I have a friend who shall remain unnamed who won’t buy a new pair of shoes without dragging someone to the store with her to inspect them. She takes care to wear the type of clothing she’ll likely wear with the shoes and she’ll walk around the store to make sure that she isn’t treading on her jeans and that the shoe doesn’t easily slip off. She considers how long the shoe would last to help her calculate whether the purchase price is a good investment (I use the word "investment" loosely). She will then ask the advice of someone whose fashion sense she admires before she commits to taking them home. She sounds responsible, right?
When it came time to buy a house, however, she surprised us all.
"Hey! I bought a house!"
She had wanted to buy a home for almost a year, but as far as we knew, she hadn’t yet looked for one. One day, though, she happened upon a For Sale By Owner (FSBO) sign near Camp Pendleton (A MilitaryByOwner sign, she excitedly informed me!), and she contacted the owner. They quickly came to an agreement, used standard template legal forms, and she made the purchase contacting nary a single real estate professional beyond an escrow agent—never mind her family and friends.
We couldn’t believe it. For someone who so wisely takes care of her pennies, we couldn’t understand why she wouldn’t have at least paid for the advice of a professional to ensure that she was properly executing the sale.
Though many states, such as California and Washington, permit the buyer and seller to complete the FSBO process without either the input or assistance of any outside parties, when conducting one of the biggest purchases of your life—one that costs substantially more than a new pair of patent pumps—it seems ludicrous to skimp on professional advice on the real estate sales contract.
In her enthusiasm for saving money as part of completing a FSBO, she explained that she didn’t want to incur any unessential costs. She and the seller used a standard form for completing the real estate transaction, which is a relatively simple and inexpensive form that provides state specifics for buyers and sellers. (In fact, you can download the form for your state through MilitaryByOwner’s partner USLegalForms.)
However, using a standard form does not eliminate the greater risks inherent in purchasing real estate. In caring for her pennies, she lost sight of the greater investment she was making where risks could cost thousands, if not her entire house, should the process go awry. If, for instance, a claim arose several years from now as to the legal ownership of the property, she could find herself in a sticky situation. This could occur in a case such as if the home was part of an estate sale but a dispute existed over the proper ownership because of an unclear situation regarding a will.
At the very least, it’s helpful to have an objective third party to help hold all parties accountable in the real estate transaction. Hiccups in the process will arise, and sometimes it’s challenging to know the difference between whether one party is in breach of contract or whether it’s even legal to still go to closing if the original set closing date has expired. What would you do, for instance, if you get to closing day and learn that not only does the seller still have property in the home, but also doesn’t have any intention of moving out for another month because he’s waiting on orders to PCS? You don’t need a real estate attorney to handle this situation, but it’s simply one of many hiccups that you can experience as part of the closing process in a FSBO, or in any home sale for that matter.
Homes listed for sale on MilitaryByOwner represent a good mix of both For Sale by Owner properties and properties that will have a real estate agent manage the sale process. You may have noticed our ebook, FSBO: Is It an Option for You? A quick perusal through the guide will show you that the process is easily navigable; a more in-depth look, and you’ll learn just how to navigate that process step-by-step for your own home sale.
Though my friend has been fortunate to not have incurred any significant problems as a result of her home purchase, that isn’t always the case. Less than a thousand dollars can help to buy greater peace of mind in having a real estate attorney review the FSBO contract and title to make sure that no red flags exist.
Key Points to Know about Hiring the Real Estate Attorney
- The buyer has the legal right to select the real estate attorney, otherwise known as the closing attorney.
- The real estate attorney does not represent you specifically; instead, the attorney represents the entire real estate transaction, so he or she is making sure that every actor in the transaction is fulfilling their respective obligations, to include the buyer, seller, and escrow agent.
- Some states do not require that you have a real estate attorney as part of the closing process; in other states it is mandatory.
All things considered, if you solicit more advice on whether your shoes are a good purchase than on the home you're considering purchasing, then you may want to reconsider your decision-making strategies.
Looking for more answers to your FSBO questions? Download our free resource!