As a “For Sale By Owner,” or “FSBO” seller, you usually have one very attractive main objective: to sell your home without paying a real estate agent a commission.
However, many times and often, what happens after you find a buyer can totally derail your plans of selling your home without the assistance of a few other professionals you may not have anticipated.
In fact, finding a buyer - although time consuming and often costly or impossible when it comes to marketing your FSBO home (not with HomePocket, btw!) - can sometimes be the easiest part of the transaction.
You see, once a buyer for your home has presented themselves, there are many, many steps to go until you close and the money is safely in your account: contracts, inspections, financing, state and federal regulations and, most importantly, gathering and completing all the appropriate legal artifacts needed to get the property properly transferred from you to the new owner are just a few..
It’s no wonder FSBO homes can often take 20-40% more time to close than agent-assisted home sales.
Luckily, there’s help for the most important parts of the process - transfer of ownership - in the form of a local title company. Here are just a few of the things they’ll do:
Insuring Your Transfer of Ownership
Among other things, your title company will run a title search to be sure the property is free of any liens and will issue title insurance to the new owner. This protects both you and the buyer in the transaction. Title insurance usually costs around 1% of the purchase price and it’s important to declare who’s paying for the insurance right in the contract.
Usually, the person or side of the transaction paying for the title insurance will be the party that selects the title company. As an FSBO seller, you may consider paying this cost to ensure that you are working with a title company that you feel will get the deal done correctly or that you’re comfortable with and trust.
Holding Earnest and Escrow Money to Back Up Your Deal
Your title company will hold the earnest money paid by the prospective buyer in escrow until your deal closes. This is an important part of establishing good faith between buyer and seller, as many disputes (and legal issues) can arise without the use of a 3rd party to do so.
They’ll also make sure the correct documents are signed properly to ensure transfer of the deed from the FSBO seller to the buyer - the thing that actually causes release of funds.
When purchasing property you typically are dealing with larger sums of money. Having a third party to ensure that the money is held and disbursed properly should be considered a huge relief to both the seller and the buyer. It’s important to note that title companies will usually charge a settlement fee in addition to title insurance charges which can range from $250 - $1500 depending on the company used to handle your closing.
Many title companies have attorneys on staff or are run by lawyers themselves. If you decide you’re willing to pay title insurance closing costs, you can pre-select the title company you plan to use. This means you’ll have valuable, legal counsel on your side for all the worries associated with the contract portion of the deal and to help with any questions as they arise. It’s, of course, not mandatory to have an attorney involved in the transaction in many states and many FSBO sellers are able to accomplish their goals by utilizing a local title company without an attorney.
That said, it’s important to gauge your level of comfort in handling the real estate transaction should things not go according to plan. They rarely ever do.
Ultimately, title companies are one of many business professionals that should be included in any FSBO real estate transaction.
Ready to list as FSBO? Get the process started by listing your home with HomePocket today!
And don’t forget to plan - you’ll likely need the help of more than a few professionals; even if you don’t use an agent.
List now by downloading our app or using our app on the web at mobileweb.homepocket.com
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