LEGAL TALK by Phyllis Oeser

 

 

The FOR SALE BY OWNER sign is up, what should I do next?

If you read our article last month, you already know that we are going to be discussing the ins and outs and pros and cons of selling and or owner financing your own property.

Most people who consider owner financing their own property also consider trying to locate a buyer on their own without a realtor. When I am representing an estate containing real property to sell, I always advise them to purchase a “For Sale by Owner” sign and post it on the property for a few weeks to determine whether there is anyone in the area who desires to purchase it. If you are fortunate enough to locate a buyer without a realtor, you will realize considerable savings in the closing cost and put more funds in your own pocket.

It is important to do a little homework prior to posting a For Sale by Owner sign or retaining a realtor to represent you in the sale of your property. You want to educate yourself regarding the value of the property, so you can be prepared to state your sales price and to be ready to enter into bargaining regarding the sales price and the terms of the sale.

One way to educate yourself is to review comparable sales in your area. Realtors and other services can provide these to you. To locate a realtor to work with, I suggest driving around the area to determine the realtors who are active in the area and contact and meet with three different realtors working for different brokers. Getting three different opinions will provide you with a good idea of the amount to list the property, the amount of time to sell and amount at which it should sell. You always list the property higher than lower, because obviously, no one wants to agree to pay more.

Educating yourself and visiting with the realtors will allow you to decide upon the listing price. However, there are also other important terms of the sale. Such as whether you are going to pay all of the closing cost, require the purchase to pay all of the closing cost or whether you and the purchaser are going to each pay a portion of the closing cost. We will discuss typical closing cost in much more detail in a later article.

Additionally, you must decide if you are willing to owner finance the property or if you are going to require the buyer to obtain their own financing. If you elect to post a For Sale by Owner sign you must be educated and prepared to negotiate because the first calls will usually be from someone in the area who believes they can score this property for a very low price. This is particularly true when the owner has died and the property is being sold by the heirs or estate. If you are not prepared, it is easy to be caught off guard and agree to a sales price and terms that you later regret and believe to be unfair. However once you have agreed, it is hard to change the terms of an agreement regardless of whether it is verbal or in writing. As a general rule, an agreement regarding the sale of real estate must be in writing to be enforceable, however making changes to a verbal agreement creates hard feelings and mistrust. These hard feelings and mistrust at best will make the transaction less pleasant and at the worst may cause one of the parties to refuse to complete the transaction.

Bottom line: when you POST a FOR SALE sign, be EDUCATED and prepared to NEGOTIATE!

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