Welcome to Part Six of FSBO: The Ultimate Guide. Let's dive right in and get started. The first thing for you to do once you have a written offer of interest from a potential buyer:
Get Yourself a Good Real Estate Lawyer
A very important ally for you to have during all your negotiations is to have a real estate lawyer. They will help you with all aspects of the contract and legal contracts, so you can't do without one. How to find a good one? Word-of-mouth is recommended here. Speak to as many people as you can. Someone you know is bound to have had a good experience with a professional real estate lawyer, and can advise you. If you can't find any recommendations, arrange appointments with several, and do your own research. See what your impressions are - it should be fairly obvious to you from your meetings how professional and keen for your business a lawyer is, and how you will get on personally.
Remember that there's no reason for you to feel intimidated by the looming prospect of contract and negotiations when selling FSBO. The real estate lawyer is there to help you with all legal technicalities and guide you through the process. Any questions or queries can be easily answered by them. The vast majority of sellers and buyers have no idea how to write up and create contracts - that's why you employ professionals for this job and to rely on them to keep procedures professional. The lawyer is very much part of your negotiations, and will give you all the advice you need.
When you advertise your property privately online, you may well receive calls from buyers who have employed agents to work for them. Remember to make it clear that your asking price does not include any commissions to be paid out - that is the responsibility of the buyer. Just make sure any offers from a potential buyer includes the amount they will have to pay their agent - this would all be added into the contract agreement. You may want to include a line in your listing: 'Asking price includes agent's finders fee of $400.' and add this onto your original asking price.
Buyer Financing
Before we agree to sell the property, we need to 'pre-qualify' meaning, can the buyer get financing for the deal? You may have agreed a price and everyone's happy, but can your buyer find the funds? Do they qualify for a loan? Your lawyer can guide you in more depth, and one of the major lenders will no doubt inform the buyer once they have applied if the financing can go through. As we said before, the sales price is important not just to you, but also to the loan company - if you have agreed a price that's too high, the loan company may be reluctant to lend.
Disclosure Documents
In some countries, Disclosure Agreements are required for selling properties. These are documents which advise buyers of any defects in the property, or anything that warrants repair. There are now laws which require sellers to 'disclose' any known defect in the property. You can talk to your lawyer about this, and they can supply you with the relevant material. It's sometimes wise to have a valuer come round, for a small fee, and inspect your home. They can check for any problems there may be with the property, and it gives you the opportunity to fix any problems that may become as issue at a later date in negotiations. You can make the report available to any buyers, who will no doubt appreciate your professional valuation and documents.
Offers on Your Property
When you have received an offer from a serious buyer in writing, and they have been pre-qualified for a loan, their offer will include the usual information: the offer price, what items are included in the sale of the property and any conditions you or the other party wish to include in the offer. You also have an acceptance period, traditionally around 1 to 3 days. You will review the offer with your lawyer and discuss your options. There may be items in the contract which you wish to change, and these changes will be represented as a 'counter-offer.' Your lawyer will produce the necessary documentation for this.
Remember also that buyers will inevitably offer slightly lower than your original price. Usually this is below your original asking price, but not so low as to offend or be ridiculous. If you want, you can negotiate from this initial offer to a middle-ground where you are both happy, and both compromise a little to reach an agreement. As we discussed in earlier parts of the guide, your own circumstances and 'bottom line' come into play here - as well as how much interest your listing and other advertising has generated. You never know - you may be dealing with multiple offers! The respective offers may go back and forth several times until an agreement has been reached.
If you have time on your side, perhaps you can afford to stick to the figure you want, or wait for someone to call you with the right offer.
You must be prepared to be patient and if you can, wait for the offer to come along that suits you.
Continue to read 'Part Seven' for more FBSO Top Tips.
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