Y
ou decided to sell your own home and now you’ve gotten an offer! Do you know for certain what you need to do next?
First you need to respond to the offer. You can either accept, reject, or make a counter offer. You should always make a counter offer. It’s expected. If you said “yes” right away, the buyer would feel they offered you too much! If you just flat out say, “no!” you could lose a potential deal. Don’t take getting a low offer personally or get angry with the potential buyers. They are doing what is in their best interest. When you are a buyer, you might even do the same!
Agents make offers and negotiate via faxed contracts. So when selling your home yourself, feel free to use fax or email to make counter offers. It’s never a bad idea to have everything in writing to avoid misunderstandings anyway.
Since you are selling your own home, you must provide the proper sales contract and disclosures. If you don’t have a “for sale by owner” contract and you’ve gotten an offer, you better get one NOW!
If you are working with a title company, you should be able to get one from them. If not, you can purchase a state specific “for sale by owner” contract online.
I recommend Standard Legal. Their “FSBO Home Sale Package” provides you a state-specific “for sale by owner” contract and disclosures, as well as other “for sale by owner” forms to make the administrative part of the sale easy, safe, and foolproof. They also offer a Legal Document Preparation Service, where they’ll provide custom, fully completed documents for a very reasonable fee. All you have to do is sign! What could make the daunting task of handling the paperwork to sell your house easier?
The “for sale by owner” contract you will be using will be a relatively simple document compared to the standard contract that realtors use. Much of what is in the standard realtor contract is there to protect them, not you or the buyer.
Before getting the sales contract signed, you and your buyer will need to agree on the following terms. It’s not just about the price!
SALES PRICE
Remember to take into account real estate commissions. If your buyer is working with an agent, your commission will usually be 3%. If your buyer isn’t working with an agent, there will be NO commission to be paid!
EARNEST MONEY DEPOSIT
At the sales contract signing, a buyer needs to give you an earnest money deposit, made out to the agreed upon title company. Typically, you want to collect at least 1% of the sale price.
DOWN PAYMENT
This is the amount of money the buyer needs to come up with at closing from a source besides their loan. The minimum amount needed is determined by the loan program the buyer will be using.
CLOSING COSTS
Decide how the closing costs will be divided. Some buyers will ask for closing cost assistance. In many parts of the country, the division of closing costs is customary. However, this is a point that can be negotiated.
In my state they are usually divided 50/50; however, a seller can offer to pay 100% if that would make the difference between the deal going through or not. Talk to your mortgage broker about how this would work with the particular loan program your buyer is using.
CONTINGENCIES
Contingencies let buyers cancel a contract without penalty. It is in your best interest for there to be as few contingencies as possible. Some typical ones include loan, inspections, appraisal, and contract contingent on buyers selling their own home.
OTHER PROPERTY
Generally, everything attached to the house stays with it. If you really want to take your fridge with you, you need to put that in the contract.
DATE OF POSSESSION
Decide on a date that you and the buyer want to close.
When you come to an agreement on the price and all the terms, a sales contract will be signed by both you and the buyer. Any required disclosures will need to be signed, too. These differ by each state, but some examples are lead paint, notice of defect, and mold.
When you and the buyer are signing the sales contract, the buyer also needs to provide an earnest money deposit, made out to the name of the title company that will handle the closing.
When you have done all this, your house is now officially “under contract”! Whoo-hoo! 
