Category Archives: Real Estate

5 Mistakes Every FSBO Home Seller Should Avoid

garden city ks for sale by owner lawyerOver the decades I have helped hundreds of For-Sale-By-Owner (FSBO) clients sell their property successfully with zero problems when closing. If you’re planning on selling a home without a real estate agent here are some potential pitfalls you can avoid so your property will sail through a closing without a hitch.

First of all, you should tell your attorney what problems you are facing and specifically what you are trying to accomplish, whether it be to have a “normal” sale to a qualified buyer, or, are simply in trouble with your bank and are trying to “dump” the property.

You need to be aware that you don’t have control of all aspects of the transaction.  For example, if your buyer is like 99% of buyers and has to get a loan, you need to know that the buyer’s bank is going to require that you, the seller, fix items in the house and pay some closing costs.

If you negotiate an agreement claiming the seller is selling the property “as is” your agreement won’t work in a real estate transaction as the buyer’s lender will make requirements in the transaction that the seller has to comply with.  I have sellers that just want to get rid of a home that has been on the market for some time and sell the home for what is owed against it, or “dump” the home.  Some sellers do not know or take into account that there will be repair costs resulting from the appraisal, termite and mechanical inspections that the buyer’s bank will require. Also, the seller is responsible for the cost of a title policy, document filings and property taxes. All this needs to be addressed during negotiations with the buyer or you can be in for some nasty surprises that no one can fix, especially when it comes to closing on the property.

Here are 5 mistakes FSBO sellers should avoid:

  1. Drafting a real estate contract without an attorney. As stated previously, this will help you avoid nasty surprises at closing and give you a clear idea of your responsibilities from the buyer and the bank.
  2. Failing to provide the buyer with a seller’s disclosure. Most real estate transactions have a disclosure from the seller to the buyer listing all known problems with the property like mechanical and structural defects. By not disclosing this information to the buyer you open yourself up to potential lawsuits after the sale.
  3. Not pricing the property correctly. As an FSBO seller you will save on real estate agent brokerage fees but you should still get a fair market price for the property. Many sellers undercut their selling price hoping for a fast sale but fail to take into account potential repair and closing costs. The last thing you want to do is lose money on the sale! You should always get an independent appraisal or the pricing opinion from some local real estate brokers.
  4. Not understanding negotiation power. A lot of FSBO sellers are not experienced negotiators. Issues such as inspections, loan approval, possession date, earnest money, repairs and closing costs can all play a huge role when negotiating a sales contract. A good grasp of all potential contingencies helps when it comes to closing the deal and getting the best deal.
  5. Not hiring a local escrow or title insurance firm for the closing. Local companies know their territory and give you a higher probability of closing successfully. Nothing is more frustrating than errors in documents and paperwork that postpone or kill a closing. A good local real estate attorney knows reputable firms you can count on.

This short list is by no means everything you should be aware of, but it’s a good start.

Bottom line, don’t find a buyer and make a deal without first talking to your attorney, finding out what bank the buyer will be using, and what your costs will be in the transaction.

Additionally, check how much you owe on your mortgage. You shouldn’t guess at this because interest and fees are piling up every day. If you are going to handle a transaction that consists of tens of thousands of dollars, don’t just guess about what you might need to know to handle it.  Get yourself informed so you can negotiate a contract you can close. Know your closing costs, unpaid property taxes, title insurance and other contingencies before you set a price. Hire your attorney BEFORE you make a deal so you have a clean and seamless closing. You’ll be glad you did.

Is “For Sale By Owner” Your Best Route?

For Sale By Owner Legal HelpIf you want to pocket more cash from the sale of your property then you may want to consider being your own real estate agent. Since a typical agent fee is 5% to 7% of the selling price these commissions can add up to quite a tidy sum. We’re talking a good chunk of the cost for a college education or a car for your son or daughter.

For example, if you’re selling a home for $200,000 the fees will cost you $10,000 on the low end (5%) of the scale. These fees can be negotiable and will usually decrease as the asking price of the home increases but not as much as most folks would like.

For some people, selling a home without a real estate agent makes perfect sense. For example, if you already have a buyer lined up then it’s a no-brainer. All you need to do is contact a real estate attorney and they’ll take care of the appraisal, inspections, title search and all the other paperwork.

