Clear Realty Full Service Option

Using Clear Realty's Sell-Star suite of tools you will be more knowledgeable about the value of your home and what buyers most desire than any real estate broker you speak with.

Every one of Clear Realty's Sell-Star tools lets you understand which qualities of homes buyers most cherish and will pay the most to attain—not based on opinion, but through billions of precisely designed analyses.

You will know why buyers pay more for some homes based on their actions and how they spend their money.

Sell-Star tools give you marketing expertise, which is very different than advertising skills.  Marketing is understanding which qualities of your home trigger the greatest emotional responses in your buyers allowing you to market your home better meeting the desires of your buyers than all the homes you are competing with.

Creed, the broker/owner of Clear Realty, not only possesses a Master's Degree in Marketing and over 30 years’ experience in real estate, he’s also the inventor of the entire suite of Sell-Star tools and holds four U.S. Patents pertaining to real estate technologies.  All this knowledge, experience, and technology is yours through Clear Realty's Full-Service package.


Advantages you have:

  • Using Sell-Star’s PRICE Tool (Automated Valuation Model, AKA Value-Amp), PREPARE Tool, and PROMOTE Tool, along with marketing expertise, and 30+ years’ real estate sales experience, Clear Realty gives you better marketing consultation and services than anyone else in the real estate industry.
  • Your PRICE Tool gives your home's value credit for every quality it has–amplifying your value in the marketplace.  You'll see your home's value jump when it has an open-and-flowing floor plan, a view of the mountains, professional kitchen appliances, new carpet, a finished basement, and any of thousands of qualities buyers in your neighborhood most seek.  This is a patented valuation system no one else has and now it is yours.
  • Your PREPARE Tool focuses your knowledge about what creates value in your home to short-term projects maximizing your home's value and speeding up your time to sell, just before placing your home on the market.
  • Your PROMOTE Tool rank order presents which photos to present and exactly which qualities of your home to advertise to maximize the emotional impact on home buyers, amplify your home's value to them, and streamline your time on market.
  • Your PROFIT Tool is quite unfair to the buyers, as you likely know more about their options than they or their realtor do at the moment of negotiations.  You are seeing the buyer's best home options available and your closest competition, instant answers to your negotiation questions based on market facts at the moment of negotiations, and with this knowledge you will know how hard to push or what to give to optimize your home sale.
  • Your complete Full-Service fee is 4% of sale price.  Clear Realty earns only 1.5% of that as your broker, while offering buyer agents 2.5% of the total fee—ensuring your home receives the absolute maximum buyer exposure and interest.  We’ve had excellent outcomes offering 2.5% instead of the typical 2.8% to 3.0% buyer agent commissions.  You are welcome to consider any buyer agent commission you wish. About 24% of buyers find the home they purchase through a realtor using the MLS system.
  • About 59% of buyers find the home they purchase on the internet.  We market your home using our customized Sell-Star based analyses along with our 30+ years’ brokerage experience, on major internet sites like realtor.com, zillow.com, trulia.com, plus many others.  Your PRICE, PREPARE, and PROMOTE Tools guarantee triggering your buyer's emotions and showing activity.
  • About 10% of buyers find the home they purchase from your sign and friends and neighbors telling the buyers about seeing your home for sale.  Your for-sale sign is patented and guaranteed to get attention.
  • Clear Realty personally manages all buyer and agent inquires on your home.  We do all the work and let you know when it’s time to review an offer.
  • One of the things homeowners dislike the most about the sale process are perpetual lifestyle interruptions for showings and contract negotiations.  With an active real estate market we believe you are not harming your chances of selling your home by limiting showing days and times, and even setting days and times you are available to review offers on your home with us.  While not suggesting you constrict your showing and contract review times to the point of one or two days a week, you are fine setting specific days and times throughout the week your home is available—and setting specific times it is not.  There’s no reason you must get a stressful call at 10pm about reviewing an 18-page contract.  If you tell us 9am to 6pm, we ensure this is when we will contact you.

If Clear Realty provides the buyer who closes on your home, then Clear Realty earns the buyer agent fee, fully understanding we will have to put together the full contract for the buyers, work through negotiations, manage contingencies such as inspections and appraisals, and overseeing third-parties like the buyer’s lender.  We will be doing the work two brokers typically perform.


Clear Realty uses our 30+ years’ real estate experience, marketing expertise, and patented technologies to PRICE your home knowing which qualities buyers most demand and pay the most to attain, PREPARE your home optimizing your best return-on-investment projects based on buyer demand, PROMOTE your home knowing which qualities trigger the greatest emotions of your buyers–getting them to spend the most money, and unfairly negotiate your sale knowing your buyer's options better than they and their agent do with your PROFIT tool.

Of course as a full-service brokerage Clear Realty manages all contingencies and time frames within your sale contract (posted below for your review).

These are the unfair advantages you have selling your home through Clear Realty’s Full-Service option.


The Colorado Contract to Buy and Sell Real Estate is posted below for your review.
 

Pre-market Considerations

 

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Exploring whether you want to sell is okay; we’re here to offer honest advice whether you should sell or not based on your needs and goals.

Part of your decision process is deciding if your potential new location, whether across town or across the country, is a good fit for you. We are right here to explore and advise you on this and help discover details about your new area.

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The very first thing we will do is pull all of the qualities buyers most love about your home through Clear Realty’s Value Amp™.

This amplifies your home’s value to the absolute max.

Your Clear Realty™ advisor does all of this using your personal input.

Or you can do this yourself by activating your Sell-Star™ account.

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If not, you’re okay. The biggest regret home sellers have after closing on their home is not better preparing their home for sale before going to market—because not being fully prepared lost them money and cost them a longer time on the market. This is not going to happen to you ☺.

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Once we have amped your home’s value to the max, if you have been using Sell-Star’s “PROTECT” tools, updating your home with the qualities you love and those buyers love, you are likely in excellent shape to sell.

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We’ll ensure this as we immediately activate an absolutely necessary Sell-Star™ tool for your home.

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PREPARE

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Sell-Star’s PREPARE tool is all about making your home as perfect as possible for as little money as possible before going to market.

Your Clear Realty™ advisor will help turn your home into a buyer magnet for as little time and money as possible.

You’re ready for market ☺

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Marketing

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The right words and photos trigger your buyers to picture living in your home. Using Sell-Star’s artificial intelligence driven analyses this is no longer an agent’s guessing game but instead a precision process.

PROMOTE displays exactly how to advertise your home to maximize buyers’ interest.

Let’s be brutally honest: advertising your home in just three mediums covers 100% of buyers for your home.

  • 1) 59% of buyers find the home they purchase on the internet*.
  • 2) 24% of buyers find the home they purchase through an agent and the realtors’ MLS system*.
  • 3) 10% of buyers find the home they purchase from your yard sign and your neighbors telling people they know*.
  • The remaining 7% are new home builders direct by-owner sales (*source NAR 2019).
  • So the first three mediums are 100% of the locations you should advertise in.

More honesty: every broker can advertise your home on the internet and in the MLS. Again, it’s not where you say it—but most importantly WHAT you say that sells your home. This is what Sell-Star’s PROMOTE does for you.

Your advantages through Clear Realty™ are: 1) we use complex algorithms to precisely say what buyers want to hear (59% + 24%), and 2) our patented sign will get more neighbors talking and helping sell your home (10%) (Patent D778,364).

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Negotiations

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There's no doubt about it: you have a completely unfair advantage during negotiations using Clear Realty’s Sell-Star™ PROFIT tool.

You know more about the buyer’s options and their likely actions during negotiations than they do.

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Clear Realty™ gives you all this and more at a low 4% total fee. HIGH Experience  LOW Fees

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Following are the most vital portions of the Colorado Contract to Buy and Sell Real Estate for selling your home in Colorado. Clear Realty brokers are experts with every provision of the Colorado Real Estate Contract with decades of experience, plus we provide all of the Sell-Star™ tools already mentioned, and we are your insurance against every challenge in your home sale.

Understanding the Colorado Contract to Buy and Sell Real Estate

Clear Realty™ services continued (understanding the Colorado Real Estate Sales Contract).

Every check-box, blank field, date, and paragraph within the 820 lines and 18 pages of the Colorado Contract to Buy and Sell Real Estate is important, and legally binds you and the buyer to specific actions within specific time frames.

