FSBO right for you?

Seller’s that handle their own real estate transactions, or “For Sale By Owner” transactions account for roughly 8% of the total sales. As a seller, you are responsible for several legal obligations to assure that your transaction is a smooth one.

 

Prior to selling your home, it is important to value your home appropriately. The market isn’t dictated by how much you want for your home, but rather what a buyer is willing to pay for a home. There are instances where sellers can even underprice their home by thousands of dollars. It is important to do a market analysis of your home to see what similar homes in the area are both selling for, and what has recently sold. The sale’s price of the home should not be above the value because lenders will not finance a transaction where the loan exceeds the current market value, so it is critical to price your home right the first time.

 

Make yourself and your home readily available for potential buyers. Some buyers will be accompanied by an agent, so, therefore, you would be obligated to provide a commission, whereas other buyers may not be pre-approved or capable of affording your home. Regardless, there is no way of figuring out a qualified buyer until you dedicate your time to them. There is no way to assure that your buyer is serious, or is even scamming you perhaps until it is too late. Scammers take to the “FSBO” crowd due to their lack of experience with real estate transactions.

 

Stay safe when showing your home. Tell a friend, or better yet, have a friend with you. Assure you keep buyers within line of sight. Don’t be paranoid, but don’t be overly welcoming either. These people are still strangers after all.

 

Be sure to get as much information as you can about the buyer, including proof of funds, or a pre-approval letter from the lender they are using. It is also important to figure out if the type of loan that the buyer is qualified for can be used to purchase your home. Once you have found a buyer, you must obligate yourself to that buyer and not entertain offers until you are no longer under contract.

 

The title company and the lender need to have a legally binding contract between the buyer and seller of the home. The contract may include applicable addendums based on the property, including lead-based paint disclosures, defective drywall addendums, homeowner’s association addendums, sinkhole addendums, old person’s addendums, mold, firpta, and insurance addendums, amongst many others. As a seller, you are to provide (to the best of your knowledge) the current and past conditions of the property, including a series of answers with regards to storm damages, electrical issues, mold, structure conditions, termites/pests, flooding, roof conditions, pools, sinkholes, HOA restrictions, environmental questions, governmental questions, claims, and litigations.

 

Once you are under contract, people will be coming in to conduct inspections, appraisals, and surveys. When a buyer is financing, it is critical that they are using qualified inspectors that are providing the proper documentation that the insurance requires to finalize a policy. It is important as the seller to also know whether a buyer can get insurance with the current condition of your home. Even if you have insurance, a policy may not be available for a buyer until some issues get fixed.

 

Before transferring the title, the seller needs to assure there are no issues with the title. Issues could come about during ownership of the home from marriage, divorce, death, foreclosure, bankruptcy, probate, or errors with the prior transfer. The title company will assure these things will not be an issue, but it doesn’t mean that they won’t cause a delay in closing. The seller typically designates the Closing agent and pays for the Owner’s Policy and Charges, and Buyer shall pay the premium for Buyer’s lender’s policy and charges for closing services related to the lender’s policy, endorsements and loan closing, which amounts shall be paid by Buyer to Closing Agent.

 

The seller is also responsible for the documentary stamp taxes and surtax on the deed, title search charges, municipal lien search, HOA estoppel fees, recording fees to cure title, and seller’s attorney fees.

 

The buyer is then responsible for taxes and recording fees on notes and mortgages, recording fees for deed and financing statements, survey, lender’s title policy and endorsements, HOA applications and transfer fees, municipal lien search (if agreed upon by the seller), loan expenses, appraisal fees, buyer inspections, buyer attorney fees, and home owner’s insurance.

 

As a seller, you have the right to request an escrow deposit, assure the loan is to be funded after a certain period from the execution of the contract, and cancel should none of the time restraints have been met.

 

The buyer has the right to conduct an inspection of the home and void or negotiate the contract based on the findings, not be obligated to purchase the home should the financing not be available, whether it be from an inaccurate appraisal or issues with the buyer’s financial situation, and withdraw should the title not be clear to close prior to their closing date.

 

After the title search comes back clear, the survey has been complete, the appraisal had been good, and the inspection period had passed, the buyer and seller can close. The title company will give a list of all credits and debits to the buyer and seller. These were those doc stamps and fees mentioned earlier. It is important to compare these fees to the receipts and assure that nothing is inaccurate. Once the title is transferred, you must keep your settlement statement for tax purposes.

 

At this point in a transaction, you should be successfully closed, but do keep in mind that issues may come up after closing. If a buyer states there was an issue with the home that was hidden by the seller, they can sue, so be sure to disclose everything in the seller’s disclosure to avoid any issues.

 

Should you have any questions regarding selling your home, feel free to reach out to us!

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