HAGEN LAW FIRM
2023 For Sale by Owner (“FSBO”) Tips and Advice
Dear Seller,
This letter will outline some of the legal advice/selling tips that I have shared with FSBO clients over the course of 37 years of real estate law practice. (It is general information only and does not constitute legal advice unless an attorney-client relationship has been established by signing a written fee agreement. I’ve had a FL real estate broker’s license since 1987, which I utilize solely for personal purchases/sales and property tax appeals via my wholly owned company, TaxCuts1, Inc., but I am not providing brokerage services or brokerage advice in this tips sheet.).
- List price. A FSBO cannot afford to over-price or underprice the property. Fair market value is the objective, and this can be obtained by a realtor CMA or BPO or by an appraisal if you are not comfortable in valuing the property yourself. Asking prices of other homes should not be the entire basis of your opinion of value, closed, recorded sales are the best indicators of value. In this sellers’ market the biggest danger is “leaving money on the table.”
- Marketing. The “for sale” sign is the cheapest and best adverting that there is. Invest in a professional looking sign. You can attach a brochure box and stock it with color brochures with photos. Directional signs can be used on weekends (do not leave them up on weekdays, code
enforcement will remove them and cite you). Zillow was the “go to” marketing website for FSBOs but now some sellers are reporting difficulties with it. Craigslist can be an effective option. Be sure your photos are clean and show the home in its best light and that your facts are 100% accurate. Cooperating with Realtors (selling agents) is another option: you need not list the home with them but can agree to pay a pre-negotiated selling side fee (%) if they bring an acceptable offer. You have no obligation to pay realtors but doing so opens the home up to a wider pool of buyers. - A. Buyers Must Be Pre-qualified (“pre-qual” letter). After you discuss your home with any prospects, be sure to determine whether they have been pre-qualified by a local lender for home in your price range before showing them your home. Get the lender’s name and phone number and confirm this with their lender unless the prospect can show you a prequal letter. If they have not been pre-qualified, then you could have them call a mortgage broker (we can recommend a mortgage broker if needed) and have the broker pre-qualify your prospect and
confirm the prospect’s status with you. It is imperative that you at least get an initial idea of whether the buyers are creditworthy and can afford to buy your home before spending your valuable time showing them your home and possibly tying the property up in a contract that could
later fall through due to financing being disapproved. - B. Cash buyers-proof of funds: if the buyer is paying cash it is imperative to obtain proof of funds prior to showing or, at the latest, prior to writing up the Contract.
- Showing Instructions. BY APPOINTMENT ONLY. Ideally, for your safety and security, a friend or neighbor should accompany a single seller (especially if the seller is a woman) if you are showing the home. Make showings by appointment only. Verify identity by always checking
the prospect’s driver’s license (and take a photo of it with your phone). If it is an open house, require all prospects to sign in and check IDs. Keep the prospects together as you show them the home: do not let them go off wandering separately. Be sure your valuables are fully secured before a showing. - Offers. If the prospect wants to make an offer, first ask them if they wish to have their Realtor or real estate attorney prepare the offer at their cost, if so, their realtor or attorney will then send it to us for review. If the prospect has no realtor or attorney or doesn’t know how to go about
doing that (which is typical), tell them to give you a $1000 (or other reasonable amount), fully refundable binder deposit check made out to Hagen Law Firm Trust Account (if an agreement is not executed, that deposit is fully refundable; if an agreement in made with the
prospect, then an additional deposit will be due upon acceptance or after inspection approval). Contracts with minimal deposits should be avoided unless the buyer is applying for a high loan to value FHA or VA loan. If the prospect will not give you an initial, refundable deposit, do not waste your time with them (as they’re either not sincerely interested or are financially incapable) or require their attorney to write up the offer. Upon receipt of the requested deposit call Hagen
Law to draft the contract. - Key terms of sale. Be sure to discuss and try to get a meeting of the minds as to the following key terms of sale and provide this info to HLF:
• Buyers’ full names, addresses, phone #, email addresses;
• price;
• deposit amounts (initial deposit and the second deposit amount due upon acceptance or after inspection approval. The bigger the deposit the better although 10% deposits are rare in today’s market);
• if buyers are financing: % LTV amount and whether the loan is fixed or adjustable rate;
• personal property (i.e. the appliances that are included, etc.). If any furnishings are included, itemize them by written inventory and we will discuss how to structure this;
• closing date (please coordinate with Hagen Law Firm’s schedule). - Negotiation/Contract. This is probably the most challenging issue for FSBOs and where the Realtor’s services are missed the most. Buyers will typically try to find out what your bottom line is. Get them to tell you what their key terms are. If the terms are not acceptable tell them so to
avoid wasting time. The “end game” is a written and fully signed real estate contract. In Florida only written agreements are typically deemed enforceable and any sale term that is important MUST be in writing, nothing should be left to a “handshake deal.”
Material facts concerning the home that are not readily available must be disclosed under FL law and the best way to do that is via a written Seller Disclosure provided at or before the time of contract. Examples would include roof leaks, inoperable appliances, mold and past flooding. - Title Insurance/Closing Costs. In Lee County, FL the seller typically pays for title insurance and, therefore, selects the attorney who will close the sale and issue the title insurance. Hagen Law Firm has a strong focus on providing title insurance/closing services. We will calculate all fees and costs including the title insurance premium via a draft closing statement. The seller also typically pays for the state documentary stamps on the deed (calculated at 70 cents per $100 of sales price), however payment of these expenses is negotiable. Many closing expenses,
including the foregoing, will vary depending upon the sales price. - If the FSBO doesn’t “pan out”. FSBOs sometimes do not result in a sale, for a number of reasons, mostly because of the seller’s lack of experience. Most homes are sold by realtors. We have great, long-standing relationships with many reputable and accomplished local realtors and can always make a referral.
Conclusion
This list simply highlights a few important considerations in the FSBO process. The optimal way to proceed is to call Hagen Law Firm for an initial one-hour consultation to discuss the specifics and the many issues involved in this detail-oriented marketing, sale and closing process.
Best regards,
Michael S. Hagen
Hagen Law Firm
5290 Summerlin Commons Way · Suite 1003 · Fort Myers, Florida · 33907
Phone: (239) 275-0808 · Fax: (239) 275-3313
E-mail: Info@MikeHagen.com
Hagen Law Firm is pleased to provide customized advice to parties in For Sale By Owner scenarios.
