Although the steps involved in selling a home are similar regardless of where in the U.S. you live, Missouri's real estate laws and practices are unique in some respects. Becoming familiar with the process early will help you avoid problems later. Here’s an overview of the basics—from working with a real estate agent to making legally required disclosures to closing the deal.
Working With a Missouri Real Estate Agent
Most people selling their home in Missouri work with a licensed real estate broker or agent. A good agent will help you prepare and price your house, market it to prospective buyers, review house purchase documents, negotiate with buyers, and help see the deal through to the closing.
Before signing up with any agent, get references from other home sellers and check customer reviews on sites such as Zillow and Realtor.com. Be sure to doublecheck the licenses of Missouri real estate agents at the Missouri Real Estate Commission’s Licensee Search.
Signing a Listing Agreement in Missouri.
Once you find a real estate agent with whom you want to work, you’ll sign a “listing agreement,” which gives the agent the right to market and handle the sale of your house. Most agents use standard forms created by their state or local Realtor association, such as the Missouri Realtors Association.
Listing agreements typically cover the following terms.
- Commission that you (the seller) will pay. The traditional commission ranges from 5-6% of the house sales price, to be ultimately split between your real estate agent and the buyer’s agent. That model could eventually change, based on recent lawsuits that alleged monopoly dealing. Despite widely publicized court settlements, however, no major changes have yet taken place.
- Type of listing. Most agents will have you sign an exclusive right to sell listing, which obligates you to pay a commission to the agent regardless of who brings in the buyer. Other arrangements are possible, however, such as an open listing, in which you agree to pay a commission to whichever agent brings in a buyer, or an exclusive agency listing, in which you agree that your agent is the only agent authorized to sell your house, but that you will pay a commission only if the agent brings in the buyer (not, for example, if you do).
- Duration of listing. The agreement will cover a set amount of time, such as 60 to 90 days.
- Listing price. Your agent will recommend the appropriate selling price by first comparing prices of similar homes (“comps”) that have been sold recently in your immediate area then, based on market experience, recommending an amount above or below the home's actual value that will most effectively bring in high bids. To educate yourself as to whether the agent is recommending an appropriate price, the National Association of Realtors’ website is a good source of information on prices of houses currently on the market, and websites such as Zillow provide data on actual prices of houses sold.
- Items included or not included in the sale. For example, you might plan to leave behind a large mirror, which thus becomes part of the property that the agent is contracted to sell. Or, you might want exclude a refrigerator that you plan to move to your new home, in which case the agent needs to know that, and to convey the information to buyers.
- Duties and obligations of seller and real estate agent. Your agreement will spell out how the real estate agent will list or market your house, what type of insurance you must maintain on the property, and what disclosures you must make to buyers.
Making Real Estate Disclosures in Missouri
Unlike many other states, Missouri has few statutory requirements when it comes to disclosures. The state requires sellers to disclose whether the property has been the site of a meth lab (Missouri Revised Statutes § 442.606) or contains a solid waste disposal site or demolition landfill (Missouri Revised Statutes § 260.213).
In addition, licensed real estate professionals must “disclose to any customer all adverse material facts actually known or that should have been known by the licensee;” so don't count on your agent's help in hiding problems from buyer-customers, particularly problems that the agent can see him- or herself (Missouri Revised Statutes § 339.730).
However, common law (created by Missouri courts) has developed to where Missouri sellers must disclose to buyers all "material latent defects" that can't be seen through a reasonable investigation or face a lawsuit over fraudulent nondisclosure. (See, for example, Martin v. McNeill, 957 S.W.2d 360, 366 (Mo. App. W.D. 1997).)
To assist sellers in making the necessary disclosures, the Missouri Association of Realtors offers a disclosure form (which your real estate agent will provide to you), which includes details on the property, including:
- type of heating, ventilating, electrical, plumbing, sewage, and other systems, and any problems with those systems
- appliances, equipment, and other items included in the sale, such as a dishwasher, garage-door opener, trash compactor, and lighting fixtures, and whether they are in working order
- construction and drainage issues to do with the basement, roof, and so on
- issues with pests or hazardous substances such as termites, asbestos, PCBs, or mold
- insurance claims made regarding the property
- whether or not pets have been kept on the property, and
- any subdivision fees, deed restrictions, and special assessments, including violations by the current or past owners.
In addition, if your house was built before 1978, you must comply with federal Title X disclosures regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website for details.
Failing to adequately disclose defects could cause major problems in your real estate transaction. A frustrated buyer might try to void the sale or seek money damages for repairs and/or losses.
What Goes Into Missouri Offers, Counteroffers, and Purchase Agreements
Someone wanting to purchase a particular Missouri home will make the seller a written offer, specifying the price, proposed down payment, and other terms, including any contingencies (conditions that must be met for the sale to close, such as buyers having the home inspected and being satisfied with the resulting report or the buyers’ arranging financing or selling their current house).
You may reject an offer outright, accept it as, or (as is more typical) respond to a buyer’s offer, with a counteroffer. A counteroffer accepts some or most of the offer terms, but suggests changes to others, such as a higher price or a closing date that’s sooner than the buyer proposed.
A legally binding contract is formed when you accept the buyer's signed final offer (agreeing to any changes from the original offer) and notify the buyer of its acceptance. The transaction will then go into what’s called “escrow.”
What Is Escrow?
Escrow is the time period between signing the purchase agreement and closing on the house. You and the buyer will agree on an escrow or title agent, a neutral intermediary that will supervise the process (in some cases preparing title reports, as well as monitoring the processing of loans, removal of buyer contingencies, and so on).
The buyer typically has a lot more to do during this time period than the seller. By the close of escrow, the buyer will need to finalize financing, remove all buyer contingencies, have the house appraised (typically required by mortgage lenders), and get title insurance—usually under set deadlines.
Still, you will have to cooperate with things like scheduling inspections and appraisals. And, if you added any contingencies to the purchase contract, such as a condition that you find a new house to buy, you'll need to act on those within the deadlines.
Issues often come up that require negotiating, such as who will pay for repair problems identified in an inspection report. The buyer might insist that you pay to remedy a defect or lower the purchase price. If you cannot reach an acceptable agreement, the buyer might have the right to back out of the deal.
What Happens at the Closing of Your Missouri Home
By the close of escrow (known as the closing or settlement), you and the buyer should have fulfilled all the terms of your purchase agreement. At the closing itself (sometimes a meeting of the parties, other times conducted in separate locations and even on separate days), all final documents and funds will be exchanged between buyer and seller.
The buyer pays you the purchase price, and you give the buyer a deed and other transfer documents and clear title to the house or condo. You pay off any outstanding loans on the property and pay commissions to the real estate agents (per your listing agreement).
Sellers do not usually need to be present at a Missouri closing so long as all costs are paid and documents are signed. Often, the buyers will sign the final documents at the office of their title company or escrow agent and pick up the keys. Or, parts or all of the closing might be conducted virtually. Then the escrow agent will record the new deed in the buyer's name at a local government office, and the home is officially theirs.
Working With a Missouri Real Estate Lawyer
Unlike in some states, Missouri does not require that sellers involve a lawyer in the house-selling transaction. Even if it’s not required, you may decide to engage a lawyer at some point in the process—for example, to review the final contract or to assist with closing details.
Or, you might want a lawyer’s help drafting a lease agreement if you plan to rent the home back for an extended period of time after the house closing, or if problems show up on the title report such as a lien on your property. And if you are selling your home without a real estate agent (a “for sale by owner” or FSBO), it might be useful to hire an attorney to help with the legal paperwork.