10 Steps to Take After Selling a Home

Selling a home often feels like a grand sigh of relief, but remember the process isn’t completely over once you hand over the keys. Certain post-sale steps are crucial for a safe and seamlesss transition.

This blog will navigate through vital steps you need to follow after selling your home. Topics covered include saving your closing documents, updating your account addresses, and remembering to re-direct your mail.

We’ll also tackle the necessity of estate planning and the importance of having a will and power of attorney. The aim here is to equip you with the necessary knowledge for a truly smooth transition after selling your home, ensuring you’re wholly ready for the next exciting chapter.

Save Closing Documents

Real estate closing have an array of critical documents. It’s not uncommon for sellers, relaxing after a successful sale, to overlook saving documents. Saving documents is important for future convenience, property tax filings, and legal protection.

Documents that a seller likely received or delivered at the closing:

Seller Closing Disclosure: A detailed breakdown of the financial aspects of the transaction, including the sales price, mortgage pay-offs, and closing costs. The seller should save this document to understand how the proceeds were calculated and for future tax obligations.
Deed: Legal document that transfers property ownership from the seller to the buyer. It is proof of the ownership transfer.
Seller’s Affidavit of Title: Legal document provided by the seller during a property sale that confirms they hold the title, the property is lien-free, and there are no undisclosed ownership claims or other issues related to the property
1099-S form: A 1099-S form is an Internal Revenue Service (IRS) document that indicates the proceeds from the sale of a property. This form officially reports the transaction’s financial details to IRS.
American Land and Title Association (“ALTA”) Settlement Statement: The Settlement Statement is a standard form that outlines all the fees and charges associated with a real estate transaction, highlighting costs borne by both the buyer and the seller.

As a seller, it is critical to save closing documents for a variety of reasons:

Accurate Reporting of Capital Gains Tax: The IRS requires homeowners to report the sale of their real estate on their income tax, and deductions may apply depending on the duration of residency and the sale price. Documentation from the closing supports accurate tax reporting.
Proof of Property Transfer: The deed obtained at closing acts as a transfer of title. It serves as evidence that the seller legally transferred ownership of the property to the buyer.
Address Disputes or Lawsuits: In the event of any post-sale disputes or legal actions taken by the buyer, the seller can use the saved documents as evidence of disclosure and agreement.
Mortgage Release Verification: The documentation from closing can verify the release of the mortgage lien on the property, protecting sellers if there are future claims from the mortgage lender.
Accounting Purposes: Documents can help your accountant to effectively manage and understand the financial implications of the house sale, including profit calculations and tax considerations. If there’s any disparity with the state or federal tax return related to the property sale, these documents will help facilitate a swift resolution with tax authorities.
Proof of Fulfilling Seller Obligations: Some documents, like the Seller’s Affidavit or confirmation of repairs, serve as proof that all obligations as a seller were completed as agreed upon in the contract.
Clarifying Errors or Inaccuracies: If the need arises to contest or clarify any inaccuracies in the property sale information published in public records, saved documents will serve as an ideal reference and proof.

Given their importance, safeguarding these documents is a necessity. Traditionally, people store important documents in a safety deposit box or a secure place at home. However, in the digital age, it’s prudent to maintain electronic copies as well.

Digital copies can be stored on your computer, but ensure they are backed up regularly on external storage devices or cloud storage. Services like Google Drive, Dropbox, or iCloud provide secure storage options. When scanning or photographing documents, make sure all details are legible.

Update Account Addresses

Sellers should make sure to update the address across their many accounts .

Although it may feel like a chore, it is an important task with far-reaching implications. Luckily, we live in a digital era where many of these updates can be performed online, making the process easier and more efficient.

Let’s examine which accounts to update and some of the potential repercussions if not undertaken diligently.

Financial Institutions: Banks, credit card companies, and investment accounts should be promptly informed about your new address. This ensures timely communication regarding account activity, statements, notifications, and essential correspondence.
Utility Suppliers: Electricity, gas, and water providers, along with internet and cable services, need to be aware of your transition to ensure final bill settlement and prevent unnecessary services at your old address.
Insurance Providers: Home, auto, life, and health insurance companies should be updated to reflect your new location to ensure proper coverage and premium accuracy.
Government Agencies: This group includes the Internal Revenue Service (IRS), Social Security Administration, the Department of Motor Vehicles, the Post Office (for mail forwarding), and voter registration authorities. Updating these agencies is vital for accurate demographic information and to maintain your civic duties and rights.
Subscriptions and Loyalty Programs: Newspaper, magazine, online streaming services, and retail loyalty programs all require accurate address information to continue offering their services without disruption.

