5 Things to Be Aware Of When Selling a Home By Owner
5 Things To Be Aware Of When Selling a Home By Owner
It’s hard to put everything associated with selling a home in NOLA into priority, as to what thing is more important than the other… they are all very important. Selling a home is complicated and requires extensive knowledge of NOLA real estate, real estate laws, negotiation techniques, and common local sales practices. It also requires the skill and expertise to deal with unexpected bumps and turns as the sale progresses from start to finish (and if you don’t think unexpected bumps and turns will happen, well, you are either just unaware or possibly deluding yourself). It’s important to know that, even after a home sale closes, mistakes can come back to haunt you; especially in Louisiana. Any error made when selling a home can surface years after the deal closes. Lawsuits are extremely common in real estate, and frequently, they aren’t the cheap kind. Realtors are trained extensively in how to deal with problems, or even better, how to prevent them; they also have the supervision and assistance of their experienced Manager or Broker to help them when any of the usual or common turbulence arises in just about every home selling transaction. Owners who intend to self-represent their own sale (For Sale By Owner, or FSBO for short) take risks that they are largely unaware of and frequently expose themselves to problems, including lawsuits, that could easily be avoided if an experienced professional were helping and/or advising them.
Owners who sell FSBO generally do it for one reason and one reason alone: to save on real estate commissions. So for anyone BRAVE enough to sell “By Owner”, here are 5 important things you really need to know.
Escrow is a third-party, usually a title company, whose purpose is to make sure that all terms of your sale are honored, that both parties keep their end of the deal, and not to give legal or real estate advice. Escrow is not there to “walk you through” selling your home, it is the legal process for closing on your home. They aren’t legally allowed to give Real Estate advice. Escrow is there to make sure whatever agreement you make with your Buyer is satisfied to both parties expectations, and not to assist, instruct, or guide either party through the sale in any way. Many FSBO Sellers mistakenly believe they can get advice and guidance from their Escrow company, but since Escrow companies aren’t licensed to sell homes or give real estate advice, anything you take from them, anything at all, is at your own risk.
Selling a home requires an abundance of disclosures. Disclosures consist of written documentation of just about anything and everything you know (and some things you don’t) about your home: insurance claims, damage, additions (permitted or not), use or presence of certain specific substances or materials, internal, external, and environmental hazards and/or their proximity to the home, etc. The list can be exhaustive and broadly comprehensive. Failure to disclose ALL necessary information could result in a breakdown of the sale, or even worse, a lawsuit, even after the sale closes. Realtors are trained in disclosures and can help make sure you don’t end up in a pot of hot water. In Louisiana, we have a mandated property disclosure that must be used in all real estate transactions. Depending on the age of the home, you may be mandated to fill out lead based paint disclosures too.
Technically, redhibition is:
Redhibition is a civil action available under Louisiana law against the seller and/or manufacturer of a defective product, similar to the lemon laws more familiar to common law jurisdictions in other U.S. states.
In a real estate transaction, it means that if an issue is found with the home, even years after the act of sale, the seller can be held responsible. Most qualified NOLA real estate agents will put a waiver of redhibition in place.
As mentioned in the paragraph above, failure to disclose certain information can result in some hugely unwanted problems. The only way you could make things worse is to conceal, deny, or misrepresent important information that the buyer is legally entitled to receive. Misrepresentation and failure to disclose important facts is the number one reason for real estate lawsuits. If you ever end up on the receiving end of a real estate lawsuit, be prepared to dig deep. Realtors have insurance to protect and cover them if such things occur, but FSBO Sellers don’t. It only takes a few hours with a real estate attorney to eat up whatever money (or more), you may have saved by doing it “DIY”.
Many diligent home buyers will pay for their own professional home inspection. Home inspections are done by professional, trained home inspectors who are likely to find more problems with your home than you’d ever expect. If, during the inspection, any kind of cover-up or mis-representation is discovered, get ready to make things right quickly, or run the chance of the deal falling apart completely. It’s fair to say that some home buyers may not have the home inspected, but you can’t count on that. Expect that the home will be inspected, that problems will be found, and that you’ll have to find a way to settle these issues without causing the buyer to walk. In addition, if you are selling your home in Lakeview, be prepared for the buyer to want a clean WDIR, which stands for Wood Destroying Insect Report.
Be Prepared for Unexpected Problems
It should go without saying that problems have the potential of surfacing (and they frequently do) at any time during your sale, from start to finish… or even after. Selling a home is a lot like flying an airplane, in the sense that there are a LOT of things you need to know, a LOT of things to be prepared for, and plenty of opportunity for turbulence, delays, and even the occasional “crash and burn”. Again, a good Realtor is trained in how to handle just about any problem that comes up, and if they aren’t, they have an abundance of resources to draw assistance from. A Realtor, just like an Airline Pilot, is extensively trained (and usually experienced) to handle problems, and to, no matter what, get the plane landed safely and as close to on-time as possible. It goes without saying that unexpected problems will arise… they always do… and how well you handle them can make the difference between a safe landing or crashing to the ground.
Real Estate Commissions
In conclusion, its important to remember that when a home owner chooses to try to sell their home on their own, they are usually doing so to “save the real estate commission”. When a home buyer is looking at FSBO homes (almost always without the assistance of a REALTOR), they too are trying to “save the real estate commission”. The reason that over 90% of homes are sold with the assistance of an agent is because there is only ONE real estate commission, both parties are trying to “save it”. This means you have two sides, both not familiar with the process, both trying to save the same thing. This leads to many deals falling apart at best or a costly lawsuit at worst.
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