Although lenders and technology companies keep talking about how we’re eliminating paper when someone buys or sells a house, you’d never know it from the stacks you get at a closing.
When you buy, you should get a closing book, your mortgage documents, warranties, proof of problems that the seller resolved, and any condo, coop, or homeowner association documents.
When you sell, you’ll need to gather up all that information, plus any information on home repairs, home improvement projects, and warranties for any new appliances you purchased while you lived in the home. You may also need to pull together current tax information.
Why should you put together the paperwork now? Because the buyers are going to ask for it as soon as you and they work out the purchase price. And after you close, you’ll need some of these documents to help figure out what your net profit is on the house, and perhaps for tax purposes.
Here’s a list of documents you’;ll want to have handy:
-Closing book. When you bought your home, your attorney, title or escrow agent should have handed you a folder with all the paperwork from the transaction. This might have included a copy of your offer to purchase, the signed contract, a copy of the title insurance policy, your HUD-1 sheet (detailing all of your closing costs and those of the buyer), your loan documents, and perhaps other information.
-Mortgage, home equity loan, home equity line of credit or refinance documents. If you have a home loan or have taken out a home equity loan or line of credit while you’ve lived in your house, you should have copies of these loan documents handy. If you can’t find your original loan documents (or your copy of them), you’ll need the loan number (or numbers) and the loan servicer’s toll free customer service number. In preparation for the closing, you (or your attorney or escrow closing officer) will need to contact the lender to get the payoff information for your loan.
-Home warranty. A home warranty is an extended service contract for an older home. It guarantees to a buyer that the mechanical system and appliances that are working in the house on the day of closing will work for a year. If something breaks, the buyer can call a toll-free number, pay a service fee (typically under $100) and someone will come and either fix the item or replace it. If you purchased a home warranty in order to help you sell the home, you’;ll want to have the paperwork handy to give to the buyer.
-Proof of problems resolved. If you had a problem with water, like a leak in the basement, but you’ve since fixed it, you’ll want to keep proof of the repair close at hand. So pull together all the bills and receipts for payment from contractors or workmen you’ve employed through the year. If you’ve had a serious problem, a buyer may want to see proof of the repair to be sure you have resolved it. If the repair carried a warranty that transfers to a new owner, be sure to keep that information together.
-Warranties for new appliances and mechanical system components. If you’ve bought a new refrigerator, replaced your hot water heater, or put in a new furnace, the item probably came with a manufacturer’s warranty. Be sure to keep all of this warranty information together, in order to give it to your buyer.
-Condo, co-op and homeowner’s association documents. If you live in a condo or co-op, home buyers will want to see copies of the building budget for the last two years, plus minutes from the prior year or two of board meetings. Buyers may also ask for the “condo dec,” which is the legal condominium declaration that was written and filed when the condo was created. You should also prepare copies of the condo, co-op or homeowners’ association rules, regulations and bylaws.
-Home improvement or renovation information. If you’ve completed a patio, deck or added on another garage bay, it’s important to keep all of the information relating to the home improvement or renovation project together. You’ll also want to have your building permits, certificate of occupancy, plans, surveys, and a list of contractors and subcontracts who worked on your home. If you had plans drawn up for a potential renovation that you opted not to do, you may want to pass these plans along to your future buyers in your renovation kit. It will give them a good start if they decide to do some work to the house in the future.
-Bills, tax receipts and other household paperwork. Your buyers will want to know how much cable, gas, electricity, and property taxes cost. If you rent out a room or the attic or the second floor of your house, you’ll want to have a copy of the most current lease as well.
Preparing your files ahead of time means you’ll be ready when your buyer needs that information — instead of struggling to fine things when time is at a premium.