Whether you're downsizing an empty nest in Springfield or have outgrown a starter home in Chicago, selling your Illinois house or condo may involve not only practical but legal ramifications. Becoming familiar with the process early will help you avoid problems.
Here’s an overview of the basics—from working with a real estate agent to making legally required disclosures to closing the deal.
Working With an Illinois Real Estate Agent
Most people selling their home in Illinois work with a licensed real estate broker or agent. A good agent will help prepare and price your house, market it to prospective buyers, review purchase offers, negotiate with buyers (or more realistically, with their agents), and otherwise help guide the deal toward closing.
Before signing up with any agent, get references from other home sellers and view customer reviews on sites such as Zillow and Trulia. You can check licenses of Illinois real estate agents at the Illinois Department of Financial and Professional Regulation’s website.
Signing a Listing Agreement in Illinois
Once you find a real estate agent you want to work with, you’ll sign a “listing agreement,” which gives the agent the right to market and handle the sale of your property. Most real estate agents use forms created by the Illinois Association of Realtors or a similar local realtor association.
Listing agreements typically cover:
- Commission that you (the seller) will pay your agent. This typically ranges from 5-6% of the house sales price, and is ultimately split between your real estate agent and the buyer’s agent.
- Type of listing. Most listing agents will want you to sign an exclusive right to sell listing, which obligates you to pay a commission regardless of who brings in the buyer (see the sample Illinois Association of Realtors Exclusive Right to Sell Contract). Other arrangements are possible, however, such as an open listing, in which you agree to pay a commission to whichever agent brings in a buyer, or an exclusive agency listing, in which you agree that your agent is the only agent authorized to sell your house, but that you will pay a commission only if the agent brings in the buyer (not, for example, if you do).
- Duration of listing. In all cases, the listing agreement will cover a set amount of time, such as 60 to 90 days.
- List price. Your agent will recommend the appropriate selling price, by both comparing prices of similar homes (“comps”) recently listed and sold in your immediate area and by evaluating what price (above or below the house's actual value) might most effectively inspire offers. To educate yourself as to whether the agent is recommending an appropriate price, the National Association of Realtors’ website shows prices of houses currently on the market, and websites such as Zillow and Trulia provide data on actual sales.
- Items included or not included in the sale. For example, you may plan to leave behind a built-in dishwasher, which would thus become part of the property that the agent is contracted to sell. Or, you might want to exclude a refrigerator that you plan to move to your new home, a fact that the agent will need to know and convey to buyers.
- Duties and obligations of seller and real estate agent. Your agreement will spell out how the real estate agent will list or market your house, what type of insurance you must maintain on the property, and what disclosures you must make to buyers.
Making Real Estate Disclosures in Illinois
State law in Illinois (765 Illinois Compiled Statutes Sections 77/5 and following) requires sellers to provide buyers a disclosure form, which contains details on known material defects that would affect the value of the property or health or safety of occupants, such as cracks in the foundation or a termite infestation.
To assist sellers in making all required disclosures, the Illinois Association of Realtors offers a disclosure form, which your realtor will make available to you. Certain types of sales (such as newly built homes) are exempt from state disclosure rules.
In addition, if your house was built before 1978, you must comply with federal Title X disclosures regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website, for details.
What Goes Into Illinois Offers, Counteroffers, and Purchase Agreements
A buyer who wants to purchase a particular Illinois home will make the seller a written offer specifying terms including the price, proposed down payment, and any contingencies (conditions that must be met by a certain date for the sale to proceed to closing). Common contingencies include the buyers’ successfully arranging loan financing, arranging and being satisfied with the results of a professional home inspection, and selling their current house.
You may reject a buyer's offer outright, accept it as, or (as is more typical) respond with a counteroffer. A counteroffer accepts some or most of the offer terms but suggests changes to others, such as a higher price or a closing date that’s sooner than the buyer proposed.
A legally binding contract is formed only when you accept and sign on to a final offer containing the buyer's signature (agreeing to any changes from the original offer) and notify the buyer of the acceptance. The transaction will then go into what’s called “escrow.”
What Is Escrow?
Escrow is the time period between signing the purchase agreement and closing on the house. You will choose an escrow or title agent, a neutral third party that will serve as intermediary and supervise the process (possibly preparing title reports, as well as monitoring loan processing, removal of contingencies, and so on).
The buyer typically has a lot more to do during this time period than the seller. By the close of escrow, the buyer will need to finalize financing, remove all buyer contingencies, have the house appraised (typically required by mortgage lenders), and get title insurance—usually under set deadlines.
Of course, if you negotiated for any contingencies within the contract, such as the right to have it called off if you're unable to find a new house to buy, you too will need to get busy.
Issues often come up that require negotiating, such as who will pay for repair problems identified in an inspection report. The buyer may insist that you either pay to remedy a defect or lower the purchase price. If you cannot reach agreement, the buyer may have the right to back out of the deal.
What Happens at the Closing of Your Illinois Home
By the close of escrow (known as the closing or settlement), you and the buyer should have fulfilled all the terms of your purchase agreement. The closing itself is sometimes a meeting of the parties, other times conducted in separate locations and even on different days.
All final documents and funds will then be exchanged between buyer and seller. The buyer pays you the purchase price, and you give the buyer a deed and other transfer documents and clear title to the house or condo. You pay off any outstanding loans on your property and pay commissions to the real estate agents (per your listing agreement).
Sellers do not usually need to be present at a Illinois closing so long as all costs are paid and documents are signed. Typically, the buyers will sign the final documents at the office of their title company or escrow agent and pick up the keys. Then the title company will record the new deed showing the buyer's name at a local government office, and the home is officially the buyer's.
Working With an Illinois Real Estate Lawyer
Unlike in some states, Illinois law does not require that sellers involve a lawyer in the house-selling transaction.
Even if it’s not required, you may decide to engage a lawyer at some point—for example, to review the final contract or to assist with closing details. Or, you may want a lawyer’s help drafting a lease agreement if you plan to rent the home back for an extended period of time after the house closing, or if problems show up on the title report.
And if you are selling your home without a real estate agent (a “for sale by owner” or FSBO), it may be useful to hire an attorney to help with the legal paperwork.