Residential Real Estate Basics
Author: Attorney Peter J. Curran
While residential real estate transactions can vary widely from case to case, there are certain elements that are common to most basic transactions.
Offer to Purchase
The first step is often the preparation of an Offer to Purchase. This document will be the contract for the transaction and will set forth the key terms of the deal, such as the parties, the property’s description, the purchase price, any down payment or “earnest money,” any contingencies for the transaction (financing, inspection, appraisal, proposed use, etc.), proposed closing date, and any other terms that are specific to the particular transaction. This document is usually prepared by the buyer’s attorney, but is not required to be. It is important that the Offer be filled out correctly and fully understood to avoid potential problems.
Counteroffers and Amendments
In the event that the seller does not agree with some of the terms of the Offer as presented, that party can make a counteroffer, which modifies the terms with which the seller does not agree. This can be accepted, rejected, or subject to another counteroffer from the other party. Once both parties have agreed to the same terms, the Offer is deemed accepted.
After the Offer is accepted, should the parties wish to change any of the terms (and are in agreement on those changes), an amendment to the Offer is the proper way to legally set forth those changes and amend the contract.
Deed and Transfer Tax Return
A deed is the document by which ownership is transferred. This is signed by the seller as part of the closing. Once executed, the deed should be recorded with the Register of Deeds in the County in which the real estate lies. Deeds are traditionally prepared by the seller’s attorney. It is important that the deed is prepared correctly to avoid potential future title issues.
In order to have the deed recorded, a Transfer Tax Return needs to be completed. While there are some exemptions from transfer tax, non-exempt transactions are subject to tax at a rate of $3 per $1,000.00 of value transferred. This tax is collected by the Wisconsin Department of Revenue.
The closing of the transaction is the final step of the process. This is the date and time set in the Offer by which all parties must have completed the items required of them in the Offer and be ready to pay for the property (buyers) and convey the property (sellers). In most cases, closings can be done in person or through the mail.