Being proactive in updating address information allows you to maintain the flow of these vital communications, services, and privileges.Failure to update your address may lead to numerous unfavorable consequences.

Unattended mail can turn into missed bills or, worse, fall into the wrong hands, leading to potential identity theft or fraud.
Leaving one’s address unupdated with financial institutions may result in late charges or impacts on credit score due to missed payments.
In the insurance world, failure to update your home address can lead to policy cancellations or non-coverage, and in the case of auto insurance, increased premiums associated with the new location.
Similarly, in terms of healthcare, it may lead to inaccessibility to preferred providers or increased rates based on changed locations.

Updating your address after a property sale, while tedious, iis a crucial post-sale task. It protects you from potential monetary losses, security breaches, and maintains tnecessary services and correspondence. Be proactive, meticulous, and diligent in taking these necessary steps towards a smooth transition to your next chapter.

Re-Direct Mail

Re-directing mail following a closing is a necessary step to safeguard your personal information and maintain important communications. Re-direction ensures you receive information from government institutions, banks, healthcare and insurance providers, as well as prevents your sensitive details from falling into the wrong hands.

Forgetting to re-direct mail can cause issues from minor inconveniences to major headaches:

Missed Bills and Payments: Regularly, utilities, banks, and credit card companies communicate through paper mail. Not redirecting the mail could lead to missed payments and impact your credit score negatively.
Lost Correspondences: Losing out on essential newsletters, updates, or invitations from various sources can cause disruption in personal and professional relationships.
Identity Theft: Criminals could exploit unattended mail loaded with personal details to commit fraud or identity theft.
Loss of Privacy: Personal letters or documents left at your old place can lead to an unintentional breach of privacy.

Redirecting your mail is a straightforward process, typically handled by the postal service. Here are some general steps:

Notify Relevant Parties: Inform banks, utilities, subscription services, and other relevant parties about your upcoming change of address.
Contact Postal Service: Visit your postal service’s website or local office. They typically have a mail redirection service. This service ensures that any mail sent to your old address is forwarded to your new address for a selected period.
Fill in Details: Provide your old address, new address, and the effective date of the change.
Choose Duration: Most postal services will allow you to choose the length of time for which they will redirect your mail, typically from six months to a year.
Pay and Confirm: Once you’ve completed these steps, pay any fees and confirm your redirection.

Estate Plan (Will and Power of Attorney)

Real estate is an expensive and it is common after the sale to have signfincatly increased cash on hand. It is vital to have a plan in place as to how handle the new asset is handled in case of death, incapacity, or inability to make decisions.

Planning ahead will allow for your families best interests to be put paramount if one of these unfortunate events strike (after which it is too late to estate plan).

A will, perhaps the most common estate planning document, details how you want your assets distributed and who is responsbile for distribution after death. A will is essential for the following reasons:

Choose Your Heirs (Don’t Allow State Law to Decide): Property is distributed by general state laws without a will – the beneficiaries of your property may not align with your wishes.
Maintain Harmonious Family Relationships: Clear intentions set in a will prevent disagreements as to how you desired your assets to be distributed.
Choose a Trustworthy and Competent Estate Administrator: The court appoints one person to manage an estate. Courts will follow your choice of administators in a will. If you did not have a will, any persons and/or family members could petition to be the administrator (even those that would not have been your choice) resulting damaged relationships or legal disputes.
Swift Property Transfer: Transfer of real estate ownership will be delayed without a will due to a longer probate process, resulting in problems if no person has authority to make decisions.
Reduce Legal Costs: Estate administration without a will involves more legal work and higher legal fees.
Increase Family Wealth with Tax Benefits: Estate planning allows for maximizing tax benefits to preserve family wealth.
Choose a Guardian For Children: Appoint a guardian for your minor children in case of your death. Otherwise, it is for the courts to decide.

A power of attorney (“POA”) allows you to appoint someone to handle your legal and financial affairs if you become incapacitated.

Contrary to some beliefs, a power of attorney is needed even for spouses to make decisions on each other’s behalf. If one person becomes incapacitated without a power of attorney in place, the only option then for obtaining decisionmaking authority opening a litigation for legal guardianship.

Do you own other real estate? A power of attorney for real estate offers several benefits in the event you are no longer able to make decisions:

Property Management: POA would allow the person you trust to handle property affairs, pay property taxes, manag mortgages or loans, and accept rental income.
Real Estate Transaction Decisions: A POA can act on your behalf in buying, selling, transferring and refinancing real estate.
Efficiency and Convenience: Even if you are not fully incapacitated, a POA can step in and assist you if ownership becomes challenging due to health, age, distance, or other commitments.
Legal Decisions: A POA can make decisions regarding tax matters, disputes, or legal issues involving the property.

