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What are the steps in a FSBO transaction?

Posted by caulk_king (My Page) on
Tue, Feb 3, 09 at 9:11

Hi -

Wondering what the most efficient order is when selling a property yourself.

If someone looks at a property & you verbally agree to a price - what do you do next?

1) Ask for qualifying loan documents or something so you know they're real before incurring lawyer fees?

2) Then get a contract drawn up by your attorney & proceed?

Thanks!


Follow-Up Postings:

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RE: What are the steps in a FSBO transaction?

They have to present an offer, which would be a legal document once signed by them (and then you if you accept it, or counter) together with a reasonable down payment. Terms would be set out in it just as they are in any such offer re what's included in it (appliances, etc.), when they want to move in (i.e. become official owners, exchange money and ''close"), plus how it's going to be paid for, etc., just as any RE transaction goes. Generally the attorneys are the ones who handle the closing between themselves, but I understand that can be different depending on where you live and what their actual mandate is re having surveys done, checking if their are liens on the property, etc. before the transaction is final (closed). But please don't just go by these internet tips, find out more for yourself from your lawyer, or even a local RE board or broker.


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RE: What are the steps in a FSBO transaction?

1. Call an attorney and line him/her up to do the closing for you. Get a contract from your attorney, NOT Staples.
Your lawyer should guide you through the following, as to what's required by your state, or if you have questions, but basically do the following:

2.FIRST, YOU give the buyers
(These are requirements by state):

A) SELLER DISCLOSURE SHEET (all sellers must fill out, sign, and give this one to buyers. Buyers must sign after they read and accept it)provided by your state.

B)LEAD DISCLOSURE and a BOOKLET(the lead ONLY IF house was built before 1978) provided by your state.
-Get both sheets signed by yourself and buyers.

3.After disclosures signed, write up THE CONTRACT with earnest money deposit i.e. $1,000, with 5% more in one or two weeks, or as soon as you can get them to give you more money. You both have to agree on these terms.
4)In the contract

-the 2 contingencies while you wait for the closing are
A)the inspection. Have them do this ASAP, like within a week or two.

B)the mortgage. You must give them a month with the prevailing rate.

Be very specific in the contract as to what stays with the house what goes-curtains, fixtures, appliances...

Make several copies of everything and give it to the buyers so they can take the contract to their lawyer for approval and later their bank.

In fact, both of you should sign it contingent on your lawyers approval. Set a time i.e. within 48 hours. Once lawyers say ok., The buyers proceed with inspections and financing.

Remember-be specific. Give everything time and date. Spell everything out and run everything by the lawyer.
If you need extra time to move, and want to stay there an extra day after closing spell it out. Have them intial it.
My buyers were nice and let me do that.

Summary:
1)Lawyer
2) Discloures (2)
3)Contract with earnest $, 2 contingencies. What conveys & TIME FRAMES SPELLED OUT. THIRD contingency-lawyer approval.
4)Copies to buyer.
5)Lawyer approval.
-buyer fulfills contingencies, while waiting for closing. A bit of nail biting period.
5)Contingencies done (bank and inspection)-Pfewww!

READY TO CLOSE.

I'm not a lawyer, and am not trying to do such. That is what I did when I sold my house FSBO. FYI-there are lots of costs associated with a sale. Both the SELLER and the buyer have closing costs. As a seller, I figured that the costs were a little over 2% of the sales price. This covered the atty cost, the state taxes, recording fees, etc.


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RE: What are the steps in a FSBO transaction?

All things are not the same in different areas. There is no way to tell you what the "right thing" to do in your area is. Best advice is to touch base with a local atty and ask him what you will need in your area even before you receive an offer.

A) SELLER DISCLOSURE SHEET (all sellers must fill out, sign, and give this one to buyers. Buyers must sign after they read and accept it)provided by your state.

In some areas, attys DO NOT want you to fill these out. They want you to pay the $500 penalty for not filling it out. Its best to talk to an atty about what you will need and what is required, not get your info from this forum.


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RE: What are the steps in a FSBO transaction?

In some areas, attys DO NOT want you to fill these out. They want you to pay the $500 penalty for not filling it out.

The only place where I have heard of this being done is New York State. (but of course I may be wrong)
Linda is correct that you need to talk to an attorney NOW to find out what is required in your area. Years ago we sold our home FSBO. We had an attorney write/review the contract, then a title company handled the closing.


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RE: What are the steps in a FSBO transaction?

Thank you all for the replies. I will contact our attorney now. He also owns a title company that I plan to use, so getting the correct forms, etc., should be easy.

The property is empty so we don't have anything holding up negotiations on our end. What you see is what you get & the sooner the better on closing date.

It's not actually on the market yet but we put an ad in the paper to see if there would be any interest & have had a call per day on it, so fingers crossed that this might actually happen at some point. We are showing it this weekend to one of the callers + the guy next door is interested.


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RE: What are the steps in a FSBO transaction?

We just sold land FSBO. Not as complicated as a dwelling, but it was instructive, nonetheless.

1. Have a blank contract in hand before you advertise. You can buy them at low cost off of the web, supposedly for your state. I think it is a good idea to have something written up before you go to your lawyer. It is cheaper to have them review an existing document than to draft one from scratch.

Don't let the attorney insert a bunch of crap that the buyers won't stand for. Insist that the contract be fair and equitable. Lawyers charge by the hour. You don't want your attorney negotiating with their attorney needlessly.

2. Have a local title company lined up to handle the escrow and do the closing. Don't use your attorney's title company. In my non lawyer opinion, it is a flaming conflict of interest. It may also frighten off a buyer.

3. Find out what disclosures are required by law in your area. Have those available before you advertise. Don't just copy what the Realtors do. Some of those disclosure forms are solely for their benefit.

Make sure you fully disclose any deed restrictions, covenants, easements, and home owner association fees. Have all that written up. Make sure that prospective buyers get the disclosure along with the property information sheet you are going to write up.

4. Thoroughly inform yourself regarding the federal, state, and local laws regarding housing discrimination. This is a minefield for the unwary, and even unintended violations can be very, very expensive.

Don't even think of answering questions from buyers regarding the ethnic or religious makeup of the neighbors or neighborhood. There are a bunch of other taboos as well. Check out the link below.

5. Figure out how and where you are going to advertise. Craigslist is a sure bet. It's free. If you have the skills, put up a detailed web site featuring your house. Link to it from Craigslist.

Take lots of pictures. Properties with no or few pictures don't sell well. They are a red flag, since digital cameras are cheap and readily available. Sometimes it's just a lazy agent, but prospective buyers wonder if there is something wrong with the property, if there aren't a bunch of photos.

You will need signs. Make them professional looking and readable from a moving vehicle. It's amazing how many people think someone can read a fine line sign at speed. It can't be done. Most moderately sized towns or larger have sign shops that can supply you with signage. Signs are also available on the web.

6. Talk to local lenders about the availability of mortgages. A lot of buyers are clueless and don't know where to look. Find out who is lending at what rate, and be prepared to hand that information out to prospects who ask about it.

Yes, you need to do all that and more before you put the property on the market.

Good luck.

Here is a link that might be useful: Fair Housing Act


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