FSBO (FOR SALE BY OWNER) IGNORANCE

Ellen and Donald bought their first home. After living in it only one year, Donald was transferred out of state. We were concerned that if we hired a realtor we would not be able to afford the hefty 6% commission. Because of this we decided to sell FSBO (“For Sale by Owner”.)

We put an ad in the local newspaper and placed a “For Sale Sign” on their lawn. After about 2 weeks and several lookers an offer was made on our home. The offer was lower, but time was running out, so we accepted it. The prospective buyers presented us with the contract to buy our home. We all decided on a closing date which would take place in 90 days. Weeks went by without a word from the buyers. Ellen decided to call them. The buyers told us that they were turned down by their first bank choice. They assured us that they would be able to get the loan from another bank. The following week a neighbor telephoned us asking if her uncle could come and view the house. We explained that we were obligated by a contract, but would be happy to have him come by. After he viewed our home he told us that if something happened to our deal, he would be very interested. He told us that he was a cash buyer, would pay full price, and could close very quickly. We were beside ourselves. Ellen called the buyers and explained that we had received a back up offer. The buyers reassured Ellen that they most certainly would be able to get the financing. They reminded her that there was no contingency for financing in the contract and their contract was for a 90 day time period. My wife was so upset. We had not realized that there was not a financing contingency. We felt so foolish for signing the contract without thoroughly checking it. We began to telephone them almost daily. Finally when the 90 days passed, the buyers still could not get financing and the contract ended. We were so happy, now we could sell the house to our neighbor’s uncle. Wrong. He had already purchased a house! We had wasted four months. It was now time for Donald to begin his new position and for us to move. What did we do? We ended up listing it with a realtor anyway. She explained that we could still ask our asking price and put the 6% commission over that price as the actual selling price of our house. We had not realized that. After reviewing our contract with the ex-buyers, she informed us that we should have had paid an attorney a nominal fee to review it. We had been so happy to get the offer and the buyers had assured us that the contract was legal that we just signed it. We are now renting in our new city. It has been one month and we still have not sold our house. Unfortunately we learned a costly lesson (still paying the mortgage AND our rent every month). If we sell by owner, we will make sure we educate ourselves. Oh yeah, by the way we did buy Irene’s book and learned so many tips for buying and selling. The pitfall stories were amazing…we didn’t feel as stupid after I realized how many things can really happen in a real estate deal.

Suggested Links

Audrie.com - Forms and Contracts to sell a home without a real estate agent.  Full set for $12.10 

MLS Hub National Home Listing - List your home for free

The Be Aware of Real Estate Handbook has tips for selling your home "by owner". There is also a handy  checklist of questions every seller needs to ask the potential buyer.