FSBO

[Mary E.]

Hi all -- I'm new to this board and have enjoyed surfing your topics. I'm retired 1 year from federal service (CSRS). We have a rental house which is now vacant and we've decided to sell it. We've had a few people ask about buying it, and I'm toying with the idea of doing it myself. I find that most discussions (and books) focus on the marketing rather than the paperwork nuts and bolts.

One thing that isn't clear to me is what happens after we sign a sales contract with a willing buyer?

Do I just take the contract to a title company and pay them to complete the transaction?

TIA

 

[brewer12345]

If it were me, I would probably hire a RE lawyer to draw up the deal.

 

[youbet]

Strongly agree with the above. Should cost you less than a kilobuck. Well worth it.

 

[yakers]

I sold my own condo once. It was easy since there was a genuine agreement with the buyer. My sister is a lawyer and she lightly looked over the papers just to see nothing was greatly out of shape. Most importantly I worked with an escrow company which had a checklist of all the permits, fees, taxes and things that needed to be done by both parties. You could work with a company like Help-U-Sell which offers a legal freamework or at least look at what NOLO Press has about doing it yourself.

 

[burch64]

I have sold several properties FSBO, the title company in my area does all the paperwork to close the property.

You can buy a real estate sales contract at most office supply stores.

After the contract is signed the buyer takes it to the mortgage company to get a loan and the seller takes it to a title company to do the paperwork.

If either party is uncomfortable they should take the contract to an attorney before signing or have written in the contract "contingent upon my attorney's approval".

 

[brewer12345]

A lot of this depends on your location, which the OP didn't disclose. In NJ, for example, it is illegal to buy or sell a residential property without an attorney. In other parts of the country, hiring a lawyer is unusual.

 

[Martha]

My feeling is that the time to get help is when drafting the purchase agreement. Once that is done, the rest is easy. If the buyer is getting financing, the lender will want title insurance and the title company can arrange to have the deed prepared in whatever way is customary in your area.

You want help with the purchase agreement because you want to be making as few warranties as possible. You do not want the buyer coming back and complaining about anything. You also need to know what your state requires in a purchase. States have various disclosure requirements and different laws about what can and what cannot be waived.

Federal law also has its own requirements. You have to give a lead paint disclosure in a certain format and a required pamphlet to the buyer.

If you are not using a realtor, I recommend a lawyer for the purchase agreement. Heck, unless you are pretty sophisticated about real estate transactions, I recommend a lawyer for the purchase agreement even when a realtor is involved.

 

[Arif]

If you are not using a realtor, I recommend a lawyer for the purchase agreement. Heck, unless you are pretty sophisticated about real estate transactions, I recommend a lawyer for the purchase agreement even when a realtor is involved.

There are too many "gotchas" in real estate not to have a lawyer do the paperwork. When we bought a package deal from an investor we used a reputable attorney to draw up the contract and he didn't charge us anything to do it however we did close in his office. And I have used this lawyer since them for other closings as well as deed transfers. Not too many freebies in the legal profession.

 

[Nords]

One thing that isn't clear to me is what happens after we sign a sales contract with a willing buyer? 
Do I just take the contract to a title company and pay them to complete the transaction? 

Welcome to the board, Mary. If you're in California then Nolo still has an excellent FSBO book for that state's legal system.

But, yeah, it's that simple.

http://early-retirement.org/forums/index.php?topic=7926.msg142144#msg142144

After you & the buyer swap the paperwork through a few counter-offers (the devil's details are usually in the contingencies) then take a copy to the title company, deposit the buyer's check with them, and get started. Depending on the terms of your offer and the "local custom" for your area, you may have to arrange for the pest inspection or the home inspector or the appraiser. However in most areas it's done (and paid for) by the buyer so that they can select people they "trust".

You're the person in charge of ensuring that contingencies are cleared by the time that you and the buyer say they'll be cleared. You may also agree to continue marketing the property for backup offers which hopefully put pressure on the buyers to clear their contingencies.

If applicable, you'll have to provide your mortgage/HELOC info to the title company so that they can clear the lender's liens. You may also wish to have the title company search for contractor/subcontractor liens on your place. Subs don't always do a good job of letting you know that they're in a dispute with a contractor and their surprise lien on your place can really mess up the sale's timing.

The title company can help with some aspects of the sale by telling you what's customary, but it's not their job to hold the buyer's/seller's hands through the transaction. They're only interested in holding the money, clearing your title, selling the title insurance policy to the buyer, and closing the deal. Questions more complicated than that are best handled by a lawyer or a friendly RE agent.

When your mortgage is paid off, someone has to pay the fee to record that fact at the local records office. It always seems to be a problem... make sure the title company and your mortgage bank understand who's doing that. Same thing if you take any paper back from the buyer-- make sure it's recorded and that it's clear who's paying the recording fee. It's amazing how many $250K closings will be held up to settle a $25 recording fee. $250K seems like a big chunk of change but $25 is real money to most people.

We've used realtors to buy homes but we prefer buying FSBO and we've always sold FSBO. In defense of realtors, we tend to be control freaks demanding clients who want to poke our noses into every corner of the deal. Our preferred customers are experienced buyers (without their own realtors) because they know what they want and they don't waste your time. However they may also try to lowball their offer or even to slide a contingency past you. Our next-best customer is a realtor carrying a full-price offer with no contingencies, for whom we're happy to kick in a percent or two at closing. Our least-favorite customers are a tie for (1) clueless buyers who show up at closing with a pit-bull lawyer "just to answer a few questions" and (2) realtors who are happy to help us sell our house for a "small fee".

 

[Mary E.]

Thanks to all for the responses. I appreciate the advice and info. Now at least I feel that I know what I need to learn about.

We're in NM and the house is a VA foreclosure that we bought a few years back. Since we have a VA guaranteed loan, our closing was done at the VA contractor-realtor office. From the time I spotted the house to the day we closed was less than a week-- then we looked at each other and said, "What did we do!!" Our daughter lived in it while in college, but now she's flown the nest and we ready to get an RV!