I have prepared an explanation of the major components and contingencies of the Colorado Real Estate Sale Contract for you, and it is presented as you scroll down the screen you are currently on at the Clear Realty website.

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I will go through the most important paragraphs and explain how they affect you the home seller.

This contract was created by the Colorado Division of Real Estate, which is governed by the Colorado Department of Regulatory Agencies (DORA).

You can also see the complete Colorado Contract to Buy and Sell Real Estate (Residential) here and every state sanctioned real estate form Colorado brokers use here.

Every licensed real estate broker in Colorado is required to use only the CBS1-6-18 sale form. The only way around this is either the broker or the home seller paying an attorney to draw up custom real estate forms.

Home builders have done exactly this as have Institutional Investors (Instant Offer companies like Zillow and Redfin), and their in-house attorneys have created lengthy, complex forms to their utmost benefit. If you ever make an offer for a newly built home or accept an offer from an Institutional Investor, I suggest having an attorney review the form, explain the contingencies and repercussions of each paragraph, and make sure you fully understand what you—and the builder or Investor—are agreeing to.

The Colorado Contract to Buy and Sell Real Estate also starts with similar advice: have an attorney review the agreement before signing it. They repeat this advice near the end of the contract in paragraph 20 of the most recent contract.

By law real estate brokers cannot offer legal or tax advice unless they are separately trained and licensed to do so. As such I am simply offering explanations and advice from 30+ years’ experience as a Colorado real estate broker.

Let’s now walk through the most important paragraphs and contingencies of the Colorado Real Estate Contract and how they affect you the home seller.

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Here we are defining what is specifically included with your home sale, both inside and outside of your home.

Ignore stuff like roof shingles and furnace. Think instead about blinds and curtains, chandeliers, and grills—oh, and refrigerators.

Anything that is attached to a portion of your home could be considered as an inclusion by a buyer (and their attorney). So instead of allowing the buyer to interpret what they think should be included, we are specifically defining what is included with your home sale.

If you are including something like curtains or blinds, we will list them as part of the sale, as they are screwed to the wall. But if you are taking them, we must list them as an exclusion in a separate paragraph—because they are screwed to the wall.

The same concept holds true for some super-cool chandelier you love: it’s screwed and wired to your house so the buyer (and their attorney) will assume it is part of the sale. If you agree we will list it as an inclusion. If you want to take it with you after the sale, we need to list it as an exclusion and replace it with something acceptable to the buyer.

Hey, you just dropped $3,500 on that state-of-the-art smart refrigerator that’s wired to your internet and makes ice so fast you’re good for a thirty-person margarita party. Well as soon as your refrigerator is plumbed into your water supply system the buyer’s attorney is quite sure it’s attached to the home and part of the sale. We either confirm this by listing it as an inclusion or specifically exclude it.

You get the idea: you and I need to confirm anything that may be attached to your home as either being sold with the home or specifically exclude it. This is not a big deal when we do this before placing your home on the market. But confusions between these kinds of items after sale keeps attorneys driving Maserati's.

Conveying parking if you are selling a single-family home is pretty straight-forward, as long as your garage, carport, driveway, or gravel parking area is within the boundaries of your legal lot area.

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Much trickier is conveying parking facilities for condominium units. Is your garage attached or detached? Do you have underground parking? Are you assigned a numbered spot or fighting each day for open parking lot locations?

Now the legal stuff: do you OWN the parking space(s) as part of the legal description on your deed, or do you simply have rights to use common area parking locations (assigned or not) owned by the HOA as part of the common area?

Parking is pretty serious stuff, so you and I need to confirm if you have deeded ownership or just common area parking rights. The same situation and questions and concerns goes for storage areas outside of your exact unit.

Just like the inclusions section of the sale contract, this is not a big deal if we accurately define if parking is owned and being conveyed via deed by you, or if it’s just a right to use a parking area owned by the HOA. But since cars often cost $40,000 to $100,000 now days, the buyer’s attorney will be checking to ensure their client received what we offered as part of the home sale.

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Exclusions are of course the exact opposite of the prior inclusions paragraphs.

Here we list anything which may be interpreted as staying with your home when you sell, which you will be taking with you.

In the same walk through of your home prior to placing it on the market you and I will list out precisely what stays as part of the sale and what you are taking with you.

If it is something simple such as a washer and dryer set, we simply state that you are taking them with you. On more complex issues like a chandelier or a built-in natural gas grill, you may need to have a specific replacement in mind (model, make, skew number) and simply note this item will be replacing the existing item. This just makes it a clean deal that everyone fully understands.

If you live in a typical urban or suburban neighborhood you very likely will not need to concern yourself with paragraph 2.7.

Only if you own specific water rights (well or ditch or other water rights) do you need to tell the buyer how you will convey title of these rights to them.

If you receive your water from a municipality through provided supply pipes at the road which attach to your own supply lines running from the road connection to your home, we have a simple form you use to tell the buyers who provides your household water and how to contact them. This is called a Source of Water form.

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This latter scenario is all most Colorado home owners need to do 90% of the time.

If you do have other water rights let’s collect up information on this, make copies of all the documents you have, and publish them as part of the home sale information when you go to market.

The alternative earnest money deadline here is a portion of the Colorado Contract to Buy and Sell Real Estate “dates and deadlines” paragraph. The alternative earnest money deadline is explained in greater detail a little further down on this screen at the Clear Realty™ website.

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The Colorado contract places all the dates and deadlines for your entire transaction in one place so you can quickly see what tasks are required and when. Then each task is defined in greater detail within the body of the contract. The “reference” number beside each “event” in this dates and deadlines section identifies the paragraph within the contract this date pertains to.

Because this is the way the contract is designed, I am presenting my explanations in the same order, so you can look to these notes with a complete 18-page contract in your hand and be able to easily follow each detail.

Today most offers to purchase your home will be delivered electronically (email or a secured web link). However, earnest money deposits are still often presented as a paper check (although the buyer could wire the funds directly to a title company)—but during negotiations the title company may not even be chosen yet.

So, once you and a buyer work out everything within the sale contract and everyone signs it (probably electronically) then within a specific time period the buyers drag their check over to the title company agreed upon (or occasionally the listing broker’s office) for deposit in an escrow account.

The earnest money must be delivered by midnight (or more functionally by the end of the business day) on the date in this part of the contract, otherwise the buyers are already in default on the agreement.

The entire series of dates and deadlines are a vital part of your sale agreement. By each date a specific task must be completed, otherwise the responsible party is in default or has waived their rights to further actions regarding the provision.

This is important to understand, as your entire home sale lives or dies by this list of tasks and dates, and the additional negotiations and actions triggered by them. This will become clear as you read the rest of my explanation of the Colorado Contract to Buy and Sell Real Estate below.

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Most Coloradans sell their home by providing title insurance to the buyer.

The alternative is paying an attorney to completely research the recorded history of every event related to your home and the land it sits on.

Most sellers opt for the first option, as the buyer and the buyer’s lender likely demand the actual insurance associated with a title company’s search and issued title insurance policy.

The record title deadline is the date by which the buyer must RECEIVE a copy of the initial title company research. So, this needs to be ordered immediately after negotiating and signing a sale agreement and is often the seller’s responsibility. Yet there is a caveat covered in the more detailed paragraph of this topic below at the Clear Realty site.

Within the sale agreement the buyer and seller negotiate who chooses the title company, who pays for the title policy, and who is responsible for ordering the title work. It was not always like this; in the old days this was fully the seller’s responsibility.

If the title research report turns up anything of concern to the buyer, they must tell you in writing by the record title objection deadline date (perhaps stuff like a giant, scary IRS lien, or egress allowing your neighbor to cross your lot any time to access a different parcel of land).

The off-record title deadline is the date by which the seller must present in writing any potential title issues they know about and which are not publicly recorded (think a private loan with the home as collateral, or the right of a neighbor or someone else to use you land to access another parcel). If you made an agreement but never recorded it with the county, then you must tell the buyer the details in writing before the off-record title deadline.

The buyer presents to you in writing by the off-record title objection deadline if they have a problem with what you told them, and likely new negotiations begin.

The title resolution deadline is the date you and the buyer must reach a written agreement to overcome any problems discovered with the titled ownership of your home.

If someone or some entity has the right to purchase your home before anyone else, then the right of first refusal deadline supersedes everything else here until it is acted upon by the entity with this power or has expired after some pre-defined period from you issuing notice to them that you intend to sell your home.

