Questions home sellers often ask our real estate attorneys
What Are Tax Credits and Why Do I Have to Pay Them?
How do I pay for my share of the property taxes?
Can I check on property taxes myself?
What happens if I refuse an inspection request?
How will I receive the proceeds of the sale?
Do I have to pay the owner’s policy fee? What is it?
Do I Need to Attend My Real Estate Closing?
When and Where Will My Closing Take Place?
Why do I pay for both real estate broker commissions?
Why is the mortgage balance on my loan statement lower than the amount on my payoff statement?
What is earnest money?
What is a contingency?
What is Title Insurance and Why Am I Paying For It?
What is “Pulling Title” and who does it?
What Happens to the Money In My MortgWhat Happens to the Money In My Mortgage Escrow Once I Sell?age Escrow Once I Sell?
What are Tax Credits and I Why Do I Have to Pay Them?
Sellers must pay all property tax bills that are due before the closing date. Taxes that are owed but not yet due are allocated between the buyer and seller. You must give your buyer funds to cover taxes up to the date of closing, even if the bill is not yet known or available.
Seems simple enough, but …
Illinois property taxes are paid one year “in arrears.” That means this year’s property tax will not be billed until next year. Tax prorations are estimaties of those future bills.
A seasoned real estate attorney will help determine a fair formula to allocate those taxes with the buyer side and will calculate the credit amount using the agreed formula. We take several factors into account, including whether the county has reassessed the property’s value or whether existing tax exemptions will be lost or preserved.
Barring special circumstances, City of Chicago tax prorations assume a 10% increase over the last ascertainable tax bill. Suburban proations usually assume a 5% increase.
How do I pay for my share of the property taxes?
If the tax bill is issued before closing, you can pay it directly to the county in advance, or the funds can be deducted at closing and paid by the title company. It’s the same if you owe delinquent or back taxes.
If a tax bill has not been issued yet or if that bill isn’t due yet, you can give your buyer a tax credit or put money into escrow until the county sends the tax bill.
Can I check on property taxes myself?
Yes. Property tax information is available from your county treasurer either online, by telephone, or in person at their office. You might need the property’s PIN (permanent index number) from an earlier tax bill.
If the property is in Cook County, you can look up tax information on the County’s Property Tax Portal. Enter the street address or the PIN (permanent index number). The site shows the amounts billed, recent payment history, the property’s assessed valuation, property characteristics, history of tax exemptions, and assessment appeals. It also shows possible refunds and sales of delinquent taxes.
Collar counties all have websites that make this information available too.
What happens if I refuse an inspection request?
Buyers can ask you for just about anything. But just because they ask does not mean that you must give.
This is your deal too, and if you do not want to give a concession or make a repair, you have the right to say “no.” You can also counteroffer with a smaller concession than the buyer asked for. If the buyer asks for a professional repair, you may offer to hire a handyman or to make a repair yourself.
Keep in mind, the deal only moves forward if all parties agree to a resolution. And if an agreement cannot be reached, you and the buyer each have the right to cancel the deal.
How will I receive the proceeds of the sale?
You have a few options. The two most common solutions are paper checks or wire transfers.
The title company can send a paper check to you, or you can pick up your check for our (or your real estate attorney's) office or the title company.
If you give your real estate attorney the necessary details, they can have funds wired directly to a financial institution of your choosing.
Do I have to pay the owner’s policy fee? What is it?
Yes. This fee is a one-time insurance payment for owner’s title insurance that you must purchase for the buyer. It is typically paid at closing.
This insurance assures that (a) the seller legally owns the property and can convey title to the buyer, and (b) there are no unacceptable mortgages, liens, or other encumbrances that would limit the buyer’s ability to use and enjoy the property.
Do I Need to Attend My Real Estate Closing?
Sellers attend their closing if they want to. But, with proper planning, sellers do not need to. In fact, most sellers choose not to attend. Sellers can “pre-sign” all necessary closing paperwork. Our firm coordinates with clients two or more weeks in advance of closing to help make this decision.
When and Where Will My Closing Take Place?
The contract should have a closing date written in, or at least a description of how to determine that date (i.e., 30 days after the seller accepts the contract). The closing date can always be changed by the agreement of the parties.
To the greatest extent possible, the closing date is to be respected by all parties involved in the transaction. From time to time, closings may be delayed due to lender delays, title issues, travel, illness, or other factors.
