Wednesday, October 5, 2011

For-Sale-By-Owner Paperwork

This post is the fourth and final post in a four part series on how to sell your home without a real estate agent.

Once our house was listed we got our first call just a couple hours later.  Our lock box hadn’t arrived so we had to let the agent and their clients in and we walked to the park while he was showing the house.  Each time our house was shown the agent showing the house left their card.  I called each agent afterwards to find out what their clients thought and their overall impression.  It was during one of these phone calls that I found out that an offer was being made.  The agent simply faxed the offer to the fax number that was listed.  The fax was supposed to be automatically forwarded via email to us, but mls4owners never received it (fax’s not going through was a frequent problem).  I had not yet purchased our fax machine so I had to go to Staples and have him fax it there while I was on the phone with him.

Once the offer was made we had to review it and decide to accept, counter-offer, or decline.  I forget the exact details, but the initial offer was about 5k less, they wanted us to pay closing costs (3 percent), and give them a $1500 carpet allowance.  We had already felt like we had priced our house low and didn’t really like the offer.  I forget if we officially countered or not, but eventually they offered our asking price and us to pay closing costs, they explained that there bank would give them no more.  We had listed our house two weeks before the federal tax credits for buying homes were just going to expire.  We said that we wanted to wait and see if we could get any other offers the next weekend.  

We went looking ourselves that weekend and found a house we liked so we accepted the offer.  The paperwork involved is called a purchase agreement.  The purchase agreement was what was faxed to us.  When we countered we simply crossed stuff out, and added our amendments and then initialed it and dated it and sent it back.  The entire timeline for closing is based on the dates you signed so dating the initials is important.   If we had received a buyer who did not have an agent provided a copy of a purchase agreement and we would have provided it to the buyers, or possibly have sat down with them and negotiated the price in person and signed the agreement together.

Our agent we were using to buy a house was very concerned about us not having an agent.  She insisted that we get a copy of the letter that said the buyers of our house had pre-qualified for the loan.  Their agent gave us the copy but insisted that really the paper was meaningless.

Once a purchase agreement has been signed by both parties then there is a whole host of things that need to happen.  The buyer’s agent should be in charge of it all and tell you what they need from you.  The main item is a Seller’s Disclosure.  The agent representing our buyers never requested one and pretty much told us the paper was pointless and we didn’t need to fill it out (I wasn’t impressed with this guy), but if we didn’t give them one it would give them a potential way to back out of the agreement without forfeiting escrow money.  I ended up faxing it to their agent anyway.  When we bought our house the Seller’s Disclosure was returned with the signed purchase agreement.  Once again mls4owners provided this form.

The inspection (assuming this was part of your purchase agreement) is one of the first things that will be completed after the purchase agreement is signed.  I think it is customary for the agent to let the inspector in, and sometimes the buyer will come to the inspection as well (at least this is what happened on the house we were purchasing).  I ended up having to let the inspector into our house because once again the agent we were dealing with was kind of lame.  After the inspection is complete negotiation happens again depending on what the inspection found..  The only things our buyers asked was that our furnace be serviced, which is very common.  For the house we were buying we asked that the sellers clean the gutters, adjust the garage door opener safety settings, and fix a support beam in the attic that was not bolted together properly.  

Other things that have to be completed are: the buyers agent contacts a title and escrow company and starts things going including collecting the buyer’s earnest money, the buyer’s need to turn in all necessary paperwork for their loan, an appraisal will be ordered by the buyers, you need to provide the information about where the money for the sale is to go.  There is a lot of hurry up and waiting.  People demanding paperwork that they could have requested a week ago to be sent to them right away, etc.  It is prudent to get everything done as soon as possible, since most of the responsibilities are the buyers, calling the agent to check up on them is a good idea.  I had a hard time with this because I felt like I was telling him how to do his job, but unfortunately he was slow having his client turn in their loan paperwork and due to some freak FHA problem we ended up closing a day late so maybe if I had harassed him more we could have avoided that.  All of the things that need to be done and how many days you have to do them are described in the purchase agreement, so read it carefully.

Due to discrepancies about when we were actually closing we ended up agreeing on a different possession date than closing date.  When we signed the papers for closing we also paid the buyers for 3 days “rent” so we could stay in the house till we actually had some place to move our stuff.  The rent amount was simply their monthly mortgage amount divided by 30 times the three days we were renting.

Finally the last thing to do is to sign the closing papers.  The title company called and set up an appointment and we signed stacks and stacks of paper and then the house was no longer ours.

If you find these posts useful and wish to offer monetary reciprocation I would gladly accept paypal donations or gift certificates.  Even just a dollar would be nice. ;)

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