For Sale By Owner- Not As Simple As You Think!
During these tough economic times, many homeowners are making the decision to sell their homes without the assistance of a realtor. This practice is commonly known by the acronym “FSBO“. Selling a home on your own can be a challenging task and requires the homeowner to take on the role typically reserved by the realtor (i.e. advertising and marketing the home, conducting open houses, negotiating directly with prospective buyers, etc.). In addition, the homeowner should be aware of certain legal issues that arise with FSBOs, which could impact the transaction.
Let’s say you find a buyer who is willing to make an offer on your home. Who will write the contract? If the buyer is also unrepresented by a realtor, you should strongly consider hiring an attorney to draft the purchase and sale agreement. Drafting your own real estate contract, or relying on a contract template from the internet, may not be sufficient to adequately protect your interests. Even if the buyer is represented by an agent who drafts the contract, you will want to seek legal advice to insure that the contract is reviewed with the seller’s interests in mind.
A buyer has a right to a fair and complete understanding of the condition of the property they are interested in purchasing. While a buyer should always verify the property condition with a professional home inspection, they will expect the home seller to share the information they may have about the home with them. This is done through the Seller’s Disclosure Statement, a written document where the seller lists all pertinent issues that they know about the property. You should completely and truthfully fill in all that you know about your property. This is a place for factual information, not speculation. It takes just a few minutes to fill in. Keep a copy for yourself and present a copy to each prospective home seller as part of your contract paperwork.
Title Work and Survey
In most cases, the real estate contract will provide that the seller is responsible for providing title insurance for the home and a recent property survey. If the Colorado standard real estate contract is used for the transaction, the seller will also be required to provide other property documents and records to the buyer (i.e. tax statements, HOA documents, etc). A FSBO seller should be certain to comply with the timeline designated to complete the title work, survey, and other items that may be requested by a seller. Failure to do so may result in a default under the contract, and the right of your buyer to walk away from the deal.
FSBO sellers should carefully consider the legal ramifications of selling their home without the assistance of a real estate professional or Realtor. At a minimum, a real estate attorney should be hired to represent the seller during the entire process.