Information for Property Sellers in Southwest Florida
Seller Information
Sellers: Making sure your sale closes smoothly and efficiently is one reason to choose an established company with a long history in the real estate process. Information on the process from the seller's perspective is provided in this site below. Desjarlais Law & Title's professional staff is there to make sure your needs are met fully and accurately. For title and closing services that are unparalleled in the industry, insist on Desjarlais Law & Title.
Property Exchange Services1031 Exchange
Qualified Intermediary and Qualified Escrow Services
For Internal Revenue Code Section 1031 Exchanges
When You Make Your Purchase
Why Have an IRC 1031 Exchange?
When an owner of investment real property ("Taxpayer") sells the property, the sale often creates a payment of capital gains taxes. Section 1031 of the Internal Revenue Code of 1986 allows a Taxpayer to sell investment real property ("Relinquished Property"), have the proceeds used to purchase new investment real property ("Replacement Property") and defer the taxes on the sale (the "Deferred Exchange").
A taxpayer may not simply sell Relinquished Property and use the money to purchase Replacement Property. The IRS has very strict requirements which must be satisfied in order for a Taxpayer to qualify for Deferred Exchange treatment (the "Regulations").
To qualify for a Deferred Exchange, the Taxpayer must enter into a valid exchange agreement (the "Exchange Agreement") with a third party (the "Qualified Intermediary"). The Qualified Intermediary must hold the funds from the sale of the Relinquished Property and the Taxpayer and the Qualified Intermediary must comply with the requirements of the Regulations.
The Regulations allow the Taxpayer and Qualified Intermediary to place the funds from the sale of the Relinquished Property into an escrow account (the "Qualified Escrow").
The Integrity of Your Exchange
The Qualified Intermediary will prepare most of the documentation that is required by the Regulations.
The Qualified Intermediary must conduct its business in compliance with the Regulations or your exchange could be jeopardized.
The Regulations on Deferred Exchanges are complex. An unsophisticated intermediary could unwittingly act in a manner that could cause a Deferred Exchange to be disallowed under audit.
Frequently Asked Questions
How Does the Taxpayer set up an Exchange?
The exchange must be set up before the Taxpayer can close on the sale of the Relinquished Property.
The Qualified Intermediary prepares an Exchange Agreement and an assignment document to assign the Taxpayer’s rights in the sale contract to the Qualified Intermediary.
The Taxpayer and the Qualified Intermediary sign the Exchange Agreement and the assignment document. The Buyer of the Relinquished Property also signs the assignment document.
The Qualified Intermediary holds the executed Exchange Agreement. The executed assignment document is delivered to Desjarlais Law & Title as the closing agent handling the sale of the Relinquished Property.
Upon close of the sale the closing agent transfers all of the Seller’s net proceeds to the Qualified Intermediary.
Can the Taxpayer deed the Relinquished Property directly to the Buyer?
Yes, the Regulations allow the Taxpayer to deed the Relinquished Property directly to the Buyer. This avoids extra fees.
Can the Taxpayer earn interest on the funds while they are held by the Qualified Intermediary?
Yes, the Regulations allow the Taxpayer to earn interest on the funds; however, the interest may not be paid to the Taxpayer until the end of the exchange. The interest which is earned will be taxed as ordinary income.
How long does the Taxpayer have to identify Replacement Property and to complete the exchange?
Replacement Property must be identified on or before midnight of the 45th day following the day on which the sale of the Relinquished Property occurred (the "Identification Period ").
Provided the identification requirements are satisfied, the exchange must be completed by midnight of the 180th day following the day of close of the Relinquished Property or the due date of the tax return for the year in which the transfer took place, including extensions (the "Exchange Period ").
The Identification Period and Exchange Period must be counted very carefully. They are not extended for holidays or weekends.
How many Replacement Properties can the Taxpayer Identify?
The Taxpayer may identify a maximum of three (3) Replacement Properties, of any value (the "3 Property Rule"); OR
The Taxpayer may identify more than three (3) Replacement Properties BUT the aggregate value of all identified Replacement Properties cannot exceed 200% of the value of the Relinquished Property (the "200% Rule"); OR
If the Taxpayer identifies more than three (3) Replacement Properties with aggregate value in excess of 200% of the Relinquished Property, Taxpayer must actually acquire at least 95% of the value of the identified Replacement Properties.
