Q: I have just sold my house by myself. How do I handle the paperwork? Do I still need a realtor, or one of those companies that claims to do it all for a fee, or even an attorney?
A: No, no, and possibly. As in so many areas of the law, Colorado has a user-friendly system in place.
A written and signed contract is the first goal. The basic form can be purchased or downloaded, but be sure that the Colorado form is used. Many buyers and sellers simply sit down and fill in the blanks together. When the contract is completed or if there are questions, a short meeting with an attorney can be helpful, who may also suggest inserting some standard provisions. But although encouraged, this meeting with legal counsel is not mandatory.
Next, the seller must show to the buyer that he or she has good title to the property, so the seller selects a title company which will guarantee marketable title by issuing a title (insurance) policy. If a policy-covered problem later develops with the property, the buyer can look to the company for reimbursement and not have to chase down the seller.
Title companies can be found in the yellow pages of the telephone directory. The seller decides which company to use, but in choosing, each organization should be asked if it also will handle the "closing" and if yes, then find out the charge for doing so. Right now the fees seem to vary from $100 to $250 with the amount being divided equally between the buyer and seller. Normally the title company is selected based upon doing the closing for the lowest fee.
The company selected will thereafter handle all of the details to transfer the property. If no realtor is involved, some title companies may require a letter from a lawyer that the contract is binding and enforceable. Certain documents such as the warranty deed are prepared by the seller (again, it would be wise to have an attorney prepare the document), but everything else, including the details to prepare the proration sheets and other legally mandated documents, will be handled as part of the closing process.
It would be prudent to arrange to have the closing documents reviewed by an attorney a day or two before closing. The "closers" are very good and experienced, but every once in a while there are slip-ups. The lawyer can also explain just what the heck you are signing and why. It is normally not necessary to have a lawyer sit through the closing with you watching the papers being shuffled and signed.
At the closing the buyers will bring their certified check for an amount determined by the closer; the buyers and sellers will sign the necessary documents prepared by the closing agent; and the sellers will receive a check from the closing agent who will then record documents and make any required payments. The buyers will receive the recorded documents when they are returned from the Clerk and Recorder following recording.
Thus, there are several times when it might be wise to include an attorney, but it is quite possible, without the use of an attorney or realtor, to present a signed contract to the title company, sit back and enjoy the ride, and then "take your money and run."
As an aside, if the property to be sold also happens to be your principle residence for more than two years, then the first $250,000 of gain for a single person ($500,000 for a couple) is not subject to capital gains. You can just pocket the money if you should so decide and not have to invest it in a new home. If you do purchase a new residence, two years later you can sell and again pocket $250,000 (or $500,000) of gain without paying any capital gains taxes. Now that really is "taking the money and running."