The HOA related documents and information you as a home seller must deliver to the buyer are controlled by these dates.

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The association documents deadline is the date you must have the documents listed within the contract delivered to the buyer.

The association documents termination deadline is the date the buyer must state in writing if they wish to cancel this sale due to information discovered from the substantial pile of HOA documents you delivered as defined within the sales agreement. The buyer has the right to cancel the sale if they do not like what they see in the HOA documents or other information they discover within their own investigations of the HOA.

As a note: many HOAs are slow to respond to your request for this information, placing your sale in peril. So, we should get this started as you prepare to place your home on the market—before going to market—thereby allowing you to meet your contract deadlines with minimal stress.  This lack of concern HOA managers feel for your needs is certainly one of the reasons for Executive Order D 2019 006.

Additionally, most HOAs charge hundreds of dollars to provide these documents to you.

Be sure to read further down in this section of the Clear Realty site the contract paragraph 7 details to understand how in-depth the HOA data required truly is.

The seller’s property disclosure deadline is the date by which you must deliver in writing your completed disclosure to the buyer.

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The seller’s property disclosure is a detailed form I will provide to you, where you simply answer guided questions about your home.

This is a form you will complete before placing your home on the market, and it will be presented to anyone considering making an offer. When we complete this form before placing your home on the market you won’t even need to think about this task and deadline during the sale—thereby reducing your stress even more.

The buyer reviews this information and likely has it in hand during their home inspection. If the buyer has a problem with information in your disclosure or their home inspection we will likely be informed of this through an inspection objection document.

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Your buyer may have been prequalified or even preapproved for a loan, but it’s only when they have your home under contract that they can meet the new loan application deadline—they need to provide to their lender a house address and sale contract.

You want to see a date only a day or two after you and your buyers have signed the sale agreement in the new loan application deadline spot.

The buyers are meeting their new loan application deadline by providing the sale contract and any other documents requested by their loan officer to their lender by this date.

The new loan termination deadline is the date by which the buyers must inform you in writing if they do not accept the terms of the loan presented to them by their lender, or if they have simply been denied a loan.

Lines 14-19 only pertain to home sales where the buyer is assuming (taking over) your existing loan. Why would this ever happen? Well if you have a fixed rate loan at 3.75% and the existing loan rates are perhaps 6.5%, then the buyers may wish to qualify with your lender to assume your loan and pay you the difference between the existing loan amount and the negotiated sale price in cash. If you think this is of interest to you, we will talk about it before you ever go to market. Otherwise don’t concern yourself with these deadlines.

If the buyer of your home is getting a loan, by default the lender will likely require an appraisal of your home.

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The appraisal deadline is the date by which the actual appraisal must be completed.

The appraisal objection deadline is the date by which the buyer must inform you in writing if they object to the sale based on the appraised value or other information within the appraisal report. This could mean the appraisal came in below the sale price, or that there are required repairs within the appraisal report. Either way this typically triggers new negotiations.

The appraisal resolution deadline is the date you and the buyer must have negotiated and approved new sale terms in writing to overcome any appraisal issues. Otherwise the buyer has the option to dissolve the sale contract if a resolution cannot be negotiated.

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If a survey or improvement location certificate (ILC) are required by the buyer, lender, or title company these are the dates by which each specific step in the process must be completed. If a date expires without the specific action being completed, either the buyer or the seller has defaulted on the contract or has waived their rights to further actions pertaining to the appraisal or ILC.

New ILC or new survey deadline is the date the buyer, lender, or title company must have received the survey or ILC by. Either may take two to six weeks so if someone needs this it is something we need to order immediately, and if the deadline cannot be met due to delays from the contractor completing the work, we need to create and have the buyer and seller sign an Amend/Extend agreement to keep the sale contract active and enforceable.

The buyer, lender, or title company needs to let you know in writing if they have a problem with the ILC or survey by the new ILC or new survey objection deadline.

The new ILC or new survey resolution deadline is when buyer and seller must agree in writing how any problems discovered with the ILC or survey are overcome: who does what and who pays for what.

The inspection objection deadline is the date by which the buyer has already completed their inspection of your home and is telling you in writing of any problems they find.

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This may trigger some additional negotiations, or you may simply acknowledge the problem(s) and agree to fix them—or if you have a line of buyers in waiting you may simply say no to the buyer’s requests.

The inspection resolution deadline is the date by which you put into writing the terms of resolving the inspection issues between buyer and seller.

The inspection termination deadline is like the inspection resolution deadline, except instead of negotiating and working out resolutions as how discovered problems are resolved, this is the date the buyer informs you in writing they are dissolving the sale contract due to the problems they have found.

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The property insurance termination deadline is the date the buyer must inform you in writing if they find their insurance company’s terms and rates to insure the house unacceptable.

There’s little for you to do about this situation if the buyer finds their insurance agent’s terms and rates unacceptable. To save the deal we would likely recommend they call your current agent and insurance company but we cannot force them to do so.

The due diligence documents delivery deadline is the date you must provide to the buyer any documents or other information you possess as requested in paragraph 10.6 of the Colorado Contract to Buy and Sell Real Estate.

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The due diligence documents objection deadline is the date the buyer must inform you in writing of problems discovered with the documents and information you provided.

The due diligence documents resolution deadline is the date by which you and the buyer have negotiated how the aforementioned problems will be resolved, who completes the tasks, and who pays for the tasks.

As with every date and deadline within your sale contract we either negotiate and resolve the problem(s) or the buyer has an opportunity to dissolve the sale contract.

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Be sure you read the full paragraph 10.7 in the body of your sale contract if you see a date in this portion of your offer from a buyer. It means they must sell their current home before they can buy your home.

The conditional sale deadline is the date by which the buyer of your home must have their current home sold to fulfil their purchase agreement with you.

The lead-based paint termination deadline is the date the buyer must inform you in writing if they have tested and wish to terminate the sale contract due to the discovery of lead-based paint within your interior or on the exterior of your home.

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There is a specific federally required form you and the buyer will sign pertaining to lead-based paint (it’s particularly bad stuff if children ingest or interact with this stuff).

Within this required form you will let the buyers know if you have tested and know of lead-based paint on your home. The buyer will state whether they wish to test for lead-based paint or are waiving their right to test for lead-based paint. I will supply this form to you before we go to market and make it publicly available to interested buyers.

If your home was built after 1978 you likely will not need to concern yourself with this. The form is only required for homes build prior to 1978.

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When the buyer presents their offer the closing date has typically been chosen. If this date does not work for you, we need the counter the offer.

Additionally, there are many dozens of tasks and other deadlines within the contract and if the original closing date cannot be met and you still wish to close with these buyers, we need to complete an amendment to the contract extending out the closing date.

Possession date is the deadline you must have absolutely everything out of the home, and the home ready for the new buyers to begin moving into. This typically ranges from the day of closing to three days past closing.

If you need more time, then a post occupancy agreement is needed for you to stay up to about 30 days. But do see my notes several screens down regarding concerns about post occupancy.

Possession time is the actual time defined within the contract that the buyers can walk into the purchased home.

The acceptance deadline date is when you must accept and sign, and return in writing the contract to the buyers and their broker, or the entire offer automatically expires.

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If you sign the agreement by this date you have a binding offer. If you do not, the offer no longer legally exists.

The acceptance deadline time is the precise time within the defined time zone on the contract that you need to respond in writing to the buyers and their broker and obviously within the acceptance deadline date, to ensure a binding agreement.

Again, if you accept the offer as presented, all sellers have signed the offer, and you have returned the written acceptance by the acceptance deadline date and time, you are now under contract with the provisions of the offer.

If you do absolutely nothing the entire offer expires just past the acceptance deadline date and time.

If you are countering the buyer’s offer it is ideal to do so within this same date and time to demonstrate you are sincere about working out a deal and considerate of the buyer’s needs—thus keeping a positive spirit as negotiations begin.

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Defining the applicability of terms creates a precise legal binding effect on everything you see within the dates and deadlines paragraph.

This is important, for when specific legitimate dates are inserted this creates required actions on both you and the home buyer as defined in greater detail within the referenced paragraphs in the body of the Colorado Contract to Buy and Sell Real Estate.

If any date is left blank this is now defined as non-applicable to the sale agreement, even if the buyer and their broker checked the box for the provision. What I am saying is a single tiny bit of data accidentally left blank can cause you great harm as the sale progresses.