Replacement Property which is actually acquired prior to the end of the Identification Period will qualify.
What form does the Taxpayer use to identify Replacement Property?
There is no special "form" however, the identification must be in writing, must be signed by the Taxpayer and must "unambiguously" describe the Replacement Property. A revocation of a previously identified Replacement Property has the same requirements.
How is the Replacement Property acquired?
The Taxpayer negotiates the purchase of Replacement Property in the normal manner with wording similar to the following added to the purchase contract:
Buyers Exchange Provision: It is the intent of Buyer to Acquire this property as Replacement Property in an Internal Revenue Code Section 1031 exchange. Buyer reserves the right to assign their position herein to a Qualified Intermediary. Seller agrees to cooperate in Buyers exchange, provided that Seller will be at no additional expense or liability for Buyers exchange and Buyers exchange shall not delay the closing of this property.
Before the Replacement Property can close, the Qualified Intermediary prepares an amendment to the Exchange Agreement and an assignment document in which the Taxpayer assigns his rights in the purchase contract to the Qualified Intermediary.
The Qualified Intermediary and the Taxpayer sign the amendment and the assignment. The Seller of the Replacement Property also signs the assignment.
When all conditions of the Replacement Property are satisfied, the Qualified Intermediary transfers the required funds to the Replacement property closing agent.
Why Use a Real Estate Agent
Why It Pays to Use a Professional?
* When you use an agent, you'll get the benefit of professional experience from the moment you consider selling your house. Your agent will help you establish a fair market value from their daily dealings in your neighborhood.
* Real estate agents are professionals at marketing properties -- that's their job. They can choose the media -- and the message -- that brings interested prospects to your home. They'll use their sales skills and negotiating techniques to help you receive the best possible return on your sale.
* Every brokerage office has a steady stream of prospects that no individual can match. National referral networks and multiple listing services also help to reach buyers from out of town -- or out of state. Many corporate relocation clients may be working with a broker before a move is made.
* When you work with an agent or broker, they will follow-up with other agents who have shown your property and share their constructive comments on cosmetic repairs, financing arrangements, or re-evaluating your list price.
* An agreement between buyer and seller is just the beginning of a final transaction. From that point on your agent or broker can handle the details and paperwork necessary to make it complete: from termite reports to home inspection reports, and to arrange closing with Desjarlais Law & Title.
* Your agent or broker will give you advance estimates of your closing costs and net proceeds from the sale, as well as keeping you informed of the details to assure a smooth and timely closing.
If you're Selling a Home
Sellers - What to Expect
Once you establish a working relationship with your attorney / agent, your home is put on the market and marketed to potential buyers. Once a buyer makes an offer on your home you have three options: accept the offer, counter the offer, or reject the offer. After you accept an offer you can expect to do the following:
* Buyer deposits "earnest money" into escrow with the escrow agent.
* Seller submits documents and information to Desjarlais Law & Title as closing agent, such as:
- addresses of lien holders
- copies of existing mortgage monthly billing statements
- tax receipts
- equipment warranties
- home warranty contracts (if any)
- any leases and/or rental agreements
- Seller’s title insurance owner’s policy
- survey when Seller bought property.
* Seller approves and signs the closing instructions, deed and other related documents required to complete the transaction.
* Seller approves final reports and/or repairs to the property as required by the terms of the purchase and sale agreement (responsibility for inspection procedures may vary).
* Buyer and Seller fulfill any remaining conditions specified in the contract and/or closing instructions.
Sellers Financial Responsibilities
Selling Your Home: Costs and Fees
The process of selling your home involves several costs and fees. The following information is very general. Many of these items can be negotiated with the buyer. Consult Desjarlais Law & Title for details.
* Real estate commission
* Document preparation fee for deed
* State of Florida documentary transfer tax
* Payoff of all loans in seller's name
* Interest accrued to lender being paid off, statement fees, reconveyance fees and any prepayment penalties.
* Termite work (if termite damage and according to terms of contract)
* Home warranty (according to contract)
* Any judgments, tax liens, etc., against the seller
* Tax proration (for any taxes unpaid at time of transfer of title)
* Any unpaid homeowner's dues
* Recording charges to clear all documents of record against seller
* Any bonds or assessments (according to contract)
* Any and all delinquent taxes
* Notary fees
* Estoppel fees (to lender and homeowner/condominium associations)
* Title insurance premium (according to contract)
* Any loan fees required by buyer's lender (if VA or FHA)
SELLER'S CHECKLIST
A GOOD FIRST IMPRESSION CAN HELP SELL YOUR HOME
You can assist your real estate agent when you are showing your home to prospective buyers by remembering that first impressions are the most lasting and the most important to its sale.
