FSBO – FOR SALE BY OWNER
By Tim Barkley. February 2014.
Rick and the lawyer sat at the conference table. “I know it’s not the usual thing, to move right after my wife has died, but I have a chance at a promotion at work if I transfer to the Dallas office. And my neighbor wants to buy the house so his daughter can live there. He wants his grandkids closer than Hagerstown.
“What do we need to do?”
The lawyer nodded. “You’re right,” he affirmed, “it’s usually better to wait at least a year, some say two years, after the death of a spouse, before making any drastic changes. Are you sure this is the best thing?”
“Yeah,” Ricky answered. “The wife and I had been talking about it before she died, and she’s the one who found out that the neighbor wants to buy the house. I think the time is right. And my daughter says her husband is probably going to be transferred, too. He works for the same company I do, but in a different division.
“Do we need to use a Realtor®?”
“Realtors help out in three main ways. They help you get the property ready for sale and set a sale price; they market the property for you; and they provide you with the legal agreements for the sale.
“If you already have a buyer, we can usually work out the other two issues. Does the buyer want you to fix anything or change anything?”
“No, he says he’ll buy ‘as is.’ The only thing is the price. How do I know how much to sell for?”
“That’s the key issue. An appraiser can tell you what similar homes sold for locally in the last six months or year, but a Realtor® will often have a better idea of what will actually sell in the neighborhood. If you were going to list the property and you asked for too much, you might scare away buyers; if you list for too little, you might not make as much as you could. But if you’re not looking for a listing price as part of marketing the property, an appraisal can be helpful. And some Realtors® will provide you with a no-cost market analysis that can get you a good idea of what the property is worth.
“Do you want a referral? I have friends who are Realtors® and friends who are appraisers. I’ll give you a few names …
“Once you’ve set a price, download the ‘Memorandum of Understanding’ form from the Real Estate page on my website and visit with your neighbor. Go ahead and fill it out, and bring it back here.
“The next step is for me to create a contract for you. You can buy these online, but I think a custom-drafted contract is a better alternative. You’re getting the benefit of professional advice, not just paperwork.
“I can turn around the contract in a few days. Your neighbor will want to review it, and maybe take it to his lawyer. There might be some changes, or ‘addenda’ to the contract.
“You should ask your neighbor for a prequalification or preapproval letter for the mortgage, if he’s going to be applying for a mortgage. If he’s not, you can ask for a copy of a statement from his bank or mutual fund company where he’ll be getting the money. You want to be sure you’re not tying up the property, taking it off the market, only to find out that he can’t get his loan or fund the purchase.
“Once the contract is signed, your neighbor will probably want to inspect the house – his mortgage lender will probably require it. I usually give the buyer 30 days to do whatever inspections he wants.
“He might ask for repairs, or his lender might require them. We’ll have to see what he wants or needs, and then we can decide who pays for it.
“Then we go to settlement. The buyer gets to choose the title company, but you can recommend one to him. I know a few in the area. Let me give you their info …
“Nope, that sounds pretty thorough. Let me make some calls and I’ll get back to you.”
Attorney Tim Barkley
The Tim Barkley Law Offices
One Park Avenue
P.O. Box 1136
Wills & Trusts | Estate Planning | Probates & Estates
Elder Law | Real Estate | Business Planning