Posts Tagged for sale by owner
My House Is Under Contract and Officially “In Escrow”
Posted by Deane in Sale Of Author's House on May 13, 2010
Whoops! I see I haven’t posted in two weeks. I didn’t mean to let it be that long, but I’ve been busy. I’m sure you understand.
Just before we met with the Anderson’s agent who was presenting our second offer, the Johnson’s agent called to announce they were removing the contingency. Oh happy day! So now we had a full price offer, no contingencies. The Anderson’s offer wasn’t as strong as the Johnson’s, but I didn’t care – it encouraged the Johnson’s to remove the contingency. (As it turns out that wouldn’t have mattered anyway, I’ll explain below.)
The original offer(minus the contingency) was accepted, we signed the contract, and are officially in escrow. Here is what has so far happened during the escrow process:
- We have had our home inspection. The inspector found a handful of small items, but the buyers didn’t ask for any
repairs. Whew-hoo! That is unusual but more likely when your house is an excellent shape. 
- The Johnsons got a full price offer on their house, with no contingencies. Their house was on the market only 7 days! Their buyer wants to move in fast, so our closing date has already been set for 6/9. This is great news as it keeps them on track and motivated to close on time. Ironically, if we hadn’t held out for the contingency our closing date would have been the same. But you never know!
- Today the appraiser was by – we should have the results of that in a few days.
The only small glitch was I had to remind John to arrange the home inspection. According to our contract, the inspection should be done and been presented with the repairs requested 10 days after contract ratification (signing). The inspection wasn’t done til day 13. Uh-oh. So we requested an addendum. John seemed a little miffed that I asked 
for one, but you can never be too careful. In a perfect world we could do all transactions on a handshake, but in the real world we have contracts to help make sure everyone does the right thing instead.
Now we have to wait for the results of the appraisal and for the Johnson’s loan approval. Their financials were very strong, so I’m not concerned about that at all. Since there was no contingency about the appraised value of the house, that shouldn’t be an issue either. If someone is getting the maximum loan amount, not appraising high enough can kill a deal, but that really can’t happen here. The Johnsons are putting more than 1/3 down so there really is no chance their loan won’t cover their responsibility.
10 Steps To Buy A “For Sale By Owner” Home
Since you might be dealing with prospective buyers that aren’t using an agent, you should be very clear on what steps they need to take. Unless they have done this before, they might be looking to you for guidance. You want to make it easy for your buyers to buy from you! That being said, of course, are not obligated to tell them anything that is not in your best interest. Below is an article explaining the ten steps a buyer needs to take to buy your FSBO house.
“With approximately 20 percent of the real estate marketplace comprised of “for sale by owner” listings, many homebuyers are left scratching their heads wondering, “Do I need an agent to go ahead and buy that “for sale by owner” home?” Not only are agents not needed to buy a home, involving one during a FSBO transaction could actually hinder the buying process, as the agent would want the seller and/or the buyer to commit to paying an expensive commission fee.
To buy a “for sale by owner” home, follow these 10 simple steps:
1. Determine Your Budget: The first step in any home buying process is determining how much you can afford. It’s important to not overextend yourself. Luckily, there’s many Internet-based mortgage calculators that will tell you how much you can afford based upon your income, debt level, mortgage rate and available cash for a down payment. Visit our Mortgage Calculators page to determine your housing budget.
2. Get Pre-Approved: Now that you know the price range that you can afford, you’ll want to get pre-approved so that you can move forward in the home buying process. In today’s market, buyers with a large down payment and a strong credit rating are more likely to obtain a mortgage. Start the pre-approval process by clicking here. Getting a pre-approval letter is a quick process that will tell sellers that you are a serious buyer who can afford their home.
3. Search For Homes: This part is simple. Just use the ForSaleByOwner.com search page to find your ideal home.
4. Contact the Owner Directly: Unlike homes represented by an agent, there’s no middleman to interfere with you from getting directly in touch with the seller. Phone or email the seller and ask additional questions about the home that wasn’t on the online property description. If you’re still interested, agree on a mutually convenient time to tour the home.