Your major role as a seller will be to make your home as attractive as possible to potential buyers. The time, effort and limited financial investment involved can give you the competitive edge needed to sell your home when you want - at the price you want.
YOUR HOME'S EXTERIOR CREATES THE PROSPECTIVE BUYER'S FIRST IMPRESSION
Since the exterior of your home is the first thing a prospective buyer sees, a little time and effort can make a big difference in the impression your home creates. And pay big dividends when the sale is made.
Use this check list to make sure your home's exterior looks its best:
Lawn is well cut and neatly trimmed around the walks and drive.
Flower garden is weeded.
Shrubs are trimmed and dead trees and branches are eliminated.
All debris is disposed of and toys and lawn equipment are neatly stored.
Fences and gates are repaired and repainted, if necessary.
The roof, gutters and downspout are in good repair.
Driveways and sidewalks are washed down and checked for cracking and crumbling.
Cracked windows and torn screens are replaced. Screens, windows and window sills are washed. Doorknobs are polished.
Doorbell and front lights are in good working order.
If you have planned to paint the house within the coming year, consider painting the house before showing it. A new paint job, well done, will normally enhance the sale value a good deal more than the cost of the paint.
If your home's exterior looks clean, orderly and in good repair, that's the impression your house will first convey.
A SPOTLESS INTERIOR WILL REINFORCE YOUR HOME'S GOOD FIRST IMPRESSION
Interior dirt and clutter can obscure your home's good points, so start with a full house cleaning from top to bottom. Store unused or unnecessary items in closets and storage areas or hold a garage sale. Eliminate clutter and your home will look more spacious - an important selling point.
Take an inspection tour of your home, observing it as a potential buyer would.
Walls are clean and free of smudges, fingerprints and dents.
Woodwork and wallpaper are inspected for problem areas; wallpaper is cleaned and woodwork is waxed.
Badly worn furniture is temporarily stored in family's or neighbor's attic or basement.
Curtains and drapes are freshly laundered or cleaned.
Rugs and carpets are shampooed. Floors are waxed.
Loose doorknobs, sticking doors, windows and warped drawers are repaired.
Leaky faucets are fixed. Water discoloration in sink is eliminated.
Loose stair banisters are tightened and steps are free of objects.
Light fixtures are in good working order. Discolored or cracked switch plates are replaced.
Closets, shelves and drawers are organized to display spaciousness.
Clothing is hung neatly and shoes and other objects are neatly arranged.
Bathrooms are sparkling clean. Tub and shower caulking is repaired.
Bedrooms are neat. Bedspreads and curtains are attractive.
The kitchen is clean and tidy, including cupboards, stove and oven.
The basement, attic and garage are clean and well organized.
Mirrors, picture frames and glasses covering pictures are clean.
Mirrors are strategically placed to create an impression of added space in problem areas.
Lamp shades are in good condition.
Electrical connections are plugged in.
Consider painting walls and replacing carpeting if cleaning doesn't do the trick.
Many Buyers are afraid or dislike pets. Remove all obvious pet toys, bed, litter boxes, etc. Develop a plan to remove
large or noisy pets when a Buyer is viewing your home.
It is also important to keep lighting in mind when you show your home. Good lighting will make your home seem more cheery and spacious.
OVER-IMPROVING DOESN'T PAY
Don't plan major improvements on your home. Most home buyers want to make their own major changes. You are usually wiser to sell them the potential - at a price they can afford.
You can do a lot to help your real estate agent show your home. Showing your home is all important to its sale, and there are many ways you can help your real estate professional do his or her job successfully.
HERE ARE SOME LAST-MINUTE DETAILS THAT WILL MAXIMIZE YOUR HOME'S SELLING POTENTIAL
The television and radio are turned off or low enough to allow the salesperson and buyer(s) to talk, free of disturbances.
Children and pets are sent outdoors to play or otherwise entertained to eliminate confusion and to keep the prospect's attention focused positively on your house.