Every check-box, blank or completed field, date, and paragraph within the 820 lines and 18 pages of the Colorado Contract to Buy and Sell Real Estate is important, and binds you and the buyer to specific actions within specific time frames.

Purchase price is understandably the first thing most people focus on.

But it’s the net sale price after buyer concessions that is more important than purchase price.

Also, it’s important to understand the ratio to sale price the new loan is—does the buyer have some down payment ability or are they barely surviving the bare minimum required down payment?

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Obviously, we need to interrogate the buyer’s loan officer to get a feel how likely the buyer is to close on your deal. A pre-qualification letter can mean nothing if the loan office has done the bare minimum research on the buyer’s ability to obtain a loan.

If the offer price is not your asking price, then using Clear Realty’s Sell-Star™ Profit tool you and I will far better understand your buyer’s other home options and therefore the pressures they are under to make your deal work. It’s an unfair negotiating advantage for you.

We’ll also better understand how high of a sale price and how low of seller concessions we can likely go without the buyer walking.

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When there is a dollar (or perhaps percentage) amount in paragraph 4.2, it defines how much money you are paying to cover the buyer’s closing costs, aka: seller concession.

Some loans are designed to allow maximum dollar amounts here, such as VA (Veteran’sAdministration) loans.

With conventional loans too much seller contribution may trigger a problem when a buyer’s loan goes to the underwriting process. This scenario causes the underwriter investigating the loan application to kick the file back to the loan officer. We then must renegotiate the seller concession amount, amend the contract, and have the buyer resubmit for their loan.

Obviously, this creates a delay, and any delays can allow time for additional problems like the buyer losing a job, being transferred, or simply getting cold feet as they begin feeling they are over their head financially on purchasing your home.

You and I will confirm with the buyer’s loan officer that any amount you may decide to contribute is allowable within the specific loan the buyer has applied for.

Earnest money is a check (or electronic transfer) from the buyer and held by the title company or sometimes the seller’s brokerage company.

In the old days when contracts were all paper the buyer’s check usually accompanied the contract, all delivered in person by the buyer’s broker to the seller’s broker.

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Now days most forms are delivered electronically, with the earnest money delivered after acceptance (thus the alternative earnest money deadline you see in the Colorado real estate contract).

Within the sales contract are many contingencies and dates by which these defined tasks must be accepted and fulfilled—or are unable to be fulfilled, with either new negotiations breaking out or the buyer stating they want out of the deal. Here Clear Realty’s Sell-Star™ Profit tool helps you to understand how hard to push during new negotiations, or how much to flex to keep the deal together. We use millions of analyses run through complex artificial intelligence algorithms to understand more about the buyer’s options than they do—all leading to you making optimal negotiation decisions.

If all contingencies are accepted, or negotiated and overcome by their stated deadlines, then your home is heading for closing and the earnest money deposited by the buyer is applied toward their own closing costs.

If any of the contract contingencies cause the contract to fail within the stated deadlines, then the buyer gets their earnest money returned to them.

Only if all contingencies and requirements of the contract are completely accepted and fulfilled by all stated deadlines and the buyer then backs out just before closing, do you have the option of being compensated for your lost opportunity by receiving the buyer’s earnest money.

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Good funds mean cash equivalent to you the seller at the closing table in Colorado (check or wire transfer)

The buyer may use any mix of cash and loans to purchase your home, but this is all given to you as a cash exchange at closing.

This means if the buyer is using any combination including loan(s), that their lender(s) have wired to the title company by the day of closing those amounts, and the title company will give you a check or wire transfer to your account in cash the day of closing

The title company is the clearinghouse intermediary, taking in cash equivalent from buyers and transferring cash to you.

As a note: in hard economic times title companies have gone out of business with many people’s money in the title company’s bank account. Dealing with a long-standing reputable title company mitigates the possibility of losing your money.

As paragraph 4.5 states, unless you are assisting with buyer closing costs, they will be paying for their own closing and loan costs.

The buyer’s lender must provide an estimate of the closing costs along with terms and conditions of the loan to the buyer within three days of application.

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This helps protect you also, so the buyer does not get promised one thing, then receives something substantially different the day of closing. This happened more than you know leading up to the economic and housing crash in 2006.

I can talk in-depth and firsthand about many aspects of how buyers, brokers, lenders, appraisers, the secondary mortgage market, and Wall Street created that disaster...if you are interested. I helped clean up that mess over a decade and personally witnessed what the greed and deceit did to home buyers and the real estate market.

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One of the major contingencies of the Colorado real estate contract is the buyer of your home obtaining financing they deem acceptable

Yes, the buyer has sole discretion whether to accept and close on your home within the defined time frames of the sales contract, based on the terms of their loan.

Wait, why does the buyer get so much authority to make or break my home sale at their sole discretion???

Honestly, much of this has to do with the entire real estate industry, and particularly lenders, being very bad stewards of their own business dealings. It’s punishment to the industry and protection for the buyer.

You see leading up to the 2006 real estate and economic crash lenders, appraisers, realtors, the secondary market buyers (Fannie Mae and Freddie Mac) and Wall Street investors were gaming the entire real estate system to increase their own profits. (Yea, everybody calls this the crash of 2008, but it began well before then.

I personally helped clean up the disaster the industry created, eventually selling some 1,500 abandoned homes having been lost to foreclosure. And if you ever want details of how greed destroyed so many lives for a period of time, just ask me and I can give you every detail you could ever want.

So yes, if the buyers don’t like the terms of the loan, they can get out of the deal with no questions asked if they do so within the timeframes set within the sales contract. Obviously Clear Realty™ tracks every contingency and every date within your sale contract on your behalf.

Real estate agreements live and die by the contingencies and dates within them. Every step, task, contingency, and date within your contract is vital.

Appraisers simply rationalize if the price offered on your sale contract is reasonable, relative to sale prices of homes similar to yours.

The secret few people understand is that the appraiser is not deriving a value then comparing it to the contract sale price. Appraisers are given a copy of your sale contract before they determine their estimate of value, then simply rationalizing, typically on a Fannie Mae appraisal form, whether the price offered seems within a reasonable range of values based on sale prices of homes like yours.

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The other secret home sellers seldom consider is that the appraiser does not work for the buyer, nor do they work for you. The appraiser works for and is there to protect the interests of the lender—both the initial lender (the company name you see on the buyer’s loan), but more importantly the secondary market buyer of the loan (often Fannie Mae or Freddie Mac), who the initial lender sells the buyer’s loan to within days or often times minutes of the closing of your home. The secondary market buyer then packages these loans into Mortgage Backed Securities, which are then sold to investors through Wall Street channels.

I do not recommend in most cases getting an appraisal before placing your home on the market.

Your and my job is to maximize your home’s market value. We do this by running every quality your home has through Clear Realty’s Value Amp™ using the Sell-Star System™.

The appraiser will see in text descriptions and photos as guided by Sell-Star™ the rank-ordered qualities of your home creating the greatest value in your home, not based on my or any other individual’s opinion, but based on hundreds of actual home sales—demonstrated by which qualities buyers most demand and pay the most to attain.

Don't pass this benefit to you off lightly.  No one else offers the benefits of patented artificial intelligence-based analyses to you, buyers, and the appraiser but Sell-Star and Clear Realty.

Very honestly the billions of comparisons, mathematical interpretation of market actions, defining of the correlation of key qualities and the emotional impact they trigger in home buyers, and the complex algorithms allowing us to present this to you in a clean, concise, comprehensible form is too far beyond what the appraiser and realtors understand.

It is typically best that you and I simply work our magic, maximize your home’s value, and demonstrate that high value through a sales contract instead of trying to teach an appraiser why your home is worth more than they expected.

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Your buyers are not just purchasing your home; they are also purchasing your neighborhood, and your neighbors—and the rules and regs of any home owner association.

Because some people are crazy, demanding to paint their home purple with lime green dots everywhere, raising herds of Pit-Bulls, turning their front yards into auto shops, and farming six-foot-tall weeds in their backyard, HOAs were created.

Your buyer has the right to dig through the covenants of the HOA(s) and decide if they really want to live under their authority. It’s built into the contract.

Home sellers are required to deliver the HOA documents to the buyer, and paragraph 7.2 explains this.

The painfully long list of home owner association documents you must provide to the buyer is defined in paragraph 7.3 of the sale contract.

HOA managers are often not as responsive as we would like, and you are under tight timeframes as defined within the sale agreement.