Need assistance in preparing these important estate planning documents?

Our firm provides comprehensive guidance to ensure your estate planning goals and needs are thoroughly addressed and achieved. Call/text us at 201-389-8275 or e-mail contact@earlwhite.law visit the Contact Us assistance with any estate planning.

Financal Planning

Selling real estate is a significant financial event in one’s life. It generates substantial funds that, if smartly managed, will improve your financial security. A clear and comprehensive financial plan is vital.

Let’s delve into why financial planning after a property sale is essential, steps to create a strong financial plan, and how to choose an expert financial planner.

Why Financial Planning is Essential Post Property Sale

Capital Preservation: After a sizable financial windfall like a property sale, the primary goal should be to grow capital and avoid unnecessary loss. Proper financial planning offers a roadmap to allocate these assets efficiently.
Maximizing returns: Strategic planning enables one to make informed decisions that aim to maximize returns on the funds received from the sale.
Long-term financial security: financial plan ensures these funds can contribute to long-term personal financial goals, retirement plan business engagements.

Steps for Your Financial Plan

Assess your Financial Position: Analyze your current financial situation, including assets, liabilities, income sources, and expenditure. Understanding this allows for better decision-making on how to use the influx of cash.
Define Your Financial Goals: Having clear and realistic financial ambitions is vital – whether it’s a comfortable retirement, children’s education, or starting a business.
Develop an Investment Strategy: Depending on risk tolerance and timelines, create an investment strategy. It could involve investing in stocks, bonds, mutual funds, or real estate itself.
Tax Planning: The sale can significantly impact tax liabilities. Therefore, planning for possible capital gains tax or reinvesting the profits to defer tax payments should be considered.
Estate Planning: Especially for those approaching their golden years, estate planning becomes vital. This could include setting up trusts or wills.

Choosing the Right Financial Planner

Selecting a reliable financial planner is as crucial as planning itself. Here are some points to consider:

Certified Professionals: Prefer professionals with recognized certifications, such as a Certified Financial Planner (CFP) or a Chartered Financial Analyst (CFA).
Fiduciary Standard: Choose a planner who operates under a fiduciary standard, meaning they are legally obliged to make decisions in your best interest.
Fee Structure: Understand their fee structure. Typically, fee-only financial planners are preferable as they don’t earn commissions from recommending specific financial products.
Experience and Expertise: Not all financial planners are the same; their focus areas differ. Find one that aligns with your objectives.
Reviews and References: Like any professional service, reviews and references from prior clients provide insights about the planner’s reliability and competency.

Navigating the voyage of financial planning after selling a house can seem daunting, but with a meticulous plan and a trustworthy financial planner, it can lead to significant wealth preservation and growth.

Notify Family and Friends

If you are relocating as part of the real estate sale, informing friends and family is not only a couresty but also a practical step. On an emotional level, sharing the news personally ensures loved ones hear about the change from you, rather than through the third-party.

Notification of the address change is also a practical move. It helps avoid any confusion or miscommunication, particularly with invitations, deliveries, or visits. Family and friends who may not be aware of your move might send letters, packages, or even drop by your old address, resulting in breaches of privacy and potential inconvenience for the new occupants of your previous home.

This step is relatively simple. You can call, text, or e-mail immediately family and friends. If you prefer, you can also do an eletronic moving announcement or broader social media post.

Update Homeonwers Insurance

Updating your homeowner’s insurance policy after selling your will help safeguards your financial standing for a few reasons.

Prevention of Penned Liability: Once you’ve sold your home, you no longer hold any responsibilities towards it. However, if your homeowners insurance isn’t updated, and an accident occurs, there would be an open policy in your name for the property for potential claims. To avoid any issues, terminate your policy effective from the date you no longer own the property.
Securing Your New Home: If you’re moving to a new residence following the sale, it’s critical to arrange an appropriate homeowners insurance policy for your new property. The particulars of this policy will differ based on the features of your new dwelling, its location, and many other factors.
Retrieving Unclaimed Benefits: You may be entitled to a refund of the unused portion of your prepaid premiums.

