Although the steps involved in selling a home are similar regardless of where you live, New York's real estate laws and practices are unique in many respects. Becoming familiar with the process early will help you avoid problems later. Here’s an overview, from working with a real estate agent to making legally required disclosures to closing the deal.
Working With a New York Real Estate Agent
Most people selling their home in New York list it with a licensed real estate broker or agent. A good agent will help you prepare and price your property, market it to prospective buyers, and negotiate with buyers through the closing.
Selling your house "for sale by owner" or FSBO is also a possibility, but the average seller’s lack of understanding regarding home pricing, advertising strategies, and the overall process can put you at a disadvantage. You might face unexpected hassles and fail to get the best price for your home.
For more information on working with an agent, see the New York State guide, Looking to Buy, Sell or Rent Property in New York State? Know Your Rights.
Signing a Listing Agreement With a New York Agent
Once you find a real estate agent you want to work with, you’ll sign a “listing agreement,” giving the agent the right to market and handle the sale of your house. Most agents use standard forms created by their state or local Realtor association, such as the New York State Association of REALTORS.
New York listing agreements cover the following terms.
- Commission that you (the seller) will pay. This "brokerage fee" typically ranges from 5-6% of the house sales price, is due no later than the closing, and is split between your real estate agent and the buyer’s agent.
- Type of listing. The standard arrangement is an exclusive right to sell listing, in which which you must pay a commission to the agent regardless of who brings in the buyer (even if you yourself find a buyer, such as by talking to friends).
- Duration of listing. The listing agreement will cover a pre-set amount of time, often between 60 and 90 days.
- List price. Your agent will recommend an appropriate price at which to publicly list the home for sale. To educate yourself as to whether that price is appropriate, see the National Association of Realtors’ website for information on list prices of houses currently on the market, and websites such as Zillow and Trulia for data on actual sales prices (which can vary greatly from the original list price).
- Property included (or not) in the sale. For example, you may plan to leave behind a built-in dishwasher, which is therefore part of the property that the agent is contracted to sell. Or, you might exclude a refrigerator that you plan to move to your new home, in which case the agent needs to know that and convey that information to prospective buyers.
- Duties and obligations of seller and real estate agent. Your agreement will spell out how the real estate agent will act on your behalf in listing and marketing your house, and ask you to agree to things like putting up a "For Sale" sign.
New York law requires real estate agents to advise potential sellers with whom they work of the nature of their relationship and the respective rights and obligations. See the New York State Division of Licensing Disclosure Form for Buyer and Seller.
Making Real Estate Disclosures in New York
State law in New York (New York Real Property Law Section 462) requires sellers to fill in and provide buyers with a disclosure statement, containing information on the property and describing its condition within the limits of the seller's knowledge. Alternatively, the seller can credit the buyer $500 at closing.
The statement must address details of the property such as:
- presence of hazardous or toxic substances
- material defects in the electrical, plumbing, structural, and other house systems and equipment
- presence of or damage by rodents, insects, or other pests
- any common ownership of portions of the property and/or homeowners’ association fees and rules
- shared driveways, if any, and
- water source.
Disclosures must be on a Property Condition Disclosure Statement form established by the New York Department of State.
Certain types of properties (such as foreclosures or newly built homes) are exempt from state disclosure rules.
In addition to state rules, if your house was built before 1978, you must comply with federal Title X disclosure regulations regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website.
Creating a Purchase Agreement in New York
A buyer who wants to purchase a New York home will make the seller a written offer, specifying the price but not including many of the details found in most other states' purchase offers. (In other words, the offer does not take the form of a complete contract, ready to be signed, as you'd encounter in states like California.)
If the seller says yes (usually done orally, not in writing) the buyer may then conduct inspections of the structure and look for possible pest infestations, and change the offer price accordingly or ask for repairs.
Note that the buyer and seller are not yet in contract, nor bound to complete the transaction. The next step, with the help of the seller's attorney, is for a final contract to be drafted, negotiated, and signed by both parties. The buyer will then pay a percentage of the purchase price (what's called "earnest money" in most states, but a "downpayment" in New York).
Following that, the New York contract normally calls for a 72-hour attorney review period. During this time, the buyer and seller can propose and agree to any last changes. If someone's attorney spots a cause to walk away from the deal, either the buyer or the seller can do so within these 72 hours.
The final agreement will contain all terms of the sale, such as the agreed-upon price, contingencies (conditions that must be met before the sale can close), dispute resolution method, and closing date. See the New York State Bar Association Residential Contract of Sale for a sample.
The transaction will next go into what’s called “escrow.”
What Is Escrow?
Escrow is the time period between signing the purchase agreement and closing on the house. The seller's attorney will serve as escrow or title agent, supervising the process, preparing title reports as a preliminary step to obtaining title insurance, working to resolve issues such as liens on the property, preparing closing documents, 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 property appraised (typically required by mortgage lenders), and get title insurance—usually under set deadlines.
As the seller, you will need to cooperate in making the property available for inspections, appraisal, and ultimately a final walk-through. You'll also need to act on and remove any contingencies that you added to the purchase contract.
If something goes wrong; for example, the buyer cannot obtain financing after all, and this was the basis of a contingency; the buyer may have the right to back out of the deal without forfeiting the downpayment.
What Happens at the Closing of Your New York Home
By the scheduled closing day, you and the buyer should have fulfilled all the terms of your purchase agreement.
The closing itself is normally an in-person meeting of the parties, their lawyers, a representative from the title insurance company, and lawyers representing the buyer's and seller's mortgage lenders. You (the seller) can potentially skip the closing if you give your attorney signed power to handle the transaction.
Over the course of the closing, the buyer will need to pay you the purchase price, and you must 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).
Once the new deed showing the buyer's name has been recorded at a local government office (by the attorney or title company), the home is officially theirs.
Working With a Lawyer
Unlike many states, New York requires sellers to involve a lawyer in the house-selling transaction. (N.Y. Jud. Law Section 484), fulfilling the tasks described above.
You may also want a lawyer’s help with things like drafting a lease agreement if you plan to rent the property back for an extended period of time after the closing, or if problems show up on the title report such as a lien on your property.