Tips for a successful “For Sale By Owner” transaction
In our modern, super connected global environment buyers and sellers are finding each other on the internet and handling their own real estate transaction from A-Z without the assistance of Real Estate Brokers. It is important that buyers and sellers understand their obligations and duties in a For Sale By Owner transaction to avoid delays and make sure they communicate effectively with each other. Buyers and sellers are handling duties customarily handled by realtors, so it important they deal directly with each other on most matters related to their closing. The 5-6% savings for the seller may mean more hands on work , but if buyers and sellers can plan ahead they can have a successful closing. The title insurance company handles the settlement, title examination, title insurance and escrow (money part) in a real estate transaction. They act as the center point for a real estate closing for the buyers, sellers, attorneys, lenders, realtors, insurance company, condominium/HOA association and the surveyor. Finally, buyers and sellers customarily physically gather at the title company’s office to sign and notarize all their documents and finalize the sale.
What does a title company do in a For Sale By Owner closing with no realtors involved?
Title examination by Attorney or Licensed Title Agent
Prepare title insurance commitment and comply with all requirements
Order mortgage payoffs for open mortgages and all liens
Request Homeowner/Condominium Association payoff letters for maintenance fees
Inquiry Homeowner/Condominium Association for special assessment and litigation information
Check for municipal liens, code violations and open permits (i.e. City of Coral Gables or City of Miami Beach, Florida)
Coordinate the loan closing and title insurance for the new lender
Prepare all legal documents, e.g. loan documents, affidavits, power of attorney, bill of sale, deeds, corporation resolutions and/or FIRPTA documentation
Prepare the Closing Disclosure (“CD”) or “HUD” (this closing statement form now used only for cash transactions)
Pay off open mortgages, liens, judgments and HOA dues as part of the settlement process
Conduct the physical closing with all parties to the transaction
Disburse closing funds and pay off all parties
Record the deed and mortgage and all other necessary documents with the Clerk of the Court
Issue owner’s and lender’s title insurance policy (approximately 8-12 weeks after closing)
What are the responsibilities of the buyers and sellers in a For Sale By Owner transaction ?
Preparing and signing a contract
Determine buyer’s creditworthiness
Verify proof of funds
Negotiate sales price
Handle appraisal issues
Handle inspection issues
Coordinate inspections and appraisals
Review or monitor loan application status for the buyer
Trouble shoot any issues that are not related to title defects
Sellers must close out open permits and code violations
Negotiate price adjustments, request for seller credits or any other matters between buyers and sellers
Any matters normally handled by a Realtor or Broker
Our For Sale by Owner Services:
Escrow only $500
Contract preparation $150 Request contract
Legal Representation $750 *
*If we handle the closing and title insurance, our company Attorney on single family residential properties for an additional fee can prepare the contract, review offers, write addendums and negotiate basic terms like price, inspection and loan periods for up to two revisions. This flat fee is $750 paid at closing.
Seller held Note and Mortgage $1,500
Title terminology explained
Settlement: The fee a title company charges for professional services.
Title search/abstract: Examination to verify legal ownership of property using publicly recorded documents.
Title insurance: A one-time fee at closing insuring the homeowner and /or the lender that the property is free and clear of judgments, liens, and any other encumbrances or claims to its value.
Document preparation: Preparing affidavits, deeds, continuous marriage affidavits, purchase and refinance documents including power of attorney and other documents related to title insurance.
Seller’s documents: The legally compliant preparation of documents on behalf of the seller to transfer a property. These documents include a warranty deed, bill of sale, compliance agreement, CMA and non-identity affidavits, etc.
Attorney fee: Attorney specific services on a per client basis. Fees must be approved by buyer or seller in advance.
Lien search: Review of public records at the municipal level for open permits, code violations and municipal liens.
Courier and shipping: Courier/FedEx costs for closing documents. Documents being sent via courier or FedEx include payoff of mortgages, recording of deeds, condo fees and other time sensitive documents.
Wire fee: Bank charges for incoming and outgoing wires for loan payoffs, seller proceeds and creditor payments.
Archive/scanning fee: Electronic storage fee of all closing documents as required by state law