer and the seller.
Why keep it? Like the MLDS, it contains all costs associated with the real estate transaction. Buyers and seller need a copy for their future tax deductions.
Grant Deed
In California, the actual Grant Deed proves title.
It verifies the prior owner transferred the title to the buyer. Available after the grant deed recorded in the county records office.
Why keep it? The best proof of property ownership by the buyer.
Conclusion
Our real estate transactions documents tips save agents’ time. They also help agents to organize the documents a buyer needs during the ownership of the home.
Requiring sellers to confirm all the MLS information before making a listing active protects the listing agent from future claims about negligence, errors, incorrect information, or intentional fraud.
Getting a property profile before your listing presentation gives you important facts about ownership and loan amount due.
Electronic signatures allow using CC.’s of all future signatures for fast-forwarding to all parties in a transaction.
Agents help their clients by gathering and organizing all-important transaction documents for them.
Too Much to Handle?
Gathering and organizing transaction documents for clients may not be every agents’ forte. Instead, hire a Transaction Coordinator (TC) to do all these for you and your clients.
Transaction Monster TCs do all the above tasks at a reasonable cost to save agents time and help to ensure a timely successful closing.
Contact Us before your next transaction to learn how we help agents throughout California.
Steven Rich, MBA – Guest Blogger
HAVE ANY QUESTIONS?
Contact us here: www.TransactionMonster.com/contact
Let us know, we love to help!
Transaction Monster – Real Estate Transaction Coordinating Company