Home Selling Advice: For Sale By Owner Sellers
FSBO
Have you worked on your home's interior, dealt with all minor repairs and took care of re-sodding the lawn? Have you investigated the market and determined a good asking price for the house? You may be ready to be a "For Sale By Owner" seller. There are a few more things you should prepare for before you run your first for sale by owner ad.
Does your state law require that you give potential buyers one or more property disclosures when you sell a home? Disclosures typically deal with the condition of the property or facts about its location, such as:
- The age of the home and its components
- Whether problems exist with any component
- Whether you (or a neighbor) have built something (fence, shed, road, pool) that extends past property boundaries
- If the house is in an airport flight path
- If the house is in a flood zone
- If the house is on earthquake fault
- Other issues important to your specific location
Real estate agents aren't the only ones responsible for furnishing disclosures. Most for sale by owners must usually furnish them as well. Material facts are known problems with the home that the seller is required by law to disclose to the buyer even if a formal disclosure isn't mandatory. Learn about your obligations by contacting the agency that oversees real estate sales in your state.
Lead Paint Disclosures
Home owners selling houses built prior to 1978 are required by federal law to disclose that the home could contain lead based paint and give buyers details about past tests for lead paints. Buyers must be offered the opportunity to do their own lead paint testing. Most people don't perform the tests, but you must furnish them with a lead paint pamphlet, which is available free online from the E.P.A.
Fair Housing Laws
You should follow the fair housing guidelines just to make sure you don't encounter legal problems in the home selling process.
Showing The House
Showing the house isn't difficult, but you should plan to follow a few basic showing guidelines.
Can the Buyer Really Buy?
Most real estate agents find out whether or not a buyer has been
pre-qualified before showing the property. You will get many offers as well as many offers by people who cannot back them so it is a good idea to get their pre-approval letter before showing your home. People who cannot get pre-qualified sometimes think that the seller will offer to finance the transaction since they are selling by owner. Make sure to ask the following questions before setting up an appointment to show your property:
- Have you been pre-qualified by a Lender for an amount in this price range? (Require the proof of pre-approval be submitted with their offer or even before appointment, like via fax.)
- Can you buy a house now, or do you have to sell your current home first? (Decide whether or not you are willing to tie up your house until they sell.)
Contract Forms
Will you or the buyer provide the contract forms that will be used for an offer to purchase your house? It doesn't make much sense to write a contract yourself on a piece of paper because it probably wouldn't offer much protection for either your or your buyer. You want the forms you use to be valid for your state's real estate laws and to cover issues that are important for your location.
If you aren't knowledgeable about contracts, have a real estate attorney review any offer before you sign it. Don't cut corners, neglecting to get advice from an attorney or other experienced person will cost you money, not save it.
The Buyer's Deposit
In the contract, The seller should explain what happens to the buyer's deposit money, called
Earnest Money, if the deal falls through:
- Under what conditions would the buyer get it back? (unable to get financing, too many repair issues, etc.)
- Under what conditions would you expect to keep it? (buyer backs out with no cause)
The deposit money is NOT the sellers until the house sells or the buyer breaks the contract in such a way that it becomes the sellers by prior agreement. It must be credited to the buyer's funds on Closing day and ideally should be held in a third party's trust account until then.
Bottom Line
Real estate laws and customs differ in nearly every state in the US, so it's essential that you do some research on a state and local level to be sure you are abiding by all laws associated with the sale of your home.
