We are going to sell our house to our neighbors ourselves.
We know them quite well and get along.
The deal, as it is progressing, is they will put down 1/3 of price, and probably 3 years to pay off the final 2/3 at 3% interest. This will all be cash.
Do we need an attorney AND a title company – or just one or the other?
From what I understand we need:
Disclosure forms
Purchase Agreement - (both parties sign before notary or can it be an online service?)
— we don’t expect any contingencies, we don’t expect they will want an inspection, we expect it will be ‘as is’ –
We are meeting with them in a few days to discuss the particulars. My impression is after this point we write up the contract, sign it and transfer papers.
Do we need any other paperwork and can we do the Purchase and Sale ourselves?
Do we hold the deed/title until the house is paid in full, or how does that work that the deed gets released?
Thank you for any help you can give on this - we are not too worried about these buyers as we know them, but want to cover all of our bases so the transaction goes smoothly and doesn’t end up with any hard feelings. Thank you!
In many parts of the country there are companies that specialize in helping FSBOs do the deal. They mostly advertise that they help with advertising, MLS, and such. But for a flat fee, usually under $1000 and often more like $500 they can shepherd all your locally required paperwork correctly.
That may sound like a lot of money, especially when otherwise you think you’re going to do it for $zero.
But if something goes wrong, the first visit with w lawyer to unscramble the egg will cost more than the $500 you saved by going totally DIY. Think of the money as an insurance policy on having a trouble-free transaction.
We have sold a couple of houses and several lots FSBO, and always just used a title company. It’s not a big deal at all. Call a title company and ask how you should structure the paperwork with the owner financing. They can probably get you everything you need.
Thank you, Renee - that’s exactly the sort of info I am looking for.
As mentioned, I’m not marketing the house, we have a buyer already. We had it with a realtor and on the MLS and have discontinued that relationship as nothing was happening.
A number of real estate lawsuits start just like this with buddies selling to buddies in an “as is” transaction and then something very expensive pops up after the sale the buyer thinks the seller should have foresaw or been informed about. I would strongly encourage you or the buyer get both a basic survey and a house inspection so that you have a layer of disclosure in the transaction. I understand you are trying to do this in as inexpensive a fashion as possible, but you are (IMO) being penny wise and pound foolish if you do not cover these fundamental bases.
I wouldn’t dream of doing something like this without an attorney who specializes in real estate transactions. And he can advise you on what you need with regards to a title company in your jurisdiction.
Thanks for your advice - I never said I was trying to do it as inexpensively as possible, but I see no need for doubling up professionals.
I think my understanding was a title company would have a lawyer experienced in real estate transactions, I’m sure some do, but I guess I’m wondering if that would be a ‘one-stop shop’ type of thing.
I’m definitely going to get some legal advice. I’m expecting to craft the P&S to our needs and then have it looked over for sure. I don’t want any holes. I worked for a couple attorneys some years ago so I may give them a buzz and see if they can give it a looksee for a reasonable price.
And we aren’t really ‘buddies’ with our neighbors - they moved next door about a year 1/2 ago (cash sale with someone we know, no issues there) – but we get along with them. I’m not concerned about us continueing some great relationship through the future - but I’d love to sell them my house. Not only would it be timely and at full price, I know they love the place and that’s important to me personally.
You’re not selling your house, you’re doing a sales contract. The sale isn’t complete until the deed is transferred - unless you’re giving them the deed before they pay in full which would be stupid.
The title attorney won’t do contract work - you need to call a lawyer to run the transaction - define the terms between the parties, write the contract and perform any other duties asked of them, like reviewing title work, etc. And there’s no such thing as a “quick and easy” home sale - you need to negotiate things like tax credits, HOA dues, survey issues, etc., and you’ll need releases for the future, like things that may turn out to be wrong with the house, unfiled mechanics liens, boundary issues, etc.
Don’t cheap out - you and the buyer will be opening yourselves up to massive liability if you do, even if everything looks great now. There is a reason Realtors make money. And is there any reason why you didn’t tell your Realtor that your neighbors were interested?
It may have been mentioned by my husband, I don’t know. We’ve told them if we get an offer and they are interested, they’ll need to go through the process, but we haven’t received any. They’ve asked us to hold paper at 3%. As mentioned, a person we know did the same with them and they paid if off early. And no, they wouldn’t get the deed until paid.
Well, verify that the home was not shown to the neighbors during the listing period - depending on the terms of the listing contract, if they did, your agent may be owed a commission.
So you’re financing the purchase at 3% to them? And you’re doing it based on them not screwing somebody else over. It sounds like you really need an attorney – this is far more complex than a regular sale, and an attorney can pull credit reports, prepare the mortgage documents, record a lien with the county, etc., that comes with owner financing.
Please get your own attorney and pay him or her well – you could get really screwed on a bad deal.
Right. The FSBO part is a no -issue, as you already have a buyer you’re happy with.
Title is the buyer’s concern, not yours, for a SALE. But this isn’t a sale, it’s a land contrac t. You really really need a lawyer well versed in land contracts. They can be great and they can be awful.
FSBO is a lot easier if the buyer finances it. Then you walk away with the money, and unless you’ve hidden a toxic dump or something, it’s all over.
Oops. I missed the part where you have a realtor. To do FSBO right, you never engage a realtor. Since you did, … I don’t know what’s correct so I’ll shut up. But it sounds like your realtor will be miffed and with good reason. You also might be in breach of contract.
In some states every real estate transaction involves a lawyer. In other states lawyers are almost never involved in a residential sale, and any such sale with a lawyer in the middle is already in deep kimchee.
In some states a seller’s real estate agent acquires a term-limited exclusive right to a commission no matter how the house is sold. In other states the right to commission attaches if and only if the selling agent introduces the buyer to the property.
FSBO selling assistance companies is some states just help with listing / advertising. In others they manage all the buy/sell paperwork in concert with title companies.
The OP for sure needs some expert advice from whatever is the right kind of affordable expert in NH. I know I don’t know what that is. But I do think the OP’d be foolhardy to proceed any further without some NH-specific paid expert.
My wife’s a lawyer. Her general POV in situations like this is you can pay a little up front, or proceed down a blind alley and pay 10-20x that much to get pulled out of the completely predictable quagmire you created for yourself. The OP doesn’t need a lawyer necessarily; in fact that’s probably not the expert he needs. But he does need an expert.