For Sale By Owner (FSBO) Key Terms
Understand the key elements of selling property without an agentListing your house or commercial property as for sale by owner (FSBO) means that you are not hiring a real estate agent to help you. This keeps you from having to pay a commission when you sell your property. It also gives you the opportunity to take control of the sale, giving it the desired exposure through newspaper website listings, fliers, open houses and word of mouth.
Before you tackle FSBO, it's important to know what you're getting yourself into. While the process may save you money, it can still be a lot of work. The key elements of FSBO in this guide will help get you on your way to placing your property on the market.
DisclosuresThe law requires sellers to disclose any and all defects that a property may have that could cause problems for the buyer in the future. Examples of disclosures include cracks in the wall or driveway, past water damage or rodent problems, to name a few.
EscrowEscrow is where a third party agent holds funds to ensure that the buyer and seller complete their requirements of the purchase agreement before the release of funds. Typically the buyer provides the escrow deposit and the seller provides the escrow instructions.
Purchase agreementThe purchase agreement, also known as the earnest money agreement or residential offer, is the contract between the seller and buyer regarding a property. When selling your property FSBO, it's best to hire a real estate attorney to draw up or look over the purchase agreement before you finalize the sale.
InspectionAn inspection, done by a professional, is a thorough look at all aspects of the property's structure and systems from roof to foundation. If you request a house inspection prior to listing your property FSBO, and provide that information to any interested buyers, it attests to your trustworthiness and gives buyers peace of mind. Additionally, the buyer has the right to request an inspection of the property at any time during the contract process.
ClosingAt the closing, also known as the settlement, of an FSBO, the property officially changes ownership from the seller to the buyer. Everyone signs the final paperwork, the seller receives the purchasing funds and the buyer receives the deed and the keys to the property.
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