For Sale By Owner (FSBO) is a transaction traditionally done without the use of a real estate agent. Most people choose to go this route to avoid paying the agent’s commission (average is 6 percent). In some cases, the amount of money saved can be used towards the down payment of another home or closing costs.
What You Should Know
Before listing a FSBO there are steps that need to be followed. First, you must do research on what your home is worth and market it a fair price for potential buyers. Pricing your home too high may turn off buyers who are interested in your home.
An attorney who specializes in real estate transactions will be valuable during the process. The counsel will be able to guide you in the proper documentation needed, provide protection and help the negotiation terms of the contract.
Each state has its own set of regulations and requirements for the types of documents that are needed for a For Sale By Owner transaction. You will need to verify with your attorney or local government agencies on the correct documents necessary for the transaction.
Below are examples of documents that may be needed for the sale of your home if you choose to do it yourself. It is important to note that the required documents varies by each state. Make sure you have at least two copies of each document on hand.
Property Survey – A property survey is a legal document normally ordered by the buyer. It shows the property’s boundaries such as the home’s plot of land. It also has information about other structures and where fences or driveways are situated on the property.
Receipts and Warranties – This will provide the buyer information about the appliances in your home and any upgrades or finishes.
Plans and Permits – These must be on hand if you have done any additions or improvements to your home.
Certificates of Occupancy – Document that states the property is compliant with local building codes and laws and that it is suitable for occupancy.
Real Estate Contract – Legal document between the buyer and seller that outlines the terms of the sale of the property. In most cases, this is drawn up by the seller’s agent but in a for sale by owner situation the buyer’s agent processes the contract. Real estate attorneys or title companies can assist with writing the contract if necessary.
Disclosure Statement – A document that states all conditions and issues associated with the property. This may include items concerning wiring and presence of lead paint statement.
Utility Bills – May include water, sewer/garbage and electric or gas bill.
Property Tax Bill – Details the property’s annual tax amount.
Title – Proves the seller has equitable interest in the property. Must be clear of any liens or levy’s against the property.
Homeowner’s Insurance – Must be obtained by the buyer before the end of the transaction.
Homeowners’ Association Covenants – Document that contains information concerning the rules established by the association.
Home’s Floor Plan or Blueprint – Details the home’s layout, square footage and each room’s dimensions.
Having these documents readily available will help ease the transaction process. Consult with a title company or a real estate attorney should you need assistance obtaining these documents.