Before you list your home, it’s good to learn what questions you’ll have to answer prior to coming face-to-face with a bunch of check boxes. One thing you’ll have to disclose in your MLS listing is whether or not your property has any “Home Sale Restrictions.” This post will explain what home sales restrictions are and will help you identify which option to check.
What is a home sale restriction?
When a property has “sales restrictions”, that means there are specific conditions that must be met in order for it to be sold. For example, in some cases only certain buyers may purchase the property. In other cases, the property can only be sold for more or less than a stated price.
Most sellers won’t have any sales restrictions on your property. But, for the sake of understanding what the different options are and when they apply, we put together a list of the thirteen most common sales restrictions.
Call to Ask:
This simply means that a prospective buyer should call the seller or the seller’s representative to find out specifics of the restriction. It’s most often used if a seller has a restriction that they don’t want to be known publicly. For example, the seller may have a tenant in place and wants the new buyer to honor the lease term. However, the seller doesn’t want to advertise that the property is actively being rented.
Court Approval Required:
This means that before the property can be sold and a transfer of ownership can be completed, a court must give its blessing to the offer and approve the transaction.
Deed Restricted Program:
There are many types of deed restrictions. For example, there can approved uses that were stipulated by developers or original land owners or set-asides for public use and access (sometimes in the case of waterfront, nature preserves, or seasonal activities). Whatever the case, the restrictions must be agreed to by all parties, are binding to all current and future owners and become a part of the filed deeds.
If you are selling property that you inherited, you may not have clear title and may be acting as the representative of the estate even if you are the sole heir. If there was no will left by the deceased, the listing may be termed a probate sale.
HAP (Home Assistance Program):
This relatively uncommon military program that helps active duty service members and/or veterans if a nearby base closure results in a decrease in property values.
Housing and Urban Development:
A HUD home is a 1-4 unit residential property that has been acquired by HUD because of a foreclosure action on an FHA-insured mortgage. The sale of the property will be managed by the HUD agency.
Need Short Sale — No Lender Knowledge:
If your property is worth less than you owe, you can attempt to bring a lender a deal that will be approved. You can use this option if it’s your best hope but you shouldn’t try to mislead an interested buyer.
Notice of Default Filed – Foreclosure Pending:
If a mortgage lender has begun foreclosure proceedings, they sometimes use this type of sale as a last ditch effort to get out from under the default and get an acceptable offer in a hurry. It can spell a good deal for a buyer!
Pre-Short Sale Package Submitted to Lender:
If you have asked your lender to allow you to sell the property for less than the balance owed, this is notice to a buyer that an offer will be scrutinized by the lender as well as by the seller.
Probate Subject to Overbid:
In this case, a property is being offered for sale by a representative of the probate court. This almost always occurs in cases where the owner of the property died and didn’t have a will. Offers must be approved by the court and occasionally, higher bids will be solicited and accepted at an open hearing.
Following a foreclosure, lenders often attempt to sell properties that they carry on their books. Such properties are commonly offered “as is,” with little room for negotiation. No repairs or improvements will be made.
Short Sale Approved:
If a homeowner requests to sell their property for less than the amount owed and their lender approved the request, that seller has a short sale on their hands. This option is often explored if a homeowner is facing foreclosure but wants to sell in a way that will be less damaging to their credit.
The last possible category, if none of the above apply but there is a restriction on your home, is “Other.” There are a number of reasons why this option may need to be selected. Perhaps there are back taxes owed on the property or there’s a pending legal action that needs to be resolved prior to closing.
The most important point to remember when completing pre-listing paperwork with your transaction coordinator is to be as honest as possible. Never misrepresent the condition of the property, and never fail to disclose anything you know that will affect the sale.
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