So, let’s you and I get this stuff ordered before we ever place your home on the market and reduce that stress.

Your HOA will likely demand of you several hundred dollars to provide these documents, but any buyer for your home is going to need them. It’s just an investment you must make to sell your home.

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The onus is then on the buyer and their broker to read this long list of rules and regs in short order to meet their own required timeframe.

 
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After you supply that monster-list of HOA documents to the buyer on or before the association documents deadline, the buyer then has until the association documents termination deadline to inform you in writing if they cannot live within the regulations of the HOA and wish to terminate the sale agreement.

As with the terms and conditions of the loan, the decision to accept the terms of the HOA is at the sole discretion of the buyer.

 

In nearly every residential real estate sale in Colorado (your home) the seller provides title insurance to the buyer. Your other option is to hire an attorney to complete a full research of the history of your home and land, called an abstract.

The title company checks public records to ensure the only liens against your home are those expected (like the loan you used to purchase your home) while attempting to discover any unexpected liens (tax, HOA, contractors, etc.).

They’ll also ask you for a list of any liens that you are aware of not of public record (like borrowing $500K from your father-in-law for an orange Lamborghini, using your home as collateral). Any liens you have created are paid off through the home sale proceeds at closing.

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Through the title insurance company, you are insuring to the buyer they are receiving your home free and clear of any liens and they are receiving “good title”. Expect this cost to be around $2,000, varying based on the sale price of your home.

The buyer then purchases a sub-policy of your title policy to them insuring their lender against prior liens. Lenders always want to be in “first place” on the lien hierarchy.

For an additional fee the title company will provide additional coverage beyond their standard coverage, called OEC: owner’s extended coverage. See paragraph 8.1.3 of the current sale contract for defining of this additional coverage. OEC coverage is about $500 varying based on the sale price of your home.

Unlike the “old days”, we now negotiate which title company to use and who pays for it. It’s okay if the buyer chooses the title company as they are the ones receiving the policy and being covered by the actual title insurance.

As a seller expect to still pay to insure the buyer as we have typically done and expect the buyer to pay to insure the lender as they have typically done. Anything different can be negotiated within the sales contract, a counter offer, or as an amendment after the fact.

The title company research and documents will note liens, easements, and anything publicly recorded that can affect ownership of the home. It’s important that we read the documents for accuracy after each issuance (it keeps getting updated right up until closing any time something new is discovered or a prior concern is deleted).

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Paragraph 8.2 defines in greater detail the buyer’s rights and obligations and paragraph 8.3 further defines your responsibility to provide any documents or knowledge about off-record (not publicly recorded) matters affecting ownership of the home.

Do note that if new information is discovered after the title objection deadline the buyer automatically receives additional days to review and object to the new information.

If the buyer does not object to anything within record title or off-record title, either by the objection deadlines for each, or after their automatic extended period of each if new information is discovered after the objection deadline, then by default the buyer accepts all information presented in record title and off-record title.

If a title insurance company is used for your sale, they will be providing a tax certificate to the buyer thereby completing your sale contract requirement in paragraph 8.4 of supplying a tax certificate to the buyer, and noting any special taxing district your home may be in.

Here is an excellent map defining special taxing districts in Colorado, created by the Colorado Department of Local Affairs (DOLA), where you can see a general definition of special taxing districts. Using the DOLA map you can quickly see if the area your home is in has a special taxing district.

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Your buyer has until the record title deadline to state in writing if the special taxing district your home is in, is unacceptable to them. If the buyer is made aware of a special taxing district after the record title deadline then they automatically receive an extension of time to review and respond to the information within the special taxing district documents per paragraph 8.4 of the Colorado Contract to Buy and Sell Real Estate.

What is a special taxing district? It’s an entity formed to provide essential services your county or city is not providing for the residents within the boundaries of the special taxing district.

Special taxing districts may be formed to provide services such as: fire protection, mosquito control, parks and recreation, safety protection, sanitation, trash, street improvements, television relay, transportation, water, and covenant enforcement. This list was borrowed from McGeady Becher Special District Law, as I think they do a nice job of explaining special taxing districts in a way you and I can understand.

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Your home buyer has until the title objection deadline to review any and all title matters and inform you in writing if they see a problem.

If a title objection is presented by the buyer, you and I and the buyer may then have until the title objection resolution deadline to create a plan to overcome the problem(s) and amend the contract to ensure continuation of the sale.

However, the buyer may not offer an opportunity to solve title issues and has the right to terminate the sale contract within the covenants and timeframe of paragraph 8.5.2 title objection, right to terminate clause.

In most cases selling your home will not require a full-blown ALTA pin survey (people running around your property with GIS locators, trying to find prior surveyor pins to determine where your property lines are and where your home and any other structures are located within those boundaries).

If it’s required, you’re looking at a cost of $2,000+ depending on your land’s size and the complexity of the survey.

An ILC (improvement location certificate) is sometimes required but not always. If there’s anything that concerns the buyer, title company, or lender about your lot and structure(s), they may demand an ILC. Here someone with the survey company takes a copy of a prior survey to visually inspect for encroachments from your lot to someone else’s or someone encroaching onto your lot. Anticipate paying a several hundred dollars for an ILC if required.

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Paragraph 9 of the Colorado Contract to Buy and Sell Real Estate defines who orders and pays for the survey or ILC (9.1.1 and 9.1.2) when the buyer is asking for this at the time of offer.

If a problem is discovered with the ILC or survey the buyer has until the survey objection deadline to inform you in writing, and we may be given until the ILC or survey resolution deadline to agree how the objection will be overcome. However, the buyer has the right to terminate the sale agreement instead of negotiating any ILC or survey objections.

Be aware that sometimes it is not the buyer directly asking for a survey or ILC at the time of offer. Occasionally the title company or lender may make one of these a requirement of issuing title insurance or approving a loan on the property based on some discovery or concern prior to closing.

While you the seller cannot be forced to comply with either of these entities’ demands, if the title company is requiring it, it means we either find a new title company willing to ensure the property without the survey or ILC or dissolving the sale contract. The same holds true if the lender requires an ILC or survey to approve a loan on the property. If we refuse to provide the survey or ILC the loan will be denied, and this buyer cannot close on your sale. We either find a new lender not requiring the ILC or survey or this sale is dissolved.

Solutions range from providing the required ILC or survey, negotiating who pays for it, switching title companies, and/or switching lenders. It just depends on if a title company or lender can be found that does not make the ILC or survey a requirement, the risk of losing this buyer, and the time cost, as transferring the sale to a new title company or lender will likely delay everything anywhere from a week at the very short end, to two to three weeks on the most likely end.

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The Colorado Department of Regulatory Agencies, through the Division of Real Estate provides licensed real estate brokers a large variety of forms brokers must use in the sale and lease of real estate.

One of those forms is the home seller’s property disclosure (residential). (You can preview this form and every other form Colorado real estate brokers are allowed to use at the Colorado Division of Real Estate website).

While you are not required to complete the form, by not doing so may cause the potential buyers some concerns as to why you are not providing it.

So, here’s the deal: don’t lie or hide any defect you personally know about your home.

Lawsuits pertaining to real estate can happen years after the actual sale, and you are required by the state provided real estate contract to disclose known defects with your property.

What’s a defect? Certainly, use the form to guide you on disclosing problems with your home. If you are really concerned about what to say hire an attorney.

But essentially stuff like water in the basement, a faulty furnace or water heater, mold, roof leaks, asbestos, lead plumbing, known encroachments from your lot to another’s lot or from another’s property to your lot, and just anything you personally know about that detracts from the value and enjoyment of the home the buyers are about to purchase. Again, use the state provided form to guide you.

If you say too much won’t that kill your deal? Maybe, but unless it’s a pretty big deal, maybe not. But if you clear $200K on the sale and years later get sued for $1,000,000 for not disclosing some problem you knew about, is it worth the risk? Hire an attorney if you are truly concerned.

It is not your job to look for problems; you do not have to hire an inspector. But it is your job to disclose problems you do know to exist. Oh, if I as your broker become aware of a problem which should be disclosed, I am required by law to disclose it to the buyer and their broker.

The buyer is almost assuredly doing a home inspection.

They can inspect any components of your home such as foundation, roof, heating, plumbing, electrical, appliances, and most anything else to ensure the home is safe and fully functional.

The buyers really should not be coming back with complaints about paint or carpet colors.

