Anybody ever FSBOed?

[sharris315]

We're getting ready to put our house on the market--and 2 (!!) other neighbors have expressed interest in buying it. The prospect of not having to pay the huge realtor fee is so inviting--but it also means we wouldn't have a realtor to take care of the details. We know nothing about the legalities of selling a house.

What are we responsible for legally--and otherwise if we sell on our own? What would our estimated legal expenses be for doing this. ANY information or tips would be appreciated.

Shar

[donleyk]

Shar,

I have no idea but I would 'google' it and try to get info that way, at least enough to decide to proceed or not by yourselves. I'd count on a good real estate attorney, for sure, though.

[Beth H]

When we sold our first house, we started on the FSBO route (ended up not doing it that way because we already had bought our next house, and I panicked a bit). I definitely would do FSBO again, though.

There are certain disclosures that you have to get and have signed to show prospective buyers. If your house is a certain age (pre-1970s, maybe), you have to have a lead-based paint disclosure.

The contracts are pretty boilerplate - I'm sure you can get one from your state off the Internet. Go through the contract and look at the different sections - usually you have to state which party will pay for the home inspection, etc. If your state has a termite inspection required at closing, you definitely want to pay for that. Don't let the buyer do that (for all you know, their cousin works for Terminix, and their inspection could "reveal" that you need to replace all of your flooring or something). If the inspection reveals some things that need to be fixed, decide in advance how you would handle it - would you have the work done yourself or just give the buyers a concession on the price of the home?

Settle on an amount for earnest money if you get an offer - I think $1000 - $2000 is standard depending on the asking price of the house.

Honestly, I don't think you need an attorney. I did have the advantage of having two good friends who are attorneys - they provided some advice, etc. But unless something goes bad, I'm not sure it's necessary until you get to the closing, and those legal fees usually are the responsibility of the buyer.

[Beth]

The contracts and such are pretty boiler plate, but getting them right, getting all of them and making sure you get your name off of everything and the buyers get their purchase properly recorded is often not as simple as it seems in principal. Having someone in the middle can be very helpful if there is a disagreement or a misunderstanding in the inspections, working out the deal, or if there is an issue over disclosures, property condition, recording, liens, etc. The sale could fail because the financing doesn't get approved over some issue and you're 2 days before moving day with no sale. Getting everything recorded properly could be critical if the buyers have a problem. If you are still the owner of record, you could get tangled in their litigation. You could do it yourself, and maybe the chances of having a problem aren't too great, but the kind of problems you could have are potentially huge -- just not worth it in my book. Sell it yourself, but have a pro make sure the deal is closed properly.

If you have a buyer and you both go to a realtor, they can help you walk through the closing and escrow, but they don't have to show the property, advertise it, etc. They might offer to assist with the documentation and closing for a flat fee. A real estate attorney could do the same kind of thing. If you have a deal and they are just making sure the paperwork is complete and handled properly, it really shouldn't be that big an expense, especially if you split it.

BTW, pest inspection here are typically paid for by the buyer and required by the lender. They are going to have to show evidence of any damage they say needs to be repaired, and they cannot open up anything, so they are limited to visual inspection and a poke here and there. There is a greater chance of having something not turn up because it's still closed up in the walls - in which case, you don't want it to be your inspector who is being blamed for hiding damage! The inspectors should be the buyers. Differences on what kind of repairs are needed and appropriate are one of those things a realtor can help with -- but also one of those things that takes a deal from the land of "just the paperwork" to needing an intermediary.

Just for example -- our neighbors just sold their home for nearly asking price on the first day of scheduled showings. Inspections were 2 days later and the buyer had 10 days to get a list of required or requested repairs to the sellers. On the 10th day, they were getting an extension on the option period. A few days later, the sellers were presented with a 5 page list of things, many of which were vague or they could not understand or identify. Within the week, their realtor had reduced the repairs to a single item. She earned the full commission a couple times over on that issue alone.

[funnybone]

We've never done it becaue all our moves have been relocations and paid for by the company. There are several FSBO listings inour area, but they are done through those "package deals" such as www.buyowner.com or www.forsalebyowner.com . I'm not exactly sure how they work, but there may be some information on their sites. I do believe they pay a flat fee to help with legal documents, signs, advertising, etc. but I don't know beyond that.

[SusanMac]

There are several books on this out there. Definitely go to your library & stock up. The legal issues are not the real value you get from a realtor. The main thing you get from a realtor is marketing your home. FSBO homes don't move as fast, and realtors tend to avoid them (that's a generalization, of course....don't mean to offend any realtors out there). So, if you do think you have prospective buyers, then FSBO would be great for you. Also, check & see if your city has a FSBO group program (they often have group websites, marketing materials, etc)

[Laurielee]

We sold our last house FSBO because we had already had a buyer, a neighbors work collegue (sp). We used a standard boilerplate agreement. We didnt have lawyers involved, we mutually agreed upon a title/escrow compnay that did all of the work. IT was so easy.


Make sure you have a disclosure form, meaning you have to disclose anything you know about the house, defects, I would even put in if you have things like barking dogs, nect door etc.

I recommend a home inspection, who will pay for it, and a cap on costs if you agree to pay for anything that is found.

We basicly disclosed everything we knew, made thel repairs and then put in sold as is, menaing they couldnt come back to us

If we didnt have the buyer we would have listed with realtor, fo r some of reasons Beth said

Laurie

[Gilgamesh37]

I'm with Beth---you should get a lawyer. It will be a minor investment that's worth every penny to be sure someone who knows all the ins and outs is looking out for YOUR interests and making sure you are covered, now and in the future. Heck, I AM an attorney and when I FSBO'd my house, I hired a lawyer---someone who did lots of real estate work (which I don't) so I didn't have to worry about that part of it. I know some people do sell without lawyers, but I for one would never ever do it. FWIW

[leebee]

I agree. If you FSBO, get an attorney. I worked for an attorney that did real estate closings & prepared the paperwork for them--and I wouldn't have ever attempted it on my own. Title searches & insurance, appraisals, committment letters, figuring prorated taxes & assessments--there's just so much and it was a relatively small expense. And each state is a little different, so advice from one person that says it's the easiest thing in the world may not have the same issues that you do. Good luck!

[sharris315]

Thank you all for the responses--I've learned a lot this morning. I think since we know so little that we won't try to do it totally on our own. Actually, there is a realty company that has a choice of plans--one is a flat fee of $3000 then 3% to the seller--however, if WE find the buyer, there would only be the fee (no %) For that, they will take care of all of the legal matters, etc. I think that sounds reasonable. If we do already have a buyer, then this realtor will handle all of the details. We met this morning, and I really like her. This is a large, reputable company--just very innovative. So...What do you think?

Shar

[donleyk]

I think that sounds great. If you don't have any interest in becoming a realtor why go thru all that?

Good luck with the sale!

[Laurielee]

"I think that sounds reasonable. If we do already have a buyer, then this realtor will handle all of the details. We met this morning, and I really like her. This is a large, reputable company--just very innovative. So...What do you think?"

I think its a great idea, since you like the person nd its a good company. I had looked at that and that was about what they were charging. I dont know what a real estate lawyer costs to compare it to,

laurie