5. Get a Valuation Report of the Home: Either before or after you see the home, get a valuation or property report to see how the home’s asking price compares to other recently sold homes within the neighborhood. It’s similar to a real estate agent’s CMA (comparative market analysis), and it will compare the home you’re considering to up to 20 nearby recent home sales. Remember that such property reports and CMAs do not factor in any recent renovations — such as kitchen or bathroom remodeling — so the price of the home will be affected accordingly.
6. Hire an Attorney: For a few hundred dollars, a quality real estate attorney will provide you with all the advice and counsel you’ll need to go from the offer to closing. Use a local attorney who is knowledgeable about your town’s ordinances when it comes to real estate transactions, as well as your state’s disclosure laws. Our Find a Pro page can help find an attorney near you.
7. Make an Offer: Now that you’ve seen the home firsthand and have a property valuation report, plus an attorney in your corner, you’re ready to present the seller with an offer. Your attorney should have the necessary offer forms and you can also visit our Real Estate Forms section for all the state-specific paperwork you’ll need.
8. Lock in Your Mortgage Rate: Assuming that the seller is entertaining your offer, you’ll want to shop around for the lowest mortgage rate. Quicken Loans has a fast, online mortgage approval process, and Bankrate.com has a great mortgage comparison tool that will give you current rates at major lending institutions. You should also visit local banks and contact mortgage brokers to price compare. Once you’ve settled on a lender and a mortgage product, they will lock you in that mortgage rate and give you a set amount of time to close the real estate transaction. A 30 day or 60 day “lock in” period is most common.
9. Get the Home Inspected: The next step is hiring a quality home inspector who will go through the home – from foundation to attic – to see what condition the home is in. A home inspector will cost $300-$600 and the inspection will take around 2 hours. You’ll get an inspection report outlining any mechanical or structural problems that the home might have. Again, visit our Find a Pro pageto find an inspector near you.
Depending on the results on the inspection report, you might want to re-negotiate the purchase price. For example, the inspector might tell you that the furnace needs to be replaced. Negotiate with the seller to lower the price to compensate for any such expense.
10. Close the Deal: Your real estate attorney will handle most of the details at closing and, depending on your state and local area, will advise you on any special paperwork that needs to be completed between you and the seller. Your attorney and your mortgage lender will also assist you with coordinating the financing and providing payment to the seller. The seller will sign over the deed of the home and, voila, you’re the new homeowner!”
Source: Eric Mangan, ForSaleByOwner.com
FSBO Misinformation is Everywhere!
Posted by Deane in Administration on November 2, 2009
I read an article today of FSBO tips written by an owner of a “for sale by owner” site with a terrible piece of advice! He recommended that home sellers get what he called an appraisal from Zillow or Homegain.
First of all, the info you get from these sites is NO WHERE NEAR an “appraisal”. That would be like saying your McD’s burger was “created by a chef”! Appraisers spend a lot of time and money to learn their trade. Also, my experience has been that these sites are usually 10 – 40% off! I’ve compared the values on these sites to houses I have either just sold or just had appraised so I feel very confident in making that statement.
Pricing your house right is critical to getting a sale. So, please, please don’t skimp here! Pay a few $$’s and either buy a home valuation report at a reputable site such as ForSaleByOwner.com, or have a professional appraisal done.
The Top Ten Things Your Realtor Doesn’t Want You To Know
Posted by Deane in Miscellaneous on October 28, 2009
As an outspoken proponent of the “for sale by owner” movement, I write about this topic extensively, but I read an article written by a realtor I wanted to share with you. Among his top 10, he includes how little time realtors spend getti
ng their license (as little as 10 days) and how much the hourly rate can be for a listing agent – thousands of dollars an hour. But don’t take my word for it. Here is the link to read the rest of the ten things your realtor doesn’t want you to know. You may be surprised. And glad that you chose to sell your own house!
A Surprising FSBO Selling Statistic You Need to Know
Ironically, I read this surprising
statistic in two different places in the last week, plus my sister-in-law confirmed it with her real life experience this weekend!
