Selling a home as a FSBO listing – which means you’re doing it without the help of an agent – is a big task. Only one in ten (11%) of properties sold in 2019 were sold as FSBO listings. As a seller, you’ll have to list and market your home, hold open houses, negotiate with the buyer’s agent, and navigate the closing process – all by yourself.
Those tasks aren’t easy but, with a little elbow grease and some internet research, they’re definitely doable. However, the one part of the solo sale that consistently surprises and overwhelms FSBO sellers is the sheer amount of paperwork involved with selling your house.
62% of surveyed home sellers wouldn’t feel comfortable finding and completing the necessary paperwork for closing. Failing to have your paperwork in order before, during, and after your sale can have legal or financial consequences down the line or, worse yet, bring the entire sale to a screeching halt.
Why is there so much paperwork involved with a home sale? For starters, homes are regulated by a complicated web of local, state, and federal laws, each of which comes with their own set of papers. But a home is also a huge, expensive asset– in fact, selling a home is probably the largest financial transaction that most Americans will ever undertake. In that sense, selling a home should be more complicated than, say, selling a sofa on Craigslist.
With millions of dollars at stake, all that paperwork exists to protect you and your investment.
Of course, it doesn’t always feel like that, especially if you’re getting all your papers together on the fly. That’s why it helps to have a blueprint. Below is our comprehensive checklist of the paperwork you’ll need to sell your home, conveniently divided into each phase of the home sale process.
- FSBO Paperwork Before You List
- FSBO Paperwork While Marketing Your Home
- FSBO Paperwork After You Accept an Offer
- Closing Documents
- Save Money Without Selling FSBO
FSBO Paperwork Before You List
This section includes documents that establish a chain of ownership for the property, and confirms that your home is in compliance with governmental and private regulations.
The Original Sales Contract
This is the contract from when you bought the house. Depending on how long ago this was, you may have some trouble digging it up. But it’s important to have because it shows the specific chain of ownership– from the previous owner, to you, and then to the buyer.
This document also shows the previous sale price, which will definitely be of interest to the buyer. It also has all the disclosures made by the previous seller; you should review these closely to refresh your memory, and make sure they match your own disclosures. Neglecting a mandatory disclosure can have serious consequences.
Property Survey
If you’ve had a property survey done while you’ve owned your home, you should include the survey form in your pre-sale documents. The property survey will show the exact, legal borders of your property, which aren’t always as obvious as they seem.
There are thousands of stories about property owners who find out their assumed property lines don’t match the legal definition, which can have major repercussions if there are expensive home additions or fences involved. Even if you live in a subdivision with pre-existing fences dividing each lot, a property survey often reveals surprises about what, exactly, you do and don’t own.
But don’t feel obligated to do a property survey before your home sale. The property survey is considered to be the buyer’s responsibility. It’s mainly for the benefit of the buyer’s lender, who uses the survey to confirm that the property they’re financing is, in fact, what it’s supposed to be.
So even if you do have a property survey done before the sale, the buyer’s lender will almost certainly insist on having their own survey done, using their own surveyor.
Certificate of Compliance
You know your property exists; you can look at it, touch it, stand on it. But to the local municipal government, it doesn’t legally exist unless it has a Certificate of Compliance.
A Certificate of Compliance is simply a legal document that confirms your parcel of land exists, and is in compliance with property laws. And that’s all it does – it does not give you building rights or any zoning privileges. You should acquire your property’s Certificate of Compliance at the beginning of your sale process, just to prove that it’s legitimate.
Mortgage Documents
If you haven’t paid off your current mortgage at the time of your home sale, you’ll need to figure out exactly how much you owe, and how much you stand to gain from your home sale. The best way to do this is to request a payoff amount form from your lender. This will show exactly how much you’ll have to pay to satisfy your mortgage in full.
