By-owner sales are back

 

When the real estate market crashed in 2008, the for-sale-by-owner market died along with it. I’ve handled maybe 3 or 4 for-sale-by-owner transactions in the the last 5 years, But, they are picking up now and I’ve had 5 by-owners in the last few months alone. Recently, a property even sold by-owner using zillow.com’s make me an offer feature. Here’s how to sell by owner:

 

How do I set the selling price?

Look at zillow.com and eppraisal.com and that will give you a rough idea. Most sellers interview at least one real estate agent and get a comparative market analysis from the agent and that will help to set a selling price.

 

What do I do when I find a buyer?

When you find a buyer, you should verbally agree on a price and ask the name and phone of the buyer’s attorney. Don’t sign any notes or scraps of paper indicating what the price is because that could be construed as a contract. Verbal agreements to sell real estate are not enforceable. It is just a way to narrow the issues and reach agreement later in writing.

 

How much earnest money do I request?

I don’t think that large earnest money deposits do anything. Usually the amount is between $1000 and $5000. Earnest money is returned to the buyer if agreement can’t be reached under the attorney approval, inspection or mortgage contingencies. The earnest money is sent to the seller’s attorney after the contract is fulled signed.

 

Is the earnest money check cashed?

I am shocked by the number of people who think that the earnest money check is not cashed. It will be cashed and held in the seller’s attorney’s trust account to be released to seller at closing.

 

Should I fill out disclosures before I get a buyer?

Yes, it is helpful to complete the required disclosures before you have a buyer. Then the buyer can just sign your disclosures with the offer. The required disclosures are: Real property disclosure, lead paint, mold and radon.

 

Who prepares the contract?

Generally, the buyer’s attorney will prepare the contract. The buyer’s attorney send it to the seller’s attorney by email to review. Then the buyer signs it and it is sent to the seller to sign. The buyer signs the seller’s disclosures (completed by the seller in advance) with the offer. I use an esigning program called rightsignature to let buyers/sellers easily sign and initial contract using their computer or Ipad. It works great and everyone gets a final signed copy once it is esigned.

 

How long does it take to get the contract signed?

It will take far longer than anyone wants. Often, it takes up to one week from the time of verbal price agreement to get the contract signed. Some attorneys are stuck in the past and can’t create a real estate contract quickly even though with document assembly software it takes very little time.

 

Who handles the scheduling the inspection, the appraisal and walk-through?

The seller and buyer have to coordinate these times between them.

 

Who signs the contract first?

The buyer signs the contract first and then the seller accepts it.

 

Should I get a mortgage pre-approval letter from the buyer’s lender?

Sure, why not. Many, many sellers tell me how great their new buyer is because he is “preapproved.” This always makes me laugh because I have seen many pre-approved buyers get shot out of the saddle and fail to qualify for a mortgage. In reality, all it means is that the buyer talked to a lender, but there is no guarantee that the buyer will be approved for financing. It’s better than nothing though.

 

What if a real estate agent asks to show my house?

Some real estate agents will agree to show your house, but they will ask you to sign a one-time listing agreement that pays them a commission if their buyer writes an offer. Generally, the agent will want a commission of at least $2000.00 and up to 2% of the sales price. It is negotiable. In the old days (80s and early 90s) this never happened, but is is fairly common now.

 

 

 

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