Should You Try To Sell Your Home Without A Real Estate Agent?

If you already have a buyer, then the answer is YES! On the other hand, if you need to find a buyer, then you’ll need to take on all the responsibilities of the agent including research, marketing, phone calls and showings.

For some people this is doable. If you already have some marketing experience and flexible working hours it makes the process a little easier. What you’ll need to consider is the time and expenses to sell a property on your own. Remember, you’ll need to pay for advertising listings and other miscellaneous things that are normally taken care of by the agent.

Other things to consider if you are considering the For Sale By Owner (FSBO) route would include the local market. If you’re in a seller’s market and your home is in excellent condition then you could experience a quick sale at market price. In a buyer’s market, the FSBO can easily reduce the price to attract more buyers because they have the advantage of no real estate agent fees.

It is important to note that selling a home without a real estate agent is not as tough as it used to be. Twenty years ago the market was dominated by the MLS or Multiple Listing Service database. It was difficult to sell your home without an MLS listing, and to make matters worse, the only way to get listed in the MLS was through a registered real estate agent. These days, with the internet, there are dozens of sites where you can list your home that get tons of traffic. Some are free like Zillow and others like ForSaleByOwner.com have many different packages to choose from.

If you decide to try the FSBO route it is a good idea to contact an experienced real estate attorney in the local area. They can point you to all sorts of resources to help sell your home as fast as possible including listing opportunities online and offline. Some also have real estate investor contacts who may buy your home quickly. Most importantly, they make sure all the legal paperwork is taken care of so things close smoothly.

Dean Ryan is a Garden City Kansas Real Estate Attorney who can handle your real estate legal needs. He also owns Derby Homes, a construction company that builds and sells new homes in Garden City, KS.

 

 

Simple Steps To Avoid Probate Taxes And Protect Your Assets

What would happen to your estate if you were suddenly killed in an accident? Would your bank account, real estate and other assets transfer seamlessly to your heirs?

Or would everything be hurled into probate court where state and federal attorneys wrangle over taxes and your outstanding debts? If this happens your estate can be tied up in legal proceedings for years and your estate subject to unnecessary attorney and court fees.

Besides the fact that the probate process can hack away at your assets, it can be a difficult ordeal for loved ones. Having your affairs in order helps avoid family turbulence and a less painful transfer of your assets according to your wishes.

Avoiding Probate

The simplest way to avoid probate is to draft a living trust. You designate an individual you trust as your Trustee.  A Trust lists all your physical assets, including real estate, and legally transfers title to the Trustee.

Any money in savings and checking accounts are subject to probate if proper steps aren’t taken. Typically a spousal or joint banking account is safe and will automatically transfer to the survivor. To be safe, talk to your banker. To keep other bank accounts safe from probate you will need to visit your bank and fill out a Payable-On-Death (POD) form. This form allows you to designate a beneficiary and transfers ownership in the event of your death. Again, it is best to talk to your banker about your accounts and it all can be handled very quickly.

When it comes to vehicles, every state has its own laws concerning ownership transfer after a death. In Kansas, it is very simple. The beneficiary will need the vehicle title and a copy of the death certificate. In addition, you will need to fill out a Descendant’s Affidavit and show proof of insurance if you plan on keeping the vehicle. All these documents are presented at the County Treasurer’s office to complete the transfer. Go here for more information on inheriting a vehicle in Kansas.

http://www.dmv.org/ks-kansas/title-transfers.php#Inheriting-a-Vehicle

Avoiding the nightmare of probate is not that difficult to setup. Your family immediately receives the benefits of your estate without legal wrangling and the unnecessary fees and court costs of probate. Even better, your wishes are carried out quickly which may help avoid family squabbling or much worse.

Different types of trusts are available depending on your needs. Some of these include Revocable and Irrevocable Trusts, Asset Protection Trusts and Charity Trusts. A qualified estate planning attorney can go over your situation and options.

Feel free to contact our offices for advice so you can be sure your loved ones are cared for and your wishes honored. Most of all do it to avoid the pitfalls of probate court!