A Guide to Residential For Sale By Owner
Selling a residential property can be a big effort for any homeowner. From ensuring the property is in proper shape, identifying and resolving any title issues and setting the right price, there are many potential pain points in the process where major concerns could pop up. Those concerns are amplified even more when homeowners decide to try and sell their home on their own (also known as a FSBO sale), without the assistance of a real estate broker.
With ease of access to information and online advertising, homeowners are increasingly looking at FSBO options to sell their properties. We see some homeowners with a prospect lined up to buy their home off-market and they feel comfortable negotiating the process without the traditional six percent commission paid to brokers.
Before jumping headfirst into a FSBO transaction, it’s important to consider the value a real estate broker can bring to the table. From the start, brokers have knowledge of the market and homes similar to yours, so they can help you price your home competitively to maximize a sale. Brokers also have access to the NWMLS system, which expands the visibility of your home to other real estate professionals and homebuyers which can result in a higher selling price. Most of all, brokers will manage all aspects of the sales process from listing to showings, open houses and negotiations. It is important to understand how hands on you want to be as a seller and how comfortable you are with the overall sales process before making a decision.
After these considerations, if you are set on selling your home independently, it’s important to engage legal counsel right away to ensure the sale goes off properly. Counsel will be able to guide you through the process, prepare the proper contracts and help mitigate possible hiccups that can impact your deal. Specifically, counsel should be used to help with the following:
Procure and understand the title report: A clean title is necessary to close and transfer the property to a new owner. Legal counsel will help you understand the title to the property and get in front of any title issues that may frustrate a possible sale. Working with an attorney and a trusted title and escrow company can help identify and resolve any issues concerning title.
Escrow company: Once an offer is received, reviewed and accepted, an escrow company should always be used to facilitate a smooth transaction. Counsel can help you find an escrow partner to facilitate the transaction and settlement of taxes, utilities and any other requirements.
Ensure compliance with sale requirements: There are specific state and county requirements for any sale of real property. Understanding the intricacies of what must be completed and what must be disclosed can be a daunting task to the untrained. There are countless lawsuits filed every year by disgruntled homebuyers claiming that a seller negligently and / or intentionally did not disclose a material issue with the property. Understanding how to navigate these issues is paramount to completing a smooth sale of your home. Counsel can ensure you have correctly disclosed all items as required by law.
Contract Drafting: All too often attorneys see FSBO using out of date forms and / or agreeing to unintended provision purely due to a lack of experience. Real property purchase and sale agreements are one of the most highly litigated disputes in Washington. If you are not familiar with the process or do not fully understand the contract you are entering, you need to stop and reassess the situation. An experienced real estate attorney should always be considered to help properly structure a purchase and sale agreement that matches state standards and requirements while protecting your interests. Once the purchase and sale agreement is entered, it may too late to correct deficiencies. An experienced real estate attorney should be contacted from the start to help facilitate and draft the legally required documents.
Guiding the Transaction: Mutual agreement on the purchase and sale agreement is only the start. Any homeowner considering a FSBO transaction needs to consider the overall timeframes, the contractual requirements, the contingencies applicable, the pre-closing requirements prior to transferring title and the legal ramifications associated with all of the above. These can all be costly pitfalls for the unaware. An experienced real estate attorney will be able to efficiently steer the ship towards a smooth transaction from start to finish.
Selling a residential property by owner is not something that should be tackled lightly. If you do decide that selling your own home is the best thing to do for your real estate situation, make sure you reach out to a real estate attorney on day one. Our team at Holmquist + Gardiner has extensive experience advising sellers, contact us today with questions you have about selling your home by owner.
