Are You Selling a Home by Yourself?  Avoid Common FSBO Mistakes

For Sale by Owner – FSBO for Short

If you are considering being a for sale by owner seller, there are several things you

should prepare before you run your FSBO ad.  Your market analysis is done and you’ve determined a good asking price for the house.  You’ve worked on curb appeal, spiffed up the home’s interior and handled minor repairs.  So now you’re ready to let buyers take a look… or are you?

There are a few more things you should prepare for before you run your first ad.

Property Disclosures

State law requires that you give potential buyers property disclosures when you sell a home or pay Seller at closing the sum of $300.00 as an alternative.  Disclosures typically deal with the condition of the property and its components or facts about its location such as:

The age of the home and its components.

Whether problems exist with any component

Whether you (or a neighbor) have built something (fence, shed, road, pool)

that extends past property boundaries.

If the house is on an airport flight path.

If the house is in a flood zone.

If the house is on earthquake fault

Other issues important to your specific location.

Don’t assume that disclosures are only necessary for homes listed with real estate agents, because most for sale by owner sellers must usually furnish them also.  Even if a formal disclosure isn’t mandatory, you are probably required by law to tell your buyers about known problems, often referred to as material facts.  Learn your obligations by contacting Kelsey Law, LLC.

Lead Paint Disclosures

If your house was built prior to 1978, federal law requires that you disclose that the home could have lead paint and give buyers details about past tests for lead paints.  You must also offer buyers the option to do their own lead paint testing.  Most people don’t perform the tests, but you must furnish them with a lead paint disclosure which is available free online from the EPA.

Smoke and Carbon Monoxide Detectors

As of July 2015 it is a state law that the property has smoke detectors and carbon monoxide detectors that have the ability to read in parts per million (PPM).   If the appropriate detectors are not in place the seller must provide a credit of $250.00 at the time of closing.

Fair Housing Laws

Individual sellers may be subject to fair housing guidelines which should be reviewed with a Kelsey Law, LLC.

Can the Buyer Really Buy?

You should verify a Buyer is pre-approval status before you show the property.  You should make a distinction between pre-qualification and pre-approval.

People who know they cannot buy sometimes think that for sale by owner homes offer a better opportunity because they are hoping to find a seller who will finance the transaction.

Ask these questions to get a better feel for someone’s buying power:

1. Have you been pre-approved by a lender for an amount in this price range?
2. Can you buy a house now, or do you have to sell your current home first?

Contract Forms

Kelsey Law, LLC can provide the contract forms that will be used for an offer to purchase your house.  You can write a contract yourself, but it probably wouldn’t offer much protection for you or your buyer. The forms you use should be valid for Connecticut’s real estate laws and cover issues for your location.  The expense associated with having a Kelsey Law, LLC prepare the contract will far outweigh potential expenses if all problems are not addressed.

The Buyer’s Deposit

The contract should spell out what happens to the buyer’s deposit money, called earnest money such as:

Under what conditions would the buyer get it back?

Under what conditions would you expect to keep it?

The deposit money is not yours until the house sells or the buyer breaks the contract in such a way that it becomes yours by prior agreement.  It must be credited to the buyer’s funds on closing day and held in someone’s trust account until then.

Bottom Line

Real estate laws and customs differ in nearly every state, so its essential that you call Kelsey Law, LLC to be sure you are complying with all laws associated with the sale of your home.