Sellers are usually better off when they work with a reputable listing agent. However, in transaction where the seller has already found their own buyer and the parties have agreed upon the price, the parties usually do not have any brokers involved.
The biggest thing to watch for in those FSBO deals is that the seller needs to understand their duty of disclosure under California law.
I’m no Scorsese, but here is a little snippet to entertain you and educate you on what sellers should disclose in a residential real estate sale:
FOR SALE BY OWNER, Part 1 – DISCLOSURES
By Julia M. Wei, Esq.
CLIENT: I have found a buyer for my house without using a Realtor. Can you assist me with the transaction?
ATTORNEY: Yes. Have you all agreed on the material terms, such as price and close of escrow date?
CLIENT: Yes. However, we have not written anything up. What should we do next?
ATTORNEY: Normally the buyer’s agent writes the offer, however, since neither of you have an agent, we should use the standard purchase offer form published by either the California Association of Realtors or the Peninsula Regional Data Services.
CLIENT: Ok. That’s fine with me. Besides the contract, what do I need to provide the buyer?
ATTORNEY: California law requires you to fill out and provide the Transfer Disclosure Statement. In addition to the TDS, many buyers would like the Seller’s Supplemental Checklist, however it is optional.I recommend that sellers use the supplemental disclosure to help them remember what repairs and property conditions that they should disclose to the buyer. After so many years of owning a home, it’s easy to forget all the little repairs you have made. Remember, you must disclose anything that would be material to the buyers. For example, if the window leaked this past winter and you repaired it in the summer but it hasn’t rained yet, you don’t know if it still leaks. Sellers often forget to disclose things they “fixed” which can lead to problems later.
CLIENT: I’ve only lived there 2 and a half years so there haven’t been very many changes beyond cosmetic changes.
ATTORNEY: Do you still have the original disclosures from when you bought the place?
CLIENT: I think so.
ATTORNEY: great! You should provide those as well to the buyers.Don’t try to figure out what to leave out disclose more! Give the buyers every thing you can remember and then let them decide if they need to do more investigation. Also, I always recommend that sellers give the buyers any repair receipts for two reasons. The buyer knows what was repaired and when. Further, if the buyer is really worried about the repair, they can call that vendor and find out more information. and two, the buyer will be able to work with that vendor later when they own the house.
CLIENT: Are there any more disclosures I need to think about?
ATTORNEY: The contract will specify that you provide disclosures such as the Lead paint, whether the water heater is strapped down, the natural hazards report and more. In some cases these items can be ordered from a vendor for a “California” oriented disclosure package.
CLIENT: So when should we do all the disclosures?
ATTORNEY: As soon as possible! The contract requires you to do it five days after signing but each material disclosure gives the buyers a 3 day right of rescission. I’ll get started on drafting the purchase agreement and I will provide you with a copy of the TDS and Supplemental to get started on your disclosures, ok?
CLIENT: Perfect. Thanks!