FSBO (For Sale by Owner) is a property-selling approach where the owner directly markets and sells his house, without any assistance from a real estate agent.
Unsurprisingly, real-estate deals have a lot of paperwork involved. Therefore, before you get down to conducting house tours and drafting a for sale by owner contract, you will have to ensure that all the required documents are in order.
Where Can I Find the Details about Requisite Documents?
Regulations and paperwork requirements differ between states – what is relevant for one state might not be relevant for another. You can visit your county and state government websites, along with the state land title association website, to learn about the required documents for your property sale.
Real-estate attorneys can also provide this information in exchange for a flat fee. You can also check out the internet for downloadable DIY real-estate guides and free paperwork for selling a house by owner.
What Documents Do I Need For an FSBO?
As we mentioned, the specifics might differ from state to state. However, this article will cover some of the most common document requirements.
- Property survey: This legal document specifies the boundaries of your property. It contains details about the locations of any driveways, fences, and other similar structures. Normally, a buyer will order a property survey before they sign the for sale by owner contract.
- Title: Shows that you have legal ownership or equitable interest in the house.
- Permits and plans: If you have performed any upgrades or modifications, make sure you possess the relevant permits and/or plans.
- Warranties and receipts: Related to any finishing, appliances, or other upgrades.
- Occupancy certificate: This document will prove that your house is safe to live in and is in accordance with the municipal building codes. Before the municipality grants you this form, you will have to get your house inspected, get repairs done (if needed), and then get the house re-inspected.
- Recent utility bills: To show the buyer that all utilities, such as water, electricity, and gas, have been paid for.
- Recent property tax bills: To help the buyer get a fair idea about the taxes they will be paying should they go ahead and purchase the property.
- Loan documents: These documents typically include the first and second mortgages, along with any home equity line-of-credit(s).
- Homeowners associations agreements and covenants: To inform the buyer about the rules by the condominium- or neighborhood-governing bodies. Includes details about parking, noise levels, and pets.
- Blueprints or floorplans (if available): Gives the buyer a deeper insight into the structure, size, and layout of every room in your house. If you have any historically significant item or information regarding your property – such as a newspaper article – make sure to leverage it for a higher selling price.
Image Text: House blueprints for an FSBO sale.
Alt-text: Floorplans for a property up for sale.
Image Description: A blueprint.
Keep at least two copies handy of each of the documents mentioned above. This way, you will be able to present them to potential buyers during house tours.
Disclosure Statement – What is it And Why Do I Need It?
Before you entertain any potential buyers or conduct an open house, you will have to be prepared with a disclosure statement and its copies.
A disclosure statement is mandatory in most states, as it highlights any dangers or key defects pertinent to the property. These defects or dangers might include structural issues, radon, lead paint, flooding, mold, and asbestos.
A disclosure statement allows buyers to understand any potential issues about the property that might jeopardize their safety or well-being. Besides, a disclosure statement prevents buyers from making any post-sale claims about being oblivious regarding the defects.
What to Include in a For Sale by Owner Contract?
A legal document agreement between you and the seller is unarguably the most important piece of document in the entire selling process. Your real-estate contract should contain the following:
The property characteristics: Including address, type (single-family house, multiunit, condo, et cetera), property identification number, parking availability, et cetera.
Identity of the interested parties: Will usually involve only the buyer and the seller.
Purchase price: The price at which the deal has been finalized.
List of personal property or fixtures: The items included in the purchase price.
Financing terms and earnest money details: The amount paid at the time of contract confirmation and buyer financing details.
Expected closing date: The expected date for the completion of the sale.
Prorations: The percentage that the two parties owe on items such as assessments, utilities, and taxes.
Closing costs: Which party will be covering the closing costs.
Title: What types of title clearance is the buyer expected to provide.
Contingencies: Such as a home sale contingency, inspection provisions, and attorney reviews.
Breach penalties: Details about what would happen in case one of the two parties violates the contract.
Miscellaneous provisions: Any other provisions pertinent to your particular transaction.
Will I Have to Bear Any Closing Costs?
Regardless of whether you use a real estate agent or not, you will have to bear certain closing costs as a seller. Common examples of such costs include:
- Document preparation costs.
- Excise taxes.
- Deed transfer taxes.
Do keep in mind that these transfer costs are not fixed and can vary considerably, depending on your state and county.
To ensure a smooth and seamless sale process, ensure that you are prepared with all the necessary documents well before you receive your first offer. Without the proper documentation or FSBO contract, the entire deal can fall through on the spot.
If you need more information about preparing a free house contract for sale by owner, please feel free to contact us.