Closings generally take place at the title insurance company’s office closest to the property. Buyers are expected to sign closing documents live and in person on the date of closing. However, an emerging trend is to let buyers close from any title location convenient to them. This is subject to seller-side cooperation and agreement.
As for the time of day, closings are scheduled during standard business hours, Monday-Friday, between 9 am-5 pm. Closings are typically scheduled no later than 3:30 or 4:00. Again, all parties must agree to the start time.
Cash transactions have broader flexibility. Because there is no lender involved, most cash closings can be transacted entirely by email before or on the closing date.
Why do I pay for both real estate broker commissions?
Technically, you pay only one brokerage commission to the real estate broker you hired to sell the property. You agreed to this when you signed the broker’s listing agreement. The broker you hired typically shares that commission with the buyer’s broker if the purchase is closed/finalized.
Why is the mortgage balance on my loan statement lower than the amount on my payoff statement?
There are at least three reasons that the payoff statement is higher than you expected.
- Your monthly mortgage statement shows the principal balance due on the loan as of the statement date. You continue to owe interest until the date the loan is repaid. Most often, this is the next business day after the closing to allow time for payment to be sent and received.
- Mortgage payments are made “in arrears” by one month. For example, a payment made on July first covers June’s interest, not July’s. Therefore the amount paid at closing includes the principal balance and all accrued interest through the expected payoff date.
- The payoff amount may also include the lender’s administrative fees for things like loan payoff demand statements, county recording, and escrow deficits. All such payments should be itemized in the payoff statement and be available to you for review. You might ask your lender or real estate lawyer to fully explain specific fees.
What is earnest money?
Earnest money is the buyer’s good-faith deposit that will be held in escrow until the real estate transaction is over. Most often, the earnest money is held by participating real estate brokerages. If the brokers do not hold the earnest money, the title insurance company or one of the attorneys will do so.
If the buyer and seller complete or “close” the transaction, the money will be delivered to the title company and applied towards the purchase price. If the contract is canceled (for reasons that are not the buyer’s fault and provided that the cancellation notice is given in a proper manner) the money will be returned to the buyer. If the buyer defaults or breaches the contract, the seller may make a claim on the earnest money to compensate for damages caused.
Importantly, the earnest money is not additional money paid over and above the purchase price. It is one component of how the purchase price is paid.
What is a contingency?
Most often, a buyer and seller are only willing or able to proceed with a transaction if certain conditions are met. These are called contract contingencies. Standard contracts have multiple contingencies, which generally include:
- Attorney review
- Requirements for mortgage financing
- Review and approval of HOA documents
- Insurability
- Clear title
- Home inspection
Most contingencies are time sensitive and must adhere to a timeline established in the contract. If contingencies are not satisfied, the buyer may be able to cancel the contract and recoup all earnest money paid...and the seller will have to start over and find another buyer. It is generally in the seller’s best interest to close contingencies as soon as possible to limit buyers’ opportunities to kill the deal.
What is Title Insurance and Why Do I Am I Paying for It?
Title insurance protects buyers and mortgage lenders from risks of forged deeds and claims others may have against the property being bought and sold. The commitment to insure is an initial report that specifies the property that can be insured and the current state of its title: who the current owner of record is, whether the property taxes are up to date, and what (if any) liens exist.
While it can vary from place to place across the country, in Chicagoland, sellers customarily purchase title insurance for their buyers, and buyers purchase loan policies for their mortgage lenders. This custom and practice is reflected in form contracts commonly used locally.
The seller chooses the provider of the "Owners" title insurance polcy, because seller pays it. Sellers’ attorneys usually take care of this for their clients, but from time to time, a real estate brokers, relocation company, or another agenciy may place the order.
What is “Pulling Title” and who does it?
When mortgage company processors or anyone else asks about “pulling” titles, they are asking who is ordering the title insurance search and commitment to insure. In most transactions, the Seller’s Attorney pulls the title.
What Happens to the Money In My Mortgage Escrow Once I Sell?
Once you repay your mortgage loan balance in full, your mortgage lender must return all funds being held in escrow for property taxes and insurance. Lenders are obligated to do so within 20 business days of the loan repayment (holidays, Saturdays and Sundays excluded). A paper check will be mailed directly you.