This site is best viewed using Mozilla Firefox browser.

Real Estate

2005-11-01 16:19:00

Things that can happen to FSBOs

: I’m thinking about selling my house as an ‘FSBO’ (for-sale-by-owner). Do you have any advice?

ANSWER: Let me tell you a story. Four years ago, Jack and Mary Stoops bought their first home. They loved it and planned to live there for about 10 or 15 years and then move out to the lake. But nearly a year ago Jack's employer offered him a transfer to another city. Jack wasn't given much of an option. It was either transfer now or receive no advancement in his present job. Jack's company did not offer a buy-out provision, so the Stoops would be responsible for the sale of their home. Jack and Mary asked three agents to perform a comparative market analysis on their home. The results were discouraging. Because they had been in the home such a short time, the Stoops had not realized much appreciation in their home's value, so if they sold through a Realtor they would have to pay the commission out of their own pockets. They decided to try the For-Sale-by-Owner route.Everything proceeded smoothly at first. Several lookers stopped by, but the seventh family to see the house fell in love with it and made an offer. The offer was lower than Jack and Mary had expected, but time was running out so they decided to accept it. In writing the offer, the purchasers had used a blank form they'd found in an office supply store. The Stoops never thought to have an attorney review it. If they had, the attorney would have advised them to add a financing contingency clause, which would have let the Stoops out of the contract if the buyers couldn't get financing within a certain number of days.The house was to close in 90 days. When weeks passed and the Stoops hadn't heard from the purchasers, they began to worry. Jack finally called his buyers, who told him they'd been turned down by the first bank. Still the buyers were optimistic they could get the loan from their credit union. Later that same day a buyer dropped by because someone in the neighborhood had told him the house was for sale. This person offered the Stoops full price in cash for their house with closing in one week. Once again, Jack called the buyers and told them he'd received another offer, but the purchasers remained adamant that they could get financing. They refused to release the Stoops from their contract. Because there was no financing contingency, the Stoops could do nothing but wait - 60 more days to be exact. Unfortunately the second buyer needed to find a home within two weeks. The Stoops called the first purchasers almost daily but they wouldn't give up on trying to get a loan. Finally the 60 days passed, but the generic contract contained an extension clause allowing the purchasers an additional 30 days if financing had not been finalized by the original closing date. Another 30 days passed and finally Jack and Mary could sell their house to the cash buyer. There was just one problem. The cash buyer had already bought a house. The Stoops had wasted four months because they wanted to save that commission. It was now time for them to move, so they were forced to list the house anyway. It's now been six months - that's six months after the four wasted months - and the Stoops still don't have a contract on their home. They're renting in their new city and waiting, waiting, waiting...What Jack and Mary should have done was to have a Realtor or attorney review that contract before signing it. Real estate professionals will keep you out of trouble. In this case a financing contingency clause would have permitted the Stoop's to move forward immediately when the buyers' loan was turned down. They could then have sold their home to the cash buyer.If you're trying to sell your own home there are a long list of things that need to be done to get your house closed, any one of which could stop your sale cold if not performed properly. Consult a Realtor or real estate attorney before playing with the largest investment you'll ever make. More next month…