Real Estate NewsSelling Your Own Home: Big Savings or Big Mistake?
Much has been made in recent weeks of homeowners taking advantage of a booming real estate market and selling their homes without a broker. With low housing inventory in markets across the county, combined with the relatively low mortgage interest rates, it seems like saving a Realtor"s fee is a win-win situation for buyers and sellers -- - or is it?
What many people don"t know about selling homes could fill a 4 bedroom home. I"m not worried about competition from homeowners who want to sell on their own, but I am concerned about consumers who may unwittingly put themselves at serious financial risk.
Here"s what you should know before you sign a contract:
You could end up with a jail term and/or hefty fines for non-disclosure of certain environmental defects. Lead based paints are the key focus of extensive federal rules and regulations. Make sure you have all the right information and forms. Document everything.
Make sure your buyers are approved for a mortgage before you go to contract - otherwise, you might lose time while other real buyers will consider your house off the market.
Watch out for "weasel clauses" like "subject to attorney approval" or "subject to appraisal." Things in real estate transactions rarely go smoothly - and clauses like these make things a little too slippery!
Closing costs - don"t let the buyers convince you to pay their closing costs. There"s very little inventory in most markets right now. It would be foolish to pay thousands of dollars when there are so many buyers. You"ll lose a lot of money - and your self-respect.
Keep your eyes on the market and interest rates. Be sure that your buyers will be able to buy, even if the Dow takes a tumble or interest rates start to move upwards.
There are also rules on disclosing material defects in the home and property. Make sure to find out what you are legally required to do before signing any contract. This will also help you if your buyer decides to sue you after the home is purchased.
Piggyback loans or second mortgage loans - be very careful. Unless you are a mortgage banker by profession, how much do you know about setting up financing arrangements? Carrying this much financial exposure is very risky. Again, with so many buyers and so little inventory, there"s no need to leave yourself open to this situation.
Consider a home warranty. For a few hundred dollars, you can buy a home warranty that provides a full year of coverage for major appliances, plumbing, electrical, heating and air conditioning systems. This makes your home more attractive to buyers, at the same time that it reduces the likelihood of problems down the road.
Also See:
Fair Housing Issues For FSBOS
FSBO - Are You Sure You Want To Do This?
Selling Your Own Home Isn"t As Easy As It Seems