Bad odors are eliminated. Air freshener is used before the potential buyer arrives, especially if you have pets or if the house has been closed up for some time.
The house has adequate lighting (during daytime drapes are open; at night plenty of lights are on, including the porch light).
- The kitchen sink is free of dishes.
- Magazines and children's toys are in order.
- Plants have been watered and look healthy.
- Fresh flowers are arranged tastefully around the house.
WHAT YOU CAN DO WHILE YOUR HOUSE IS BEING SHOWN
It is best to vacate the house, if not then:
Be courteous, but don't force conversation with the potential buyer(s).
Ask your real estate broker or agent if your presence is necessary.
Never apologize for the appearance of your home. Let your real estate agent answer any objections.
Leave it to your real estate agent to emphasize the features of your home.
Make sure your agent knows where you are so you may answer questions, but don't tag along.
Let your real estate agent discuss price, terms, possession and other factors with the potential buyer(s).
Your real estate agent has the experience and training necessary to bring negotiations to a successful conclusion. And, if you've followed the guidelines provided, you'll know you've already done your part by making sure your home creates a good first impression.
OVER-IMPROVING DOESN'T PAY
Don't plan major improvements on your home. Most home buyers want to make their own major changes. You are usually wiser to sell them the potential - at a price they can afford.
You can do a lot to help your real estate agent show your home. Showing your home is all important to its sale, and there are many ways you can help your real estate professional do his or her job successfully.
HERE ARE SOME LAST-MINUTE DETAILS THAT WILL MAXIMIZE YOUR HOME'S SELLING POTENTIAL
The television and radio are turned off or low enough to allow the salesperson and buyer(s) to talk, free of disturbances.
Children and pets are sent outdoors to play or otherwise entertained to eliminate confusion and to keep the prospect's attention focused positively on your house.
Bad odors are eliminated. Air freshener is used before the potential buyer arrives, especially if you have pets or if the house has been closed up for some time.
The house has adequate lighting (during daytime drapes are open; at night plenty of lights are on, including the porch light).
The kitchen sink is free of dishes.
Magazines and children's toys are in order.
Plants have been watered and look healthy.
Fresh flowers are arranged tastefully around the house.
WHAT YOU CAN DO WHILE YOUR HOUSE IS BEING SHOWN
It is best to vacate the house, if not then:
Be courteous, but don't force conversation with the potential buyer(s).
Ask your real estate agent if your presence is necessary.
Never apologize for the appearance of your home. Let your real estate broker or agent answer any objections.
Leave it to your real estate agent to emphasize the features of your home.
Make sure your agent knows where you are so you may answer questions, but don't tag along.
Let your real estate agent discuss price, terms, possession and other factors with the potential buyer(s).
Your real estate agent has the experience and training necessary to bring negotiations to a successful conclusion. And, if you've followed the guidelines provided, you'll know you've already done your part by making sure your home creates a good first impression.
HERE ARE SOME LAST-MINUTE DETAILS THAT WILL MAXIMIZE YOUR HOME'S SELLING POTENTIAL
The television and radio are turned off or low enough to allow the salesperson and buyer(s) to talk, free of disturbances.
Children and pets are sent outdoors to play or otherwise entertained to eliminate confusion and to keep the prospect's attention focused positively on your house.
Bad odors are eliminated. Air freshener is used before the potential buyer arrives, especially if you have pets or if the house has been closed up for some time.
The house has adequate lighting (during daytime drapes are open; at night plenty of lights are on, including the porch light).
The kitchen sink is free of dishes.
Magazines and children's toys are in order.
Plants have been watered and look healthy.
Fresh flowers are arranged tastefully around the house.
WHAT YOU CAN DO WHILE YOUR HOUSE IS BEING SHOWN
It is best to vacate the house, if not then:
Be courteous, but don't force conversation with the potential buyer(s).
Ask your real estate agent if your presence is necessary.
Never apologize for the appearance of your home. Let your real estate agent answer any objections.
Leave it to your real estate agent to emphasize the features of your home.
Make sure your agent knows where you are so you may answer questions, but don't tag along.
Let your real estate agent discuss price, terms, possession and other factors with the potential buyer(s).
Your real estate agent has the experience and training necessary to bring negotiations to a successful conclusion. And, if you've followed the guidelines provided, you'll know you've already done your part by making sure your home creates a good first impression.