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Home Selling Advice for For Sale By Owner Sellers
From Janet Wickell, Your Guide to Home Buying / Selling.
Avoiding Common For Sale by Owner Mistakes
For Sale By Owner - FSBO for ShortYou've decided to be a for sale by owner seller, so you've done your market analysis and you've determined a good asking price for the house. You've worked on your curb appeal, spiffed up the home's interior and handled minor repairs. So now you're ready to let buyers take a look... or are you?
There are a few more things you should handle 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:
Don't assume that disclosures are only necessary for homes listed with real estate agents, because most for sale by owner sellers must furnish them, too. Even if a formal disclosure isn't mandatory, you are probably required by law to tell your buyers about known problems, often referred to as material facts.
Contact the agency that oversees real estate sales in your state and ask which disclosures you are required to make. Many state agencies offer disclosure forms online in PDF format.
Lead Paint Disclosures
If your house was built prior to 1978, federal law requires that you disclose that the home could contain lead based paint and give buyers details about past tests for lead paints. You must also offer buyers the opportunity to do their own lead paint testing. You must also give your buyers a lead paint pamphlet, which is available free online from the EPA.
Fair Housing Laws
Individual sellers aren't subject to as many fair housing guidelines as real estate agents are, but it's smart to follow all fair housing laws, just to make sure you don't encounter legal problems later.
Showing the HouseShowing the house isn't difficult, but you'll have better results if you follow a few basic showing guidelines.
Pre-Qualifying Home BuyersA good real estate agent verifies a buyer's pre-approval status before he shows them property. When you sell by owner you'll deal with many people, including those who are qualified to buy a home and those who don't have a chance of getting a home financed.
People who know they cannot buy sometimes think that for sale by owner homes offer a better opportunity, because they're hoping to find a seller who will finance the transaction.
Ask these questions to get a better feel for someone's buying power:
It's a good idea to require home buyers to submit written proof of pre-approval with any offer. If your buyer can't buy until he sells, you'll have to decide whether or not you want to wait for that to happen. If you do decide to wait, be sure to insert a kick out clause in your contract with the buyer.
Who will provide the contract forms that will be used for an offer to purchase your house, you or the buyer? You can write a contract yourself on a piece of paper, but it wouldn't offer much protection for either of you. The forms you use should be written specifically for your state's real estae laws and cover all issues that are important for your location.
If you aren't contract savvy, have a real estate attorney review any offer before you sign it. Don't cut corners here, neglecting to get advice from an attorney or other knowledgeable person will cost you money, not save it.
The Buyer's Deposit
The contract should spell out what happens to the buyer's deposit money, called earnest money, if the deal falls through:
The deposit money is not yours until the house sells or the buyer breaks the contract in such a way that it becomes yours by prior agreement. It must be credited to the buyer's funds on closing day and ideally should be held in someone's trust account until then.
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 complying with all laws associated with the sale of your home.
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