Homeowners should note that this isn’t the same thing as the current balance on your mortgage statement; the full payoff amount is often larger than that, as it includes costs like fees and up-to-date interest that aren’t figured into the current balance.
Tax Records
The best way to gauge your house’s market value is to get a professional appraisal, or a comparative market analysis (CMA). But a good way to supplement those methods is to consult your property tax records. Although the market value of your home will be higher than the tax basis of your home, especially if you haven’t had an appraisal done recently, it can give you an idea of where the bottom of your pricing range should be.
Professional Appraisal/Inspections
If you’ve had an appraisal or inspection done on your home recently, you’ll want to include the results in your pre-sale paperwork.
The inspection lays out the condition of your home, detailing things like the state of the structure, and the HVAC and plumbing systems. It will also lay out any potential problems with the home, which you’ll either want to address before the sale, or disclose to the buyer. The inspection form gives you and the buyer an objective, comprehensive snapshot of the state of your home.
The appraisal is similar, but addresses the market value of your home. While the buyer and their agent may not necessarily be swayed by any appraisal you have done– they’ll likely have their own number guiding their negotiations– a professional home appraisal can help you get a sense of how you should be pricing your home. This is an issue of utmost importance, as homes with accurate list prices tend to sell quickly and, in hot markets, for above the asking price, while inaccurately priced homes tend to languish on the market and sell for far less than their market value.
Receipts for Home Improvements and Maintenance
Hopefully, you’ve kept records and receipts for the improvements you’ve made to your home while you’ve owned it. The buyer will be interested in these records for two reasons; one, they’ll want to get a sense of the maintenance schedule for the home they’re buying, so they can make sure they stay current on the upkeep. Records that fall into this category include things like gutter and chimney cleanings, painting, roofing updates and repairs, and miscellaneous warranties.
The second reason the buyer will want to see records of your home improvements is to make sure they meet local regulations. If they don’t meet code, or weren’t properly permitted, they could be on the hook for costly repairs or back taxes. If you have had unpermitted or unapproved work done on your home, this doesn’t necessarily sink the sale, but you’ll have to address it at some point in the sale process.
Manuals and Warranty Information
If you’re including the home appliances in the sale, the buyer will want to see the manuals and warranties for them. These could include everything from washers and dryers, to dishwashers, refrigerators, and stoves, to garbage disposal units.
HOA Documents
If your home belongs to a homeowner’s association, the buyer will be keen to see the HOA documents. These documents lay out, in detail, all the HOA regulations and dues they’ll be responsible for, and the penalties for not meeting them.
Past Utility Bills
Although this isn’t a required disclosure, you can expect the buyer to ask about your utility costs. Most sellers like to provide a year or two of records, broken down by month, to give buyers a sense of what to expect from their utility bills. These records will be of special interest if your home is in a very hot or very cold climate.
FSBO Paperwork For Marketing Your Home
Now that you have all the required pre-sale documents gathered, it’s time to start thinking about how your home fits into the market. The documents in this section are mostly related to pricing strategy, legal requirements, and the financial nuts and bolts of a potential sale.
Comparative Market Analysis
The comparative market analysis (CMA) looks at recent sales of properties similar to yours to estimate the current, real-time market value of your home. This is usually supplied by the agent, and is probably the closest you’ll get to a “real” or objective value of your home. A CMA is more accurate than an appraisal because it takes market dynamics into account, rather than looking at your home in a vacuum.
In a traditional sale, you and your agent will use the results of your CMA, combined with local market conditions, as well as your personal preferences related to speed and profitability of the sale, to decide on a list price for your home.
However, in a FSBO sale you won’t get a professional consultation with a real estate agent. If you’re looking for the best of both worlds (cost savings and expert service), consider reaching out to our friends at Clever Real Estate. Clever offers top-rated, local agents that offer full service for $3000 or 1%!