You’ll likely find the number of concerns with the inspection based on buyer personality and market conditions. If there are only two homes for sale and ten buyers looking for homes the number of inspection complaints seem to drop. Unfortunately, the inverse is also true: if there are one-hundred homes for sale but only two buyers, they can get pretty picky about homes they are considering.

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Certainly, if the buyer sends over concerns within the inspection objection timeframe we must deal with them or risk losing the sale.

This is all part of typical home sale and all part of the services Clear Realty™ provides. Don’t let the potential of additional negotiations concern you now. Working through this is all part of selling a home.

Resolution to the Inspection Objection form must be negotiated and completed prior to the Inspection Resolution deadline in the sales contract or the buyers have a legitimate means to dissolve the sales contract.

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Similar to how the buyer can dissolve the sale contract if they find the loan terms unsatisfactory, they have the same rights based on the insurability of your home.

At first you may think “no big deal—everybody is selling insurance—I’ll just call Flo over at Progressive.”

But with wild fires and hail and changing flood zones, it is becoming more difficult and often much more expensive to insure real estate.

In any case, if the buyers find they cannot live with the cost or requirements of insuring the home they have the right to dissolve the contract within the timeframe set within the property insurance termination deadline .

There’s nothing you need to worry about and nothing much you can do about insurance coverage. But certainly, if you receive notice of changes of being in a flood zone or other notifications of insurance coverage or availability, make these part of your home seller disclosure form.

In most cases insurability will not be a deal-killing problem so let’s move straight forward with our home sale process and Clear Realty™ is right here on your side if a problem arises.

Due diligence is going to sound a little bit like a cross between your seller property disclosure form and buyer inspections, but it’s a little bit different.

Here the buyer can essentially expand the types of investigations they wish to do.

They can also ask for documents or other information related to anything they are concerned about such as: copies of receipts and permits from finishing your basement, copies of receipts and permits from the new roof after the recent hail storm, manuals and warrantees for the newer appliances, or the manuals and warrantees for the new furnace, air-conditioner, water heater, or garage door opener.

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As with the buyer’s inspection and every other contingency that is part of the sale contract, there are specific dates that must be met. Essentially if you have in your possession the documents and information the buyers request, we will give them copies before the due diligence documents delivery deadline, then hand over the originals at closing. If they ask for stuff you do not have, we will return a written notice before the deadline stating that you do not have what they are requesting.

This brings up an important point: with real estate everything is done in writing—verbal does not count. Also, if an important deadline passes and we do not hear from the buyers it typically means they are okay with that contingency. However, if they have requested something, we must provide the documents or information prior to the deadline or it makes our contract voidable—meaning it gives the buyer an “out” if they wish to dissolve the deal.

The buyers will let us know if they have discovered some problem or concern by the due diligence documents objection deadline, and if given the opportunity we will try to work out an acceptable resolution by the due diligence documents resolution deadline.

Otherwise the buyer can simply terminate the sale agreement by the due diligence objection deadline.

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Conditional upon sale of property means these buyers cannot buy your home unless they sell and close on their current home.

Using a notice to terminate by the conditional sale deadline, the buyers can dissolve your sale agreement if they cannot get their current home sold.

Let’s consider a few scenarios:

  1. The buyers of your home have their home on the market. Here we would have to wait for and hope that some buyers appear to make an offer and close on your buyer’s property. This can be a fairly high-risk situation depending on housing demand and inventory levels—and whether your buyer’s house is cool or sucks. If this is our situation it can mean we are in a very slow real estate market with many homes on the market, long periods of time on the market, and few buyers. But if your home has been on the market for a longer than average period you may consider this a viable option. If the buyer can’t sell and close on their own home, they have a direct means to dissolve the contract to purchase your home. As your agent I will also require a “Right of First Refusal” clause in the sale agreement, protecting you and giving you an out if a better offer comes along.

  2. In the same scenario a step-up from #1 is that the buyer’s home is now under contract and pending closing. This is a substantially better situation, but we need to thoroughly review all of the sales documents related to your buyer’s pending closing and interrogate the lender for the buyer of your buyer’s home to determine the probability of that home closing, so your home can close. Essentially, we are overseeing everything related to two separate sales and closings—every doc, every contingency, and every opinion of everyone involved with both sales.

  3. If the “conditional upon sale of property” paragraph is blank on your buyer’s offer to purchase your home that’s the best scenario. They are stating they do not need to sell or close on their prior home before closing on your home. However, we still need to double check the Additional Provisions section of your buyer’s offer to purchase contract to ensure nothing is hidden in there. We also need to confirm with your buyer’s lender that nothing related to closing a current residence can hinder their being approved for a loan. I’ve seen all kinds of stuff and tricks from buyers and their lender. I’ve seen “cash offers” that were only cash if the buyer could sell their home. I’ve seen buyers fully approved for a loan but still need to sell a home. Neither stipulation was defined within the body of the offer to purchase. In all cases I must cross-examine the buyer’s broker and lender to ensure the true loan approval status has nothing buried that can kill your sale.

Prior to placing your home on the market, you and I will work out the details of potable (safe for human consumption) water for your home.

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If you live in a city or suburban area your water likely comes from a municipality, where they supply water via a main line at the street, and you connect to this source and bring the water to your home.

When this is the case, we will provide a source of potable water disclosure telling the buyer who the supplier of your water is and how to contact them.

If instead of or in addition to, you have a well or other water source we’ll need to provide documentation pertaining to ownership of these rights. Let’s be careful, prove that you have the rights to this additional source of water, and forward copies to interested buyers with the water addendum.

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Any home built before 1978 has some chance of lead-based paint being on site. There’s a specific form, the lead-based paint disclosure, that must be presented (federal law) and signed by both seller and buyer and by both brokers, for homes built before 1978.

This must be done. There are huge fines and substantial risk of lawsuit associated with not completing this lead-based-paint form. Clear Realty™ manages your federally required compliance on this matter.

You’re required to have the signed form in the buyer’s hand by the lead-based paint disclosure deadline, defined in the dates and deadline portion of your sale contract, paragraph 3.1.11. But please, let’s just knock this form out before placing your home on the market, publicly presenting it with multiple other disclosures required in your sale contract disclosures for anyone considering purchasing your home, and keep our stress levels to a minimum during your home sale.

You provide the lead-based paint disclosure by the lead-based paint disclosure deadline in paragraph 3.1.11.

The buyer has the right to inspect your home for lead-based-paint and if discovered we are looking at a series of new negotiations on how to resolve defective paint surfaces, or they may waive their right to an inspection for lead-based-paint right on the disclosure form.

The buyer also has the right to simply terminate the sale contract if they test for lead-based-paint (or your own previous inspections have proven lead-based paint on site), by the lead-based paint termination deadline in the dates and deadlines section of your sale contract, 3.1.34

After an entire family died at a high-end residence in a Colorado ski resort town, home sellers are required by law to ensure functioning carbon monoxide detectors in specific locations in homes with any gas or wood fired appliances (furnace, boiler, hot water heater, stove, etc.).

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If you don’t have carbon monoxide detectors, we will work through the steps to install them in your home. You want to complete this prior to any home inspection completed by your home buyers to avoid triggering additional inspections later.

For details on the House Bill 09-1091 law pertaining to carbon monoxide detectors please visit this Colorado-Gov link.

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Methamphetamine—just like lead-based paint the buyer has the right to inspect (test) for this. And I will be honest this shows up in houses you never expect.

I was selling an expensive home near Colorado Boulevard and Eighth Avenue, never thinking about meth. The buyers ordered a test. I’m there to meet the tester: the doorbell rings, and some guy dressed like he’s handling uranium comes in (full body suit, mask, CSI-style test kit/bag).

Sure enough, the house tests positive and a whole complex series of remediation steps have to be completed.

Your buyer has the right to terminate the sale contract or negotiate for remediation. You have the right to negotiate or refuse to remediate.

However, if this buyer walks on this sale, and you have not completed the full and complete remediation process for methamphetamine, then you must disclose this to your next series of buyers. I must suggest hiring an attorney for legal advice at the point you know methamphetamine residue is discover in any property you own.

The buyer will complete their methamphetamine testing during the same timeframe as the inspection provision. If anything is discovered the buyer must inform you in writing by the inspection objection deadline (if they are considering negotiating remediation) or the inspection termination deadline (if they simply wish to dissolve the sale contract). If the buyer offers the inspection objection, then we have an opportunity to negotiate and define how the remediation and re-testing will take place by the inspection resolution deadline.

