FAQs on For Sale by Owner (FSBO) Transactions
Please see the answers below to some commonly asked questions related to for sale by owner (FSBO) transactions.
Can’t I just use the standard forms off the internet?
Although standard real estate forms are available from websites, such as the Kansas City Regional Association of Realtors (www.kcrar.org), these forms do not come with an explanation of the various terms or when certain disclosures are required. For most people, the sale or purchase of a home is one of the largest transactions they will ever be a party to. With so much money at stake, it is important to ensure that all the paperwork is completed correctly and that the buyer and seller are protected from future liability. An experienced real estate attorney can ensure the property ownership is properly transferred and/or help address issues that arise during the closing process.
Do I need title insurance if we sell For Sale By Owner?
If the buyer is paying in cash or the seller is providing financing, title insurance is not required to complete the transaction. However, it is strongly recommended that title insurance is a part of every real estate transaction. Title insurance protects the buyer (and mortgage company, if applicable) in the event another party claims an ownership interest in part or all of the property. We have experience working with many of the title insurance agencies in the area and can provide recommendations if needed.
Isn’t a real estate attorney expensive?
Especially when comparing the costs to that of a real estate agent, an experienced real estate attorney is rather inexpensive. For Sale by Owner packages start at only a few hundred dollars or less than half a percent of the purchase price for a $100,000 home. The standard real estate agent’s commission on that same home would be $6,000 or over 10 times the cost of hiring an experienced Real Estate Attorney to draft a contract.
What is the process and when do I contact the attorney?
If you have already identified a home or buyer and are ready to have a contract drafted, please reach out to our office to schedule a consultation to go over the terms of the transaction. You can schedule a consultation by giving us a call at (913) 303-RICK.
In order to minimize the risk of either party walking away while our office drafts the contracts, you can execute a “Letter of Intent” that can be used when someone is viewing your home and wants to make an offer. The Letter of Intent is not the purchase contract, but it can be used to memorialize some basic terms while the contract is being drafted and to create a an obligation on the parties to continue to negotiate the sale in good faith until such time as the final contract is signed by both parties.
Once the contract is drafted, the transaction can go one of two ways. If you are using a title company for the closing, we will forward the signed contract to the title company and the buyer should promptly deliver a certified check for the escrow deposit to the title company. From there, the title company will take over drafting of the necessary paperwork and we can either step out of the transaction or can continue to work as a liaison with the title company, including reviewing the title paperwork prior to your closing.
If we will be performing your closing (e.g. it is a cash sale or seller financing), we will prepare the paperwork necessary to effectuate the transfer of the property. We will then schedule a closing date and coordinate the execution of all the various documents by the parties. Once the paperwork is signed, we will record it with the county to ensure the proper transfer of title to the property.