Seller’s Net Sheet
The unfortunate truth is that a lot of the paperwork from a home sale documents money you’re paying out, whether it’s to escrow fees, settling your mortgage, or real estate commission. For that reason, it can be hard to keep track of all the money coming in and going out. That’s why the seller’s net sheet is so important.
The seller’s net sheet is a simple worksheet that gives you a sense of how much you stand to net from your home sale, after deducting all the assorted expenses. You’ll probably see a few different versions of this sheet throughout the sale, as circumstances evolve.
If you sell with an agent, they’ll likely provide one based on the list price, then do other versions as you compare various offers and counteroffers. If you sell FSBO, that number crunching becomes your responsibility.
Preliminary Title Report
The preliminary title report will tell you if you have any outstanding issues with your home– things like liens, back taxes, or other restrictions that could complicate the sale. Once you have this report, you can decide whether to solve these issues yourself (for example, by paying off liens and back taxes) or whether to add them to the disclosures and pass them onto the buyer.
A preliminary title report costs a few hundred dollars and is available from any of the “Big Four” title companies.
Seller’s Disclosures/Mandatory Disclosures
The federal government and each state government requires sellers to disclose certain home issues, and failing to do so can mean lawsuits or fines down the line.
Mandatory disclosures generally include things like lead-based paint, asbestos, or environmental hazards like spilled oil or toxic chemicals. Each state has a standard form that sellers can fill out. And even in states with a “buyer beware” disclosure policy, which generally puts the onus on the buyer to uncover issues with the property, agents usually advise to proactively disclose any serious home issues, just to be transparent and prevent acrimony later in the deal, or afterwards.
There’s also a gray area regarding disclosures. These are issues that you aren’t legally required to disclose, but that the buyer may want to know about. This category can include concerns like neighborhood or noise issues, idiosyncrasies with the home or local climate, or neighbor disputes over things like property lines. Disclosing these may not be mandatory, but most experts agree that the more transparency you can bring to the transaction, the better it will work out for both parties.
FSBO Paperwork After You Accept an Offer
So you’ve received and accepted an offer. Congratulations! It’s probably not surprising to hear that this new phase of the sale process comes with a stack of paperwork. Most of the paperwork involved in this stage aims to codify and define the terms of the sale, and clear the property of any problems before the sale finalizes.
Purchase Offer/Counteroffers
The purchase offer form documents the buyer’s offer, and defines the terms of the deal. If you engage in price negotiations, those counteroffers will be amended to the purchase offer. This document also includes a lot of the information you gathered earlier in this process, like property boundaries and specifications. Once the purchase offer is signed by both parties, it becomes the purchase contract.
Home Inspection Report
Once you and the buyer have a purchase agreement in place, the buyer will want to have the property inspected. The home inspector will evaluate the home from top to bottom, noting any cosmetic or structural issues, and produce a detailed report that includes photos. Depending on what contingencies are included in the purchase agreement, issues uncovered by the inspection could bring both parties back to the negotiating table.
Appraisal Report
If the buyer is getting a mortgage, their lender will want an appraisal. The appraiser will produce an objective value for your home, which the lender will want to be in line with the amount of the buyer’s mortgage; if the appraised value comes in below that, the buyer will have to make up the difference in cash, or convince the seller to lower the price.
Since the appraisal is done for the benefit of the buyer’s lender, the seller doesn’t typically receive a copy of the appraiser’s report. But the seller can request a copy of the report, and the lender is required to provide it within 30 days. The appraiser’s report will include details and photos about the property, similar properties they used as comparisons to assess the home being appraised, and the process the appraiser used to arrive at a final number.
Contingency Removal Form
Contingencies are simply pre-conditions for the sale. For example, an inspection contingency means that the sale will proceed as long as the inspection doesn’t uncover any major issues. Whatever the contingencies are, the sale can’t fully close until they’ve been met and resolved. The state of California uses a required contingency removal form that must be completed in every sale, but most sales containing contingencies can benefit from a specific form that addresses contