In these days of static home values, the thought of selling your home by yourself can be very enticing. After all, who wouldnÃ¢â‚¬â„¢t want to save thousands of dollars on a transaction that seems relatively simple? Set a price, agree on a closing date and turn it over to escrow and let them do the rest. Nothing to it, right? Wrong, very wrong.
The last several years were very good to home sellers who owned Pasadena real estate. With home prices appreciating in the range of 15 -20% per year, houses were selling quickly and in many cases, sellers received multiple offers, driving up the price of their home. In a softening market with fewer buyers, many owners are faced with highly leveraged homes and possibly declining equity. This has increased the FSBO (for sale by owner) activity as homeowners have incorrectly assumed all that is required to sell a house is to place a Ã¢â‚¬Å“For SaleÃ¢â‚¬? sign in the yard or to run a newspaper ad.
On the flip side, buyers who consider purchasing a FSBO will assume a seller is more negotiable and that the house can be purchased for under the market value, since there is no real estate commission to be paid. A buyer may also expect to use their own agent. Agents do not work for free and may ask the seller to compensate them up to 3% of the purchase price for the opportunity to represent their buyer while not providing any representation or advice to the sellers.
The purchase of a home is a very complex transaction. The responsibility of the escrow company is to be non-biased and to carry out the terms of the purchase contract. Their function is not to advise you on contractual disclosures or areas of performance as it relates to the agreement. The purchase contract alone is eight pages, before any addendums are attached. Addendums can include, secondary financing, termite inspection and repair, and the contingent sale of a buyers home, which can add several pages to an agreement already mired in paper.
Many questions arise before and after you have an accepted agreement. Issues such as, earnest money, title insurance, transfer of possession, does the buyer have the proper funds, and who pays for what? What items if any, remain with the house? How many contingencies does the buyer have and when are they to be removed? What disclosures have to be made? Does the seller pay for repairs? Can you explain liquidated damages, les pendas, or time is of the essence.
Not knowing the answers to these questions can cost you thousands of dollars, or provide a trip to the court house, potentially costing more money. The old adage of Ã¢â‚¬Å“you donÃ¢â‚¬â„¢t know what you donÃ¢â‚¬â„¢t knowÃ¢â‚¬? can surely apply.