So synchronicity is at work here to make sure I get this important message to you.
So here we go: “One out of three for sale by owner sellers sell their house to someone they already know!”
I guess that shouldn’t shock me, but it does. Just think of all the people listing their house with agents, spending tens of thousands of dollars on commissions when perhaps all they need to do was tell everyone they know! Yikes.
And think of all the people selling FSBO marketing their houses and skipping this critical avenue for finding buyers!
And nowadays, telling everyone you know is just an email away.
I was at a family gathering and my sister-in-law told me she had sold 3 of her houses “for sale by owner” to someone she knew and it went swimmingly. She said the 4th house they listed with an agent. She can’t remember exactly why, but she said it was a big, fat pain.
That made me think about my personal residences. I realize that I bought my current home from a family member and the house before that from a neighbor. For some reason, I hadn’t fully realized the significance of this!
So one of the best home selling tips I can give you is to be sure to put the proper energy into your neighborhood marketing. If you own The Truth About FSBO, make sure to use all the “grass roots” FSBO marketing ideas there to effectively market to your friends, family, and neighbors!
Selling FSBO Strong in Wisconsin
According to Raynor James of FSBOAmerica.org, “One of the best FSBO markets in the United States is Wiscon
sin. Going FSBO in Wisconsin is nearly as popular as using a realtor. The FSBO market is strong throughout Wisconsin, but particularly mention has to be made of Madison. The FSBO Madison market is so popular, it is hard to imagine a real estate agent surviving.”
If anyone has experience with selling “for sale by owner phenomenon” in Wisconsin, I would love to hear your opinion on why it is thriving so well there!
P.S. FSBOAmerica.org is currently offering 1 month’s free listing on their site. You might want to take advantage of it.
Selling Your Own Home and Got an Offer? It’s Not Just About Price!
Posted by Deane in Administration on October 14, 2009
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!
Some People Don’t Know You Can Sell Your Own House!
Posted by Deane in Miscellaneous on October 12, 2009
I read today on ForSaleByOwner.com ‘s blog, that many consumers are mislead to believe there is some special law or policy which states they have to use an agent during the buying and selling process! Information used to be totally controlled by agents which lead people to believe they had to work with them.
About 4 years ago, an independent study by Real Trends found out about only 50% of consumers were aware 
of the “for sale by owner” method of selling their home. I imagine during the past 4 years awareness has improved considerably and homeowners understand they have the right to sell their own home if they chose. How anyone could miss all the ‘for sale by owner” signs around town is beyond me.
You will need a title company to draw up the necessary paperwork to transfer ownership from you to your buyer. But you definitely are not legally required to use a realtor!
This is a Really Bad “For Sale by Owner” Sign
For Sale By Owner (FSBO) Sign
Now here is a REALLY bad example of a for sale sign. I assume it’s a joke. However, truth is usually stranger than fiction, so you never know! If it’s for real, I guess the seller must have buyers lined up waiting to live next door to the “bad word” neighbor.
The Three Best Things to Have on Your “For Sale by Owner” Sign
The three best things to have on your FSBO “for sale” sign are probably not what you think. First of all it’s NOT “for sale by owner”! Most FSBO signs look like this:
For Sale By Owner Sign
It says “for sale by owner” loud and clear. We got it, but really, who cares? Next there will be a phone number hand written in the white space that no one can read.
The #1 best thing your sign can say is “100% financing”. You only say this if it’s true, of course! Talk to your mortgage broker and see if he can offer such a program. That will get attention!
The #2 best thing your sign can say is “owner financing”. Again, you can only say this if it’s true! If you have a lot of equity in your house, could you offer at least partial owner financing? This will open doors to a whole new set of buyers.
The #3 best thing your sign can say is www.123MainStreet.com (fill in your address, of course). You can get a single property website for your house that will really make your marketing efforts stand out. Signs with websites have been shown to increase interest in your house by 82% ! Let’s face it, buyers would rather look at your house online than have a conversation with you, just yet.
At BuildASign.com there are many perfect templates for home selling, and you can get a great looking custom sign for under $30!
