You want to try to sell your home by yourself. But you’re concerned about the amount of time it will take as well as which parts of the FSBO experience will be the toughest. And what about the legalities involved? Will you know what paperwork to do and when?

For-sale-by-owners often realize that the adage, “a little knowledge is a dangerous thing” aptly applies to their eager naivete. That’s why it’s important to determine up front what’s involved, what you will be capable of doing, and identify which seller’ activities are perhaps out of your comfort zone. This is especially important in a seller’s market, when the FSBO may believe that his job is over once the buyer is found. In reality, his job has just begun! The toughest part of the transaction for FSBOs is what I term the “meat-in-the-middle”. This is the period of time after you’ve advertised for a buyer, a serious one is found, and you must then put the sale together and bring it to a successful close (the most important part!) Similar to a sandwich, the “meat” includes vital components like negotiating with the buyer, writing up the purchase and sales agreement and making sure the buyer follows through on applying for a mortgage (if required.) The majority of real estate transactions that fall apart do so as a consequence of inadequate preparation midstream in the sale.

The most difficult part (with the highest liability for the seller) is the due diligence that the seller must provide to the buyer during the “meat” phase of the transaction. A term often used in the legal profession, due diligence means that that FSBO must make sure that pertinent information about the property and the circumstances of the sale are shared with the buyer.

For FSBOs, this may more accurately be termed “do” diligence since many of these activities require the seller to DO something. These include (but are not limited to) filling out property disclosure forms and fact sheets, locating information regarding CCRs (conditions, covenants and restrictions) on the property and documenting information about any local improvement district (LID) liens/financial obligations for sidewalk or lighting improvements, etc. that would transfer with the property at closing, becoming the responsibility of the buyer. Unless all of the i’s are dotted and the t’s crossed, the buyer might have recourse to back out of the sale, or worse yet, sue the seller.

In the next installment of this article, we’ll focus on how the for-sale-by-owner can determine what he needs help with and how to access professionals to meet those needs.

Published: June 23, 2000

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