Selling your home on your own can be challenging, especially if you are away or in poor health. There is a lot of paperwork, and it can be overwhelming to read each offer and review all the documents before signing.
One way to simplify the process is to use a legal agreement called a “Power of Attorney” (POA). While creating a POA is not difficult, it is important to understand the subject and make an informed decision.
What is a POA in Real Estate?
POA stands for Power of Attorney. A real estate 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 purposes, such as signing closing documents or handling a single real estate transaction.
- Durable Power of Attorney (POA): Allows the authorized agent to act on behalf of the principal in case they are physically or mentally incompetent.
- Non-Durable Power of Attorney (POA): A non-durable POA automatically terminates in the case of a sudden tragedy or death. In such cases, an authorized agent cannot decide and manage real estate affairs on the principal’s behalf.
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.