Selling a house on your own can be tough, especially when you are away or in poor medical condition. There is a lot of paperwork. Also, It can be overwhelming to read each offer and review all the documents before signing.
One way to simplify it is to use a legal agreement called “power of attorney (POA).” Though it’s not difficult, you should still consider acquiring a clear understanding of the subject to make an informed decision.
What Is a POA in Real Estate?
POA stands for Power of Attorney. A real estate power of attorney or a “limited power of attorney” is a legal document. It allows the selected person the right to sell, buy, or manage real estate transactions on your behalf. The chosen person is usually an agent or a real estate attorney.
POAs have two important elements. Let’s look.
- Principal: A principal is a person who grants POA to an authorized agent. Property owners and buyers are usually the principals in a real estate transaction.
- Authorized agent: The principal provides a POA to an authorized agent. They make decisions and sign relevant documents on behalf of the principal. They’re also known as “Attorney-in-fact.”
💡 3 Efficient POA Practices
- Clarify the Scope of Power: Specify clear limitations in your POA to prevent misuse of authority. POA must be signed by both parties in the presence of a notary public and two witnesses.
- Review Ongoing Updates: Regularly review and update your POA to reflect changing circumstances.
- Select an Agent: Choose a trustworthy agent who understands your requirements and responsibilities.
Who Could POA Be Beneficial For?
Power of attorney in real estate can benefit a seller, a buyer, or an individual who needs a third party to manage the transaction.
For instance, you want to sell your house but live far away. Or, you might be incapable of making a wise decision due to your poor health.
Types of Power of Attorney in Real Estate
There are multiple types of power of attorney in real estate. Here’s how you can choose the right one.
- General Power of Attorney (POA): Allows an agent to manage various aspects of a principal’s real estate affairs. This includes buying, selling, leasing, and property management.
- Limited Power of Attorney (POA): Allows the agent to perform finite real estate tasks on behalf of the principal. It is used for specific purposes, such as signing closing documents or handling a single real estate transaction.
- Durable Power of Attorney (POA): A durable POA remains valid even if the principal becomes physically or mentally incompetent. In such cases, an authorized agent can continue to take decisions and manage real estate affairs on the principal’s behalf.
- Non-Durable Power of Attorney (POA): A non-durable POA automatically terminates if the principal becomes physically or mentally incompetent. In such cases, an authorized agent can not decide and manage real estate affairs on the principal’s behalf. It is often used for short-term or specific transactions.
How Does Real Estate Power of Attorney Work?
Here’s a step-by-step process to explain how POA works in real estate.
1. Create a Property Document
The POA must contain the address and description of the property.
2. Choose an Agent
Select an authorized agent you want to assign the POA.
💡 Tip: Choose someone who will make the same decisions as you.
3. Authorize Your Agent’s Powers
A principal should determine the scope of the POA.
For instance, your agent can handle all financial transactions under a general power of attorney. Or, your agent may only sell a specific home under a special power of attorney.
Here are some authority roles:
- Selling: Can sell a particular property or all of your properties.
- Managing: Can handle all or part of your real estate transactions.
- Refinancing: Can sign documents and make decisions related to refinancing.
- Purchasing: Can buy a specific property for you.
4. Check the State Requirements
The process of selling a house involves a lot of paperwork. Remember that this paperwork differs from state to state. Ensure you research and follow state requirements when filling out the POA forms.
5. Notarize the Document
Powers of attorney must be signed by both parties in the presence of a notary and two witnesses to be legally recognized. The principal and agent will get a copy. In this way, everyone will have a copy of the POA if needed later.
6. Consult Local Professionals
Consult with mortgage lenders, real estate agents, or legal experts to make an informed decision related to the POA.
How to Choose the Right Agent for a POA?
Pick someone you believe will make smart financial decisions on your behalf. Here’s a simple guide to help:
- Trustworthiness: Pick someone you trust completely. This person should act in your best interests.
- Availability: Ensure your chosen agent is available if required.
- Competence: Look for someone who can handle the specific tasks. A real estate agent with relevant experience would be ideal.
🤵 Real Estate Pros: Find a trusted real estate agent for your POA on Houzeo.
Bottom Line
A POA can make selling and buying real estate easier since someone trustworthy makes the decision. It’s a significant decision, so take your time and choose wisely. It’s also wise to consult a legal professional to ensure your POA is well-drafted and covers your needs.
Frequently Asked Questions
What does POA mean in real estate?
A real estate power of attorney or a “limited power of attorney” is a legal document. It allows the selected person the right to sell, buy, or manage real estate transactions on your behalf.
» How Does a POA work? Find out how POA works.
Can somebody with power of attorney do anything they please?
Of course not! The extent of authority is defined in the POA. The person with power of attorney is bound legally to act in the best interests of the principal.
How can I revoke power of attorney I have given to somebody?
To revoke a power of attorney, you can cancel it, regardless of its end date.
Can a power of attorney transfer property to themselves?
A power of attorney cannot transfer property to themselves. Unless explicitly authorized in the POA and allowed by local laws.
Can I give my Realtor power of attorney?
Yes, you can give your Realtor power of attorney.
» How to Choose the Right Agent for a POA? Know how to select an agent for the POA.
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