Although the basic rules and processes steps involved in selling a home are similar across the country, Indiana's real estate laws and practices are unique in some respects. Becoming familiar with state and local requirements and practices early will help you avoid legal problems later.
Here’s an overview of the basics of selling your home in the Hoosier State—from working with a real estate agent to making legally required disclosures to going through escrow.
Working With an Indiana Real Estate Agent
Home sellers in Indiana typically work with a licensed real estate broker or agent. A good agent will help price your house, offer suggestions for preparing and perhaps staging it, market the house to buyers, review offers, and negotiate with buyers (or more literally their agents) up through the closing.
Before signing up with an agent, get references from other home sellers and check online customer reviews on websites such as Zillow. You can check the licenses of Indiana real estate agents using the Indiana Professional Licensing Agency’s Licensee Info Search.
Signing a Property Listing Agreement in Indiana
Once you choose a real estate agent, you’ll sign a “listing agreement” giving the agent the right to handle the sale of your house. Most agents use standard forms created by the Indiana Association of Realtors.
Listing agreements typically cover the following terms.
- Commission that you (the seller) will pay. The typical commission is five or six percent of the house sales price, and is ultimately split between your agent and the buyer’s real estate agent.
- Type of listing. The standard agreement is for 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 (you pay a commission to whichever agent brings in a buyer), or an exclusive agency listing (in which your agent is the only agent you authorize to sell your house, but you pay a commission only if the agent brings in the buyer (not, for example, if you do)).
- Duration of listing. The listing agreement will cover a set amount of time, such as 60 or 90 days.
- List price. Your agent will recommend an appropriate selling price, by both comparing prices of similar homes that have sold in your immediate area and evaluating what price is most likely to inspire many, and hopefully high, bids. To get a sense of whether the agent is recommending an appropriate price, the National Association of Realtors’ website will tell you prices of houses currently on the market, while sites such as Zillow and Trulia provide data on actual sales prices.
- Items included or not included in the sale. You might, for example, plan to leave behind a refrigerator, which would then become part of the property that the agent is contracted to sell. Or, perhaps you want to exclude a freestanding dishwasher and take it with you, in which case the agent will need to know that and make it clear to buyers. (Your safest bet for anything that might be considered a fixture, however, is to remove and replace it before would-be buyers enter your home.)
- Duties and obligations of seller and real estate agent. Your agreement will cover issues such as how the agent will market your house, what disclosures you must make to buyers, and what your respective responsibilities are.
Making Real Estate Disclosures in Indiana
State law in Indiana (Indiana Code §§ 32-21-5-1 and 32-21-5-7) requires that sellers provide buyers a disclosure form before accepting their purchase offer. The form will include details on the property that are within the seller's knowledge, such as:
- condition of the roof, foundation, mechanical systems, appliances, flooring, water and sewage systems, and more
- presence of hazardous or toxic substances such as radon gas or mold
- any known meth lab contamination or other manufacture of controlled substances, and
- if the home is located in a community governed by a homeowners’ association, all the rules and restrictions, plus an accounting of assessment amounts and whether the property owner is paid up on these assessments.
Disclosures must be on a Seller’s Residential Real Estate Sales Disclosure form established by the Indiana Real Estate Commission.
If your house was built before 1978, you must also comply with federal Title X disclosures regarding lead-based paint and hazards. See the lead disclosure section of the EPA’s website, for details.
Your failure to disclose known defects or to make other required disclosures can expose you to a lawsuit from the buyer.
What Goes Into Indiana Offers, Counteroffers, and Purchase Agreements
A buyer who wants to purchase a particular Indiana home will make the seller a written offer, specifying the price, proposed down payment, any contingencies (conditions to closing, such as being satisfied with the results of an inspection report or successfully arranging financing), and other terms.
You may reject an offer outright, accept it as, or (as is most typical) give the buyer a counteroffer, accepting some or most of the offer terms but suggesting changes to others, such as a higher price.
A legally binding contract is formed when you accept and sign the buyer's final, signed offer (agreeing to any changes from the original offer), and notify the buyer of its acceptance. The transaction will next go into what’s called “escrow.”
What Is Escrow?
Escrow is the time between when you sign the purchase agreement and when you close the sale of your Indiana property. You will choose a neutral third party (an escrow or title agent) to serve as intermediary and supervise the process (possibly prepare or help arrange title reports, and monitor the processing of loans, removal of contingencies, and other details of scheduling and mutual obligations).
The buyer will typically have far more to do during this time period than you will. By the close of escrow, the buyer will need to finalize financing, remove all buyer contingencies, have the house appraised (as is typically required by mortgage lenders), and get title insurance—all of which must usually be accomplished by set deadlines prior to the closing.
Of course, if you included any contingencies in the contract, you will need to act on those. Perhaps, for instance, you negotiated, as a condition of closing, that you have successfully found another house to buy.
You might need to negotiate with the buyer on various issues during the escrow period, such as who will pay for repair problems identified in an inspection report. The buyer may insist that you either 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 Indiana Home
By the scheduled 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 different 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 your property and pay commissions to the real estate agents (per your listing agreement).
Sellers do not usually need to be present at an Indiana closing so long as all costs are paid and documents are signed. Typically, the buyers will sign the final documents at the office of their title company or escrow agent and pick up the keys. The escrow agent will record the new deed in the buyers' name at a local government office, and the home is officially theirs.
Working With a Lawyer on the Sale of Your Indiana Home
Unlike some states, Indiana does not require that sellers involve a lawyer in the house-selling transaction. Even if it’s not required, you might decide to engage a lawyer at some point in the process—for example, to review the final contract or to assist with closing details. A lawyer’s help will also be useful if disputes arise or problems show up on the title report.
People who sell their homes without a real estate agent ( “for sale by owner” or FSBO) find it especially valuable to work with an attorney.
Find an experienced real estate attorney in Indiana.
