What Is a Resale in Real Estate?
Understand what constitutes a real estate resale and navigate the distinct characteristics and steps of these property transactions.
Real estate transactions are fundamental to both the broader economy and individual financial planning, representing a significant investment. They facilitate property ownership transfer, allowing individuals to acquire homes and build equity. Understanding the various facets of property sales helps participants navigate these complex financial undertakings. The market is dynamic, with different types of properties changing hands.
Defining Real Estate Resale
A real estate resale refers to a property previously owned and occupied by at least one prior owner. This distinguishes it from new construction homes, which are sold for the first time by a developer or builder. A property that has been bought or sold before falls under the category of a resale home.
Key Elements of Resale Transactions
Resale transactions involve specific considerations that differentiate them from purchasing new construction. A significant aspect is property history, which often comes with seller disclosures. Sellers are required to reveal known issues or defects with the property, such as structural problems, environmental hazards, or past repairs. These disclosures provide buyers with essential information about the property’s condition, enabling informed decisions and potential negotiations.
Some existing homes are sold “as-is,” meaning the seller will not make repairs or provide credits for issues before closing. Even in an “as-is” sale, sellers must disclose known defects. Buyers can still conduct a home inspection to understand the property’s condition, though they may not be able to negotiate repairs based on findings in an “as-is” contract.
Home inspections are an important step for buyers in resale transactions. A qualified inspector thoroughly examines various aspects, including structural, electrical, and plumbing systems. This assessment identifies potential issues or defects that could impact the property, providing buyers with insights to negotiate or decide whether to proceed.
The appraisal process is also an important element, particularly when financing is involved. Lenders require a home appraisal to determine the property’s market value, ensuring it supports the loan amount. An appraiser evaluates the home’s condition, size, and features, comparing it to recently sold, similar properties. This valuation helps protect both the buyer and the lender by confirming the purchase price is reasonable for the property’s estimated worth.
The Resale Process Overview
The real estate resale process follows a structured sequence, starting with the seller preparing and listing the property. This often involves working with a real estate agent to determine a market value and listing the home on platforms like the MLS. Potential buyers then submit offers, which may lead to negotiations on price and terms. Once an offer is accepted, a purchase agreement is signed, and an earnest money deposit is made.
Following the contract signing, a due diligence period begins, during which the buyer arranges for a home inspection. This is also when the buyer secures financing, which includes the lender ordering an appraisal of the property. The appraisal ensures the home’s value aligns with the loan amount, while the inspection identifies potential repairs needed.
If inspections and appraisals are satisfactory and financing is approved, the transaction moves toward closing. During closing, all necessary documents are signed, funds are transferred, and legal ownership of the property changes hands. The entire closing process, from an accepted offer to final ownership transfer, typically takes between 30 to 60 days, depending on factors like financing and any arising complications.