Here are the general steps for updating the homeoowners insurance:

Contact Your Insurance Agent: Begin by reaching out to your insurance agent or company. Initiate the conversation about selling your home and lean into their expertise about the best course of action you should adopt with your current policy.
Evaluate Your New Home’s Needs: If you’re buying a new home, take the time to evaluate its insurance requirements. Consider unique elements that could impact your homeowners insurance, like geographical location, natural disaster probabilities, the home’s age, and its system conditions. Now is the time to think about raising or lowering personal liability coverage, dwelling coverage, or other portions of your policy.
Cancel or Transfer Your Policy: Once the sale is final, you then will either cancel your current homeowners’ insurance policy or transfer it to the new address if staying with the same insurance company. Make sure that the termination falls on the rightful closing date.
Confirm Everything in Writing: Whether you cancel or adjust your existing policy, ensure you get everything in writing. This record will serve as official proof and protect you from potential disputes down the line.

Confirm Mortgage Discharge and Pay-Off

At the closing, sellers provide a “mortgage pay-off” statement and the pay-off amount is sent to the lender to extinguish the mortgage. The lender is then supposed to do the following:

Account Closure: After the successful mortgage pay-off at a real estate closing, the lender proceeds to close the mortgage account, including a final review to nsure all the payments have been correctly applied and all dues have been settled. Once the verification is complete, the lender then closes the mortgage account in their system. They subsequently generate an official ‘paid in full’ notice or mortgage release document discussed in next paragraph.
Discharge the Mortgage With the County: The lender has the legal responsibility to record a lien discharge with the county recorder’s office. The lender prepares a document known as a ‘release of mortgage’ or ‘satisfaction of mortgage’, which establishes the borrower’s fulfillment of their mortgage obligations. This document is required to include pertinent information such as the original mortgage details, borrower’s identification, payment details, and legal description of the property. The lender then records this document with the county recorder’s office, which serves to officially remove the lien from the property’s title.
Return of Tax and Insurance Escrow: Lenders usually maintain an escrow account typically earmarked for property taxes and insurance premiums. The lender is responsible for conducting a final escrow analysis to determine the remaining balance in the borrower’s escrow account. Following this analysis, and ensuring all due bills have been paid, the lender must return the escrow balance to the borrower. This process generally occurs within a specified period of approximately 30 to 60 days from the mortgage pay-off.

If the lender does not properly process the pay-off this can result in: (1) future statements with penalities/fees; (2) damage to credit score; (3) an unconformed pay-off status could make getting approved for other financing problematic.

Contact the lender within thirty days of the closing to make sure your mortgage account was disclosed, the mortgage formally discharged, and that you will receive back any moneys for taxes and insurance. Knowing with absolute certainty that your home loan is paid off provides peace of mind.

Cancel Home and Local Services

Amidst the whirlwind of packing, transportation, and setting up your new abode, it’s easy to overlook the numerous services – both home-based and city-based – that need to be canceled or redirected. To help you navigate this process, we’ve compiled a list of services to consider:

Home-Based Services

Utility Services: We’re talking about electricity, water, gas, and sewer here. Make sure to inform your current utility providers about the planned move. Also, don’t forget to set up services at your new residence.
Internet and Cable T.V: You will want to check whether your current provider operates in your new location. Planning ahead ensures seamless connectivity for both work and entertainment.
Home Phone: If you have landline service, consider whether you want to keep this at your new residence.
Home Security: If it is a contracted service, best to schedule termination or transfer to new homeowners if allowed by your company.

Subscription Services

Delivery Services: These could include meal kit deliveries, subscription boxes, newspapers, and more. Update your address well in advance to ensure you don’t miss these.
Gardening and Maintenance: If you have a regular gardener, pool maintenance, or other home service companies, it’s important to inform them well in advance of your move.
Waste Management: Ensure to cancel or transfer your garbage collection service.

City-Based Services

Postal Service: Rerouting your mail to a new address through the postal service should be a top priority.
Library Subscription: Return any books you have and cancel or renew your membership depending on whether your new home is within the city limits.
Gym Memberships or Club Memberships: Remember to cancel any gym or club memberships that won’t be useful to you in your new locale.
Voting: Update your voting address so you can participate in the local and national elections in your new area.

Remember that it’s not just about canceling services, but also about arranging the same or similar services at your new home. Ensuring that everything is lined up before you move can help make the transition far smoother.

Celebrate and Rest

After successfully completing the process of selling your home, it is indeed a time to “celebrate and rest.”

This landmark achievement represents not only the end of an era, but also the culmination of a detailed and often stressful process, involving numerous formalities, negotiations, and perhaps emotional farewells. From staging the house for sale, engaging in numerous house showings, negotiating terms, to finally arriving at the closing table, it all requires substantial time and effort.

Accomplishing this task signifies an important milestone in your life. Therefore, it’s not only appropriate but essential to take a moment to celebrate before embarking on the next journey. Use this time also to rest and rejuvenate, as it’s well-deserved and much needed.

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