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As a lender, I frequently see the FSBO disasters and can say they are far from my first choice transaction to market. I've seen sellers sign addendums without taking in the full impact of what was signed. Buyers do a bit better if I can get them before they negotiate the contract, but lately, they've come in after the contract is signed.
For the folks using attorneys, your experience will vary by the attorney's experience. Many of the real estate attorneys are transaction attorneys and not contract attorneys, and visa versa. Not much practical advice flows from that direction and both buyers and sellers learn by their wallet. Agents writing contracts as a service are great for the smooth transaction. For the not-so-smooth, look forward to paying attorney fees in lieu of commission to right any issues.
But, will those mistakes be more than the commission? Probably not. However, almost every sales price on a FSBO is below market value (based on how much higher the appraisals come in), many below by at least the amount of the agent's commission.
As a lender, I frequently see the FSBO disasters and can say they are far from my first choice transaction to market. I've seen sellers sign addendums without taking in the full impact of what was signed. Buyers do a bit better if I can get them before they negotiate the contract, but lately, they've come in after the contract is signed.
For the folks using attorneys, your experience will vary by the attorney's experience. Many of the real estate attorneys are transaction attorneys and not contract attorneys, and visa versa. Not much practical advice flows from that direction and both buyers and sellers learn by their wallet.Agents writing contracts as a service are great for the smooth transaction. For the not-so-smooth, look forward to paying attorney fees in lieu of commission to right any issues.
But, will those mistakes be more than the commission? Probably not. However, almost every sales price on a FSBO is below market value (based on how much higher the appraisals come in), many below by at least the amount of the agent's commission.
Agreed. Not sure what folks are expecting from a $500 worth of attorney time.
New buyers often 'think' they need a r.e. agent...but with the inspector and appraisal...
and friends looking the place over the r.e. attorney will be great.
But it's simple, say, It's $200, 000 without an agent ...it's 206,000 with...your choice!
(Or whatever price you pick.) And if it goes on the market...it'll be listed at 230,000.
Then, if they want one, oh well. Saves you the r.e. attorney paper work...let them handle the details. My opinion.
BoBromhal - we haven't gotten that far. Our tenants, when they gave us their move out date, just asked us if we planned to sell and mentioned that several of their friends may be interested in buying if we did. Do I need to hire a real estate attorney, in addition to the title company's lawyer? Thanks!
As a lender, I frequently see the FSBO disasters and can say they are far from my first choice transaction to market. I've seen sellers sign addendums without taking in the full impact of what was signed. Buyers do a bit better if I can get them before they negotiate the contract, but lately, they've come in after the contract is signed.
For the folks using attorneys, your experience will vary by the attorney's experience. Many of the real estate attorneys are transaction attorneys and not contract attorneys, and visa versa. Not much practical advice flows from that direction and both buyers and sellers learn by their wallet. Agents writing contracts as a service are great for the smooth transaction. For the not-so-smooth, look forward to paying attorney fees in lieu of commission to right any issues.
But, will those mistakes be more than the commission? Probably not. However, almost every sales price on a FSBO is below market value (based on how much higher the appraisals come in), many below by at least the amount of the agent's commission.
Good point. What is the best way to get an accurate appraisal? I've heard from someone else that appraisals by an appraiser can be off because they're looking at sale numbers in the area and not taking other factors into account (for example: your neighbor's house may have sold low because they were divorcing and just needed to unload it). I have a fairly good sense of what other houses around ours have sold for, and know what ours was priced at a year ago (when we had it on the market as a sale/rental and ended up renting it). Thanks.
BoBromhal - we haven't gotten that far. Our tenants, when they gave us their move out date, just asked us if we planned to sell and mentioned that several of their friends may be interested in buying if we did. Do I need to hire a real estate attorney, in addition to the title company's lawyer? Thanks!
I'm sorry, but I couldn't tell you what the custom or requirement may be in the state the property is located.
A current appraisal under the indication it was specifically for a "market sale" will be the value the buyers' lender assigns to the home. Appraisers usually either know the conditions (divorce, and home condition) of surrounding sales, or they will ask the agents involved when there's an outlier (like you mention). If there are 3-5 good comps and one "fire sale", then they're going to rely on the 3-5 good comps.
Good point. What is the best way to get an accurate appraisal? I've heard from someone else that appraisals by an appraiser can be off because they're looking at sale numbers in the area and not taking other factors into account (for example: your neighbor's house may have sold low because they were divorcing and just needed to unload it). I have a fairly good sense of what other houses around ours have sold for, and know what ours was priced at a year ago (when we had it on the market as a sale/rental and ended up renting it). Thanks.
Distress sales are considered in the comps. However, if it's an oddball, one of a kind, it may be dropped. However, if the distressed sale is the most recent and similar, its hard to exclude it without strong reasoning.
You (anyone) can order an appraisal before you sign a contract, but only your buyer's lender appraisal matters. The appraisal report is an opinion of value. Opinions can vary (as much as 10%, maybe a little more). Also, if there is a closing in the neighborhood between the time of your appraisal and the buyer's, that can change the buyer's appraised value.
Selling via FSBO is to save you a little money and the buyer to get a better deal. Where things go wonky is when one side tries to get the bigger piece of the pie. If it's a matter of there's a bottom line and nothing less is acceptable (potential short to payoff) or even close to that situation, you need to do some serious upfront work. Stats prove if you approach this by asking for max price and reduce as the home remains on the market, the final price will be lower had you priced it competitively to begin with. Take into account tenants don't like people coming in and out to look at the home, so you may have a vacant rental. And if you put someone in there as a pre-occupancy, you may wind up being an unintended landlord again.
I'm not discouraging you, but advising you to consider every angle before you commit to anything.
My tenant found our buyer, it's her friend who used to be a neighbor who always loved our rental property. When our tenants gave notice she approached us to buy. We already had been talking to an agent who did our comps and so I told the buyer to get pre-approved and give me a call. I asked the agent if I could hire him as a non-agent facilitator to do the paperwork only and represent us both for 1% and he agreed. He owns the firm, so he has a little more wiggle room for negotiations. The buyer agreed we could work together without agents and we negotiated the price and terms and he wrote up the purchase and sale agreement and now we are just waiting until closing in 3 weeks. It will be our first sale and it's working out well so far. I would not sell the house myself if I didn't already have a serious buyer. I would want to make sure the person wanting to buy the house is super serious though. I told my agent I wanted to list the house a month before my tenants moved out, and she made a serious offer and signed the contract before then so we didn't list it.
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