Selling Home by Owner

From Signed Offer to All Conditions Met

Congratulations on your selling home by owner achievement! Are we there yet? Not quite. You and the buyer have agreed on price and terms and signed the paperwork.

Now, you want to make sure that all goes smoothly until the Moving Day. Whether selling house by owner or through a real estate agent the final selling steps are basically the same.

The only difference is, you should keep a slightly closer eye on the fulfillment of the contract when selling home by owner.

The Deadlines

The first thing you should do after the Purchase and Sales Agreement is signed, when selling home by owner, is make sure you have at least 2 copies for yourself and 2 for the
purchaser. If you have an extra copy, give one more to the purchaser for their Mortgage Broker or lender.

Once the purchaser has left, start marking the dates for each deadline on a notebook, blueberry, blackberry, daytimer ®, laptop, desktop, cellphone, calendar or whatever your choice of weapon in this day and age of multitasking.

As an example, you would mark the date that the lawyer approval is to be satisfied or any mortgage financing that is to be in place.

Next you might put in a building inspection, a water test, survey, closing date etc.

Lawyer Approval

Your next step when selling home by owner and the buyer's, should be a trip to your respective lawyers to have them look over the contract for approval as to form and content.

I hope you made sure that the subject to lawyer approval clause is in the contract. Go from to Subject to Lawyer Approval Clause if you need to refresh your memory or you haven't been to that page yet.

Follow the Bouncing Ball

After you have all the important dates marked and you have approval of your respective lawyers, you just keep track of each item that is to be finished.

On that date or the day before, you check with the purchaser to see if the clause has been satisfied.

Of course, when selling home by owner, if a clause that details something that you must put in place, you make sure it is done.

Meanwhile in the background, the lawyers, mortgage people and other folks are doing their jobs to fulfill the contract.

Closing Costs

There will be Closing Costs to pay both by you and the buyer when selling home by owner. Most of these will be adjusted on the closing date.

The buyer or yourself may also have some upfront costs before closing.

Some examples of these would be a water test, a building or pest inspection and perhaps some work that you have to finish on the property before the closing date.

Cold Feet or Buyer's Remorse

Beware the dreaded "buyer's remorse". This happens most often with first time buyers. They wake up the next morning after signing a contract in a cold sweat. "What have we done?!".

When I was a real estate agent I used to actually talk to the buyers about this after they had signed the contract. That way, if it happened, they would think, "Oh right, Doug mentioned this might happen." It then became "normal" to feel buyer's remorse.

If it happens with you when selling home by owner, all you can really do is stay cool, calm and collective. Don't shout and scream or get all defensive. "You signed the contract, you can't back out now!"

You may want to use the feel, felt, found approach. This is a great way to soften buyer's remorse.

Buyer: John, Mary and I were talking and we have decided that we want to cancel the contract and wait for a bit.

You: Could I ask why?

Buyer: It's a big commitment John, and we aren't sure if we are ready to go ahead.

You: I certainly understand how you feel John. Sue and I felt the same way when we bought our first house. But you know John, I'll tell you what we found. The feeling of remorse and to tell you the truth panic, only lasted about a day. Buying that first house was one of the best decisions we ever made and I'm sure you will feel the same way soon enough.

You: I know it is a big step for you and seems a bit overwhelming right now, but you will be so glad later you didn't cancel the contract. I know we count our blessings now that we didn't get cold feet when we invested in our first home.

If the buyer is still skittish, you might want to try a "fair enough" approach.

You: Well, John and Mary, I can certainly understand what you are going through. Why don't you just hold off a couple days before you make a decision and see if at that time you feel different.....fair enough?

More than likely whether you are selling home by owner or through a real estate agent, you won't even have to handle this situation. I just wanted to give you a heads up, just in case. OK?

A Reminder about Deposits or Earnest Money

When I talked about the Earnest Money Deposit I encouraged sellers to get a substantial deposit.

The buyer's remorse, whether a first time buyer or a seasoned player, is one of the reasons for this.

If a buyer has a $5,000.00 deposit on a house they are in a contract to buy, they will be much less likely to try to back out of the deal than if they have a $500.00 deposit.

Under the contract, that earnest money deposit goes to the seller if the buyer defaults without just cause. The buyer could take the seller to court to try for a return of deposit, but would they?

Not likely. In the end, they would probably lose more than the $5,000.00.

Having said that, if a buyer really wants to get out of a contract to purchase, they can probably find a way by using an Escape Clause. It depends on how badly they want out, how tight the contract is and what type of conditions are in the contract.

The vast majority of agreement of purchase and sale on residential houses, do not have this problem unless there is a actual problem fulfilling the conditions.

An example would be that the buyers could not obtain financing, or during a building inspection there was a major fault discovered with the house whereas; the seller was unable or unwilling to repair and the buyer would not accept the house in that condition.

After the Conditions are Met

Once all the "subject to" conditions are met such as financing, inspections etc., if you really want to when selling home by owner, it's now OK to put that big SOLD rider on your for sale sign.

Don't put the SOLD sign on until all the conditions have been met. It is not a very good feeling sneaking out under cover of darkness, to remove your sold sign. :-(

Putting a sold sign on when you are a for sale by owner isn't necessary of course, but it feels great, right? All those real estate agents that told you that you needed them.

They told you that they could get you more money. They said you would only get tire kickers and people that didn't qualify to buy a house.

Yeah, go ahead and put those SOLD signs up! It's OK to walk around with your head held just a bit higher for a bit. Yes sir, we sold our own house and didn't have to pay a real estate agent a big commission!

You will of course, have other things to take care of, such as arranging your Move to Your New Address You should start thinking about mailing address change, utilities, insurance etc. etc. etc.

Note: Make sure you keep your house insurance in force until after the property changes hands!

Lets Look at Some of Those Conditions

On the next pages we will examine some of the conditions that may be on your Agreement of Purchase Sale contract and how you may want to handle them when selling home by owner.

What happens if there is a "bump" on your way to a smooth closing.

Can you save the deal selling home by owner? While you sure can try. I'll be sharing some possible solutions as we go along.

For More Information about Satisfying Clauses

Escape Clauses

Subject to Financing Clauses

Fixtures and Chattel Clauses

Subject to Parent Approval Clauses

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