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For Sale by Owner: All About Your Paperwork

Signing documents

Deciding to sell your home on your own, otherwise known as “for sale by owner (FSBO),” can save you a substantial amount of money. That savings can range from the  percent commission you would have paid as a seller to a Real Estate Agent, to potentially twice that amount if your buyer is also not using an agent. While it’s compelling to eliminate commissions from both sides of the transaction, many FSBO sellers will accept buyers who are working with Real Estate Agents, because it greatly expands the pool of potential buyers.

For the higher payday at closing, however, you will need to assume the job responsibilities of a Real Estate Agent. This means coming up with your own marketing plan, booking appointments, and being present at showings. It also means handling the paperwork that results from selling a home.

Before You Show Your Home

As a first step, gather the documents your Real Estate Agent would have requested to effectively market your home and close the eventual transaction. Each state has its own rules on what is needed for an accurate listing and to complete a sale, so you will want to verify exactly what is required. Typically these documents include:

  • Any floor plans or blueprints.
  • Property tax records.
  • Current mortgage documents.
  • Improvements you made, with dates.
  • A survey of the property to show lot lines.
  • Utility bills.
  • Warranties and instruction manuals for appliances.
  • The title.
  • A certificate of insurance.
  • Homeowners association documents, such as rules, current financial statements, and a sales certificate.

You will also want to provide documents related to any special designations, like a landmark status. It is also important to gather any disclosure statements that your state or area requires pertaining to potential radon, flooding, lead paint, asbestos, mold, or structural issues. Disclosure documents use boilerplate language and should be available through your state’s real estate association.

Accepting Offers

As prospective buyers show interest, you will want to have offering agreements ready, so they can put their intentions in writing. This document is also what you will use as you negotiate price and particulars—what remains behind, what you want to take with you—and any contingencies, such as the buyer’s request for a specific amount of time to sell their current home.

Once you come to an agreement, you will copy this information to the Residential Sales Contract. Again, states have different rules on what both offering agreements and sales contracts contain, so you will want to download the right version for your state.

Coming to an Agreement

The sales contract is the key document in your transaction. It will need to include some specific information since this is a legally binding document. Again, boilerplate contracts valid for your state can be found online. Your real estate attorney, if you are using one, can also supply the form to ensure you are well protected.

The sales contract will include:

  • A description of the property type and location.
  • Names of the buyers and sellers.
  • Details on any personal property being sold with the home.
  • The purchase price.
  • The amount of earnest money and where it will be held.
  • Terms of financing.
  • The expected closing date.
  • How closing costs will be shared.
  • The proration percentage applied to assessments, property taxes, and utility bills.

The contract is not final and binding until any contingencies are satisfied. As previously mentioned, buyers often request time to sell their current home. They also usually make the purchase contingent upon their lawyer’s review of the documents and approval of their mortgage application.

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