Closing instructions are completed via a separate document…called closing instructions smiley.

The closing instruction document may come with the offer to purchase from the buyer, or it may be completed once the negotiations are finalized defining who is ordering title and who the title company will be—or even if a title insurance company will be used or if the buyer’s or seller’s attorney(ies) are instead doing their own title search and closing statements.

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Honestly, likely you and the buyer will agree on a title insurance company in the sale contract and we will then prepare the closing instructions for everyone’s signatures, keep it as part of the sale agreement, and deliver a copy to the title insurance company.

In most cases the simplest and most cost effective route to providing all of the title research, insuring of title to the buyer, preparation of all closing documents, managing the physical closing of your home and the signing of all required documents, reconciliation and dispersal of all closing costs, and the public recording of required documents is through a title insurance company when selling real estate in Colorado. But the choice is still between buyer and seller how these steps are completed and who completes them.

The closing instructions gives the title insurance company (or other entity) written permission to complete the closing related steps above, costs about $400 often split between buyer and seller, and is a different function and fee from the actual cost of the title insurance to the buyer and the lender.

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You will be transferring ownership (title) of your home to the buyer via a deed in Colorado.

And while there are several kinds of deeds almost always as one owner-occupant transfers ownership in residential real estate to another owner-occupant you will likely be asked by the home buyer to provide a General Warranty Deed.

Essentially conveying title by General Warranty Deed means you are the full, legal, rightful owner in “fee simple”, that you are transferring your home free and clear of all encumbrances, and you are warrantying to the new owner that there are no problems (blemishes) on the title “since the beginning of time”.

Don’t let this sound too terrifying: if you purchased and own your home with a General Warranty Deed, and you are providing title insurance to the new purchaser and following all the rules of the title insurer, then transferring ownership through a General Warranty Deed should not be a problem. If you are concerned please consult an attorney.

Aside from the typical transfer of ownership from the current owner of a home to another through a General Warranty Deed, there are several other instruments to transfer title: Special Warranty Deed, Bargain and Sale Deed, Quit Claim Deed, Fiduciary and Official Deeds, Grant deed, and Beneficiary Deed.

The biggest difference between any of these deeds and the General Warranty Deed is the range of protection—insurance—the owner is conveying to the new buyer. For example, the Special Warranty Deed allows you to convey title to the new buyer by warranting you are providing the title in the same condition you received it (you caused nothing that could harm the title while you owned it).

The Special Warranty Deed may offer you the seller less potential liability after you sell the home, but it may be more difficult to find a buyer willing to accept a Special Warranty Deed instead of a General Warranty Deed.

Here’s a little more information on the topic of deeds, and BTW you as the seller are the “grantor” in this portion of the contract. Additionally here’s a quick video on the subject of General Warranty vs Special Warranty Deeds provided by attorney Jon Goodman.

This will likely be no surprise to you, but any lien you have created, or government assessed property taxes against the house you are selling will be paid off at closing using the proceeds of your home sale.

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Closing Costs within the Colorado Contract to Buy and Sell Real Estate essentially range from paying off any existing loans you have against the property to much smaller transfer fees.

The Closing Services Fee is charged by the title company for preparing all required paperwork to correctly transfer ownership, including ensuring everything needing public recording through the county is completed.

It’s likely going to cost four-to-five hundred dollars and is honestly a bargain relative to all the work the title company does to prepare and perform everything needed to close and transfer the property. Typically, you and the buyer split this cost, but we must check the sale contract offer to ensure the buyer did not place the full cost on you.

HOA transfer fees can range in cost from a couple hundred to many hundreds of dollars. You can check with your HOA on their fees, otherwise the title company will do this for you and adjust your net proceeds per the required fees from your HOA. If there’s a fee to the seller typically you pay it, and if there’s a fee to the buyer typically they pay it—but be careful as the buyer could have changed this in the offer agreement, instead stating that you will pay both.

Costs associated with new service hook-up for most public water companies will usually be paid by the purchaser, just as they are for electricity, cable television, etc. Private water companies can be quite different, and we should investigate this if you are part of a private water system.

There’s a form created by the Colorado Real Estate Commission required for each sale disclosing your home’s Source of Water. Clear Realty™ provides this form to you. Typically, the only fee here is for the buyer to hook up new service.

At the time I am writing this your Local Transfer Tax (aka doc-fee) is $.01 (one penny) per $100 (one-hundred dollars) at the time I am preparing this information for you. This is often a seller paid fee, and It’s pretty tiny. If you’re interested here’s transfer tax information from around the US.

In most cases there is no Sales and Use Tax for typical residential home sales.

15.8.1 FIRPTA is the Foreign Investment in Real Property Tax Act of 1980, and allows the IRS to withhold 15% of sale proceeds from foreign property owners immediately at closing, not after-the-fact when income taxes are due.

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The reason this is so scary for home buyers is if the seller is foreign, the money is not withheld at closing, and the prior owner jumps to another country, the IRS can lien the property after-the-fact. Quoted directly from the IRS: “In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax.”

Suddenly, this poor home buyer may get hit with a federal tax lien for $200,000 or something: “…buyer could be held liable for the amount of the seller’s tax, interest and penalties.”

15.8.2 Colorado withholding is a little similar, except Colorado wants taxes withheld for anyone not a Colorado resident or will no longer be a Colorado resident after closing. So, if a seller is a Maine resident then Colorado wants some taxes withheld at closing.

If you are a foreign seller, or your legal residence is in the US but not Colorado you need to let Clear Realty know, otherwise these situations can cause delays in closing your home sale.

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Fair distribution of Prorated costs is completed at the closing table in Colorado

The easiest example to understand involves property taxes on your home. In Colorado property taxes are paid in arrears—meaning last year’s taxes are paid this year (2018 taxes are paid in 2019, etc.)

If you close July 1st, then you owned your home for six months this year, and the buyer will own the home for six months this year.

Each of you will owe six months of property tax and this will be prorated at closing.

But the taxes won’t be paid until the following year. So, the split of the expense (proration) will be arranged at closing. At closing you will credit (pay) the buyer for the six months of taxes you owned your home.

But then next year the buyer is responsible for the whole year’s taxes due (you pre-paid your six-months share to them, then they owned the home for another six months). The buyer was prorated compensation for the time you owned the home, so you are free-and-clear of any responsibility once your home closes (Final Settlement).

All prorated amounts are final at closing, including things like you providing a 75% full propane tank (home heating, not your portable grill), prepaid quarterly or yearly HOA fees, and any other split costs. Just be sure you tell Clear Realty™ about anything you pre-paid and stays with the home at sale.

Particular clarification is needed if your home was assessed an “HOA Special Assessment”—a one-time cost outside of your normal HOA fees—like maybe your HOA upgraded a common area park and playground equipment or something. Almost always the offer to purchase your home will state that the seller owes this in full. So, if you have some notice about a special assessment please tell us all about it as we are preparing to go to market. Let’s get this defined and disclosed and make it publicly available for anyone considering purchasing your home.

Within the Contract to Buy and Sell you agree to give possession to the new buyer within a specific amount of time, often the day of closing or say within 24, 48, or 72 hours of closing.

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If you don’t the buyer is accumulating a lot of expenses: moving company costs and storage of their possessions, hotels, restaurants to feed their family, the new mortgage they are paying, etc.

So, if you don’t get out and leave them a clean home as agreed, you are financially penalized each day as defined within the contract in paragraph 17, and Frank Azar will be banging on your door for the pain and suffering you have caused the buyer ?.

It is possible if you need a month of overlap between the closing date of your home and moving into your new home, to arrange a Post-Closing Occupancy Agreement (see checkbox in paragraph 17); I have definitely done this for clients. But use this provision with some caution. If any damage occurs with the home, you have to repair it to at least the condition it was in when the buyers made an offer.

Requiring a Post-Closing Occupancy Agreement could also cause you to lose potential buyers as they have their own timing issues and may not be able to accommodate your needs. And finally, your new buyer’s lender may not allow the new owners to not live in the property for much time. In most cases the buyers purchased the home as an owner-occupant and their loan and insurance require them to not rent the home out, so you may be putting some stress and risk on the buyers

If you do need a short (30 days or less) Post-Closing Occupancy Agreement let’s let everybody know this upfront as you place your home on the market, and not make it a surprise during contract negotiations. If everybody knows this upfront the whole situation will flow much better.

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The buyers expect (okay demand within the sales contract) that the home is delivered in the same condition as it was the day they made the offer—or in a superior condition if their inspections demonstrate a problem and you agree to fix the problem, thus making the home better.

A half-way smart buyer’s agent will do a “walk-through” of your home prior to signing closing papers to ensure the home is in the same or better condition than the day they made an offer.

That’s mostly all you need to know on this section. If a circumstance occurs (say hail storm or fire or pipes bursting) then we will work this out as a team.

If some major damage occurs due to fire, flood, or other substantial occurrence and the cost to repair is 10% or less of the sale price of the home, there are some built-in provisions in paragraph 19 to guide us. The damage should be contained immediately, then the buyers brought into the decision process before anything more is done.

If the damage exceeds 10% of the sale price, we will talk with the buyers, but they can dissolve the sale agreement without penalty.

If the government gives you notice they are taking over your property to run a highway through the area, let me see the notice immediately.

Otherwise just be prepared to deliver possession of your home to the new owners in the same or better condition as it was the day they made an offer.

Specific Performance and Liquidated Damages is kind of a complex subject but let’s give understanding these legal consequences a shot.

I think at this point I have driven home the point that contract dates and the actions/contingencies associated with each date, as more specifically spelled out within the associated paragraphs and many hundreds of lines in the contract, are vital. Your home sale contract lives or dies by deadlines and the specific tasks associated with those deadlines.

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If all of these dates and contingencies have been met or accepted within the defined time frames of the sale agreement, then the buyer refuses to perform (show up and close the deal as agreed) and if the box for paragraph 21.1.1 is checked, you as the home seller have the right to pursue “specific performance” against the buyer—essentially attempting to sue them into closing on your home per the terms of the sale contract.

If the box for 21.1.1 is not checked, and all dates and contingencies have been met or accepted, and the buyer refuses to perform, you as the seller can cancel the contract and keep the earnest money (no right to sue the buyer for specific performance).

Per paragraph 21.2, if all dates and contingencies have been met or accepted, and you the seller refuse to perform, the buyer gets their earnest money back and always has the right to sue you as the seller for specific performance (buy your home under the provisions of the sale contract).

If any of this stuff happens just anticipate getting legal advice on your options and other potential compensation for your lost sale.

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Paragraph 22: if you and the buyer get into a lawsuit or mediation, the prevailing party gets their costs paid by the losing party.

Paragraph 23: is obligating you and the buyer to at least attempt mediation as the first step in resolving disputes, but this is not binding unless you and the buyer agree the mediator’s resolution is agreeable to both of you, then you’ll sign an agreement making the mediation binding.

Paragraph 24: can I be honest—this is not quite as cut-and-dried as you may wish. 1) The earnest money holder will likely be the title insurance company, and they must receive written permission to release earnest money to you, signed by both you and the buyer, even if it’s the buyer defaulting on the sales contract. 2) The earnest money holder otherwise will follow instructions to release the earnest money to you, if the buyer is in default, if the court sends them written instruction to do so, which by default means legal actions have been taken. 3) or if neither of these two events occurs after 120 days the earnest money holder can return earnest money to the buyer.

What all of this really means is that if all the deadlines and tasks within the sale agreement are 100% completed by both parties and the buyer refuses to close the sale of your home, and the buyer refuses to sign a document releasing the earnest money to you, you will likely have to fight for it. Obviously, you will seek advice from an attorney.

Is this fair? No. Does this kind of suck? Yes. What can be done to stop this? We would need to negotiate out several default provisions in the Colorado Contract to Buy and Sell Real Estate that real estate brokers must use. By law Clear Realty™ cannot give legal advice, so you may need to hire an attorney to determine exactly how many and which provisions to strike and what additional terms may be needed to completely protect you.

Otherwise we do the best we can within the provisions of the existing contract, monitor every step taken by the buyer and their various supporting lenders, inspectors, etc., and work really hard as we always do.

Within the many paragraphs, provisions, and deadlines of the Colorado Contract to Buy and Sell Real Estate there are means for a buyer to terminate the agreement. I have covered the major provisions and deadlines in this section of the Clear Realty™ website.

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If within the provisions of the agreement, when the buyer has an option to cancel the sale agreement, they can do so within the confines of the specific paragraph related to that point using a notice to terminate document. If following the covenants of the sale agreement the buyer will then receive their earnest money back.

Additionally, if the buyer asks for something, even if fully legitimate based on findings or needs, and you refuse, if the buyer does not withdraw their demand then you too may cancel the contract operating within the covenants of the sale agreement.

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I’ve said this before, but now the sale contract makes my advice explicit: everything pertaining to selling your home is done in writing and specifically attached to the sale contract.

Any and every situation that arises can be attached to this main document via a multitude of DORA/Real Estate Commission forms, including the many disclosures and notices already discussed and another form called the “Agreement to Amend/Extend Contract”.

So, if you and a potential buyer are hanging out in your garage as you show them some feature, and they mention providing you with a classic 1963 Corvette should they be the offer you accept on your home, and it’s not in writing, then it does not exist. (And likely if you put it in the contract the appraiser and lender are going to flag your deal since you are receiving compensation beyond the sale price of your home).

Delivery of a document means that you or I receive it by most any means available (internet, email, text, central web link, okay—paper). So, when I get a written notice it is equivalent to you receiving it and the same holds true for me if you receive something directly.

Certainly, electronic signatures hold the same legal authority as ink and paper signatures do.

Paragraph 28 simply states that if you do not sign the sale contract by the date and time in the acceptance deadlines, then the offer to purchase your home simply expires. It’s just that simple.

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This paragraph of your sale contract called “Additional Provisions” is really important.

The buyer’s broker can place pretty much anything in here the buyer wishes, short of the requirement being illegal for you to perform.

So even though there are specific locations within the sale contract ranging from requesting closing costs paid by seller on behalf of buyer, to various down payment assistance from the seller to the buyer, or that the entire contract is contingent on the buyer selling and closing on their own home to qualify purchasing yours, if they leave those specific paragraphs blank in the sale agreement and put those demands into Additional Provisions instead, they are in full force once you sign the contract.

The buyer can jam anything they want in this wide-open section of the contract, even stating that you agree to building a six-car garage for the buyer prior to closing.

If you sign the contract and miss anything within Additional Provisions, you still have agreed to everything within this paragraph.

You and I both need to read the sale contract. Never simply gloss over anything in it.

Paragraphs 32 and 33 are not part of the sales contract between you and the buyer, as they are inserted below your and the buyers’ signatures—BUT these two paragraphs should terrify you, as depending on how they are filled out could place you in a position of having zero representation and advocacy from your listing broker.

When you hire your listing broker (aka seller’s broker) your agreement very likely states they work solely on your behalf, fulling representing you, advising you, advocating for you, negotiating for your best interests, and providing 100% loyalty for you in the sale transaction.

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However, if within your listing agreement document, they also checked a box stating they could convert from a seller’s broker to a transaction broker when a buyer comes directly to them to purchase your home, they likely will check the box “transaction broker” in paragraphs 32 and 33, plus “change of status” in paragraph 33.

With the click of a couple of boxes your broker no longer represents you. They no longer advise, advocate, negotiate, or have any loyalty to you. Legally they now don’t represent the buyer either. As a transaction broker they do not represent you or the buyer at all. They cannot legally advise or negotiate for either of you—they are now a scribe: filling the blanks as you and the buyer individually instruct them to do so.

Within an instant the person you called your broker now represents neither you or the buyer; they can now only input what each of you specifically states into all negotiations and contract documents. They cannot negotiate for you.

This broker’s goal now is to close the deal, by law represents neither buyer or seller, and will get paid twice as much for doing so.

These many screens you and I have discussed are what I consider the more important paragraphs of the Colorado Contract to Buy and Sell Real Estate.

There are many other paragraphs within this sale agreement along with all the other documents you will be using, agreeing to, and signing.

Because Clear Realty™ is not a CPA nor an attorney, nothing within this website is tax, accounting, or legal advice. It’s all just honest advice from someone having been in the real estate business for over thirty years.

Here is the entire Colorado Contract to Buy and Sell Real Estate in a single document for your review. Everything at the Clear Realty™ site is for general informational purposes only and is not advice for the particulars of your own home sale. Every home sale is different, and each of those differences requires specific consideration and actions.

Thank You!

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