ELIMINATING THE CONFUSION OF LISTING CONTRACTS

In addition to the obvious things in a listing contract such as seller name and property address, there are some other things you need to possibly be aware of.

Terms of Sale and Price
When you determine the terms of a sale, you will of course be concerned with price. You will probably have a basic idea of what your home is worth by doing some research on what's going on with other sales in your area or talking to various real estate agents. However, in addition to price, you will need to disclose what personal property will go with the house when you sell it. Personal property is considered anything that is not attached such as washer, dryer, refrigerator, microwave, etc. You aren't required to include any of these items but if you do, you need to list what will be included.

Some items are called "real property", which includes anything attached to the house. This could include something like a chandelier that's actually a family heirloom. However, since this lighting fixture is attached to the house, it's considered "real property" and any reasonable buyer would expect it to stay with the house when you move. If you don't want that particular piece to stay, you need to very clearly state in the MLS that it will not stay when the house is sold.

It's important to know that there are several different types of listing contracts although few are used. The most common is the "Exclusive Right to Sell." Others include "Open Listing" and "One-time Show."

Open Listing
This listing contract is primarily used by people trying to do a For Sale by Owner but who are also willing to work with a licensed real estate agent. This contract allows the agent to show your home to potential buyers and should the buyer put a contract on your home, the agent earns a commission.

One-time Show
This listing contract is similar to an Open Listing but is most often used by real estate agents who are showing a For Sale by Owner home to one of their clients. In this case, the seller would sign the agreement identifying the potential buyer and it guarantees the agent a commission should the purchase go through. The purpose is that it prevents the buyer and seller from negotiating directly later as a way of avoiding the agent's commission.

Understanding the Real Estate Contract
Most contracts can make our head spin just by looking at them, much less trying to read and understand them.
Because contracts are very important when it comes to buying or selling a home, I thought I would list some of the most common legal words that you will come across on a real estate contract, or during a real estate transaction, including their definition. It might be a good idea to have a copy of this list with you and review it carefully before you sign a real estate contract.

REAL ESTATE CONTRACT GLOSSARY

Abstract - A summary; an abridgment. Before the use of photo static copying public records were kept by abstracts of recorded documents.

Abstract of Title - A compilation of the recorded documents relating to a parcel of land, from which an attorney may give an option as to the condition of title. Still in use in some states, but giving way to the use of title insurance.

Acre - A measure, usually of land, equal to 160 sq. rods (43,560 sq. ft.) in any shape.

Action to Quiet Title - A court action to establish ownership to real property. Although technically not an action to remove a cloud on a title, the two actions are usually referred to as "Quiet Title" actions.

Adjustable Rate Mortgage ARM) - A mortgage where the interest rate is not fixed, but changes during the life of the loan in line with movements in an index rate. You may also see ARM's referred to as AML's or VRM's.

Agency - An Agency relationship is one in which one person is empowered to act on behalf of another, subject to the control and consent of the person being represented.

Agent - The person who is acting on behalf of the principal or client.

Agreement of Sale - In some states it is synonymous with a purchase agreement (Purchase Agreement). In other states, it is synonymous with a land contract Land Contract).

Alienation Clause - A clause calling for a debt under a mortgage or deed of trust to be due in its entirety upon transfer of ownership of the secured property.

Amortize - To reduce a debt by regular payments of both principal and interest, as opposed to interest only payment.

Annual Percentage Rate (APR) - A measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost of loans, including mortgage plans.

Appraised Value - An option of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings.

Arrears - Payment made after its due is in arrears. Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance.

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Mark Linder
New Century Realty Group
Phone: (469)879-2960
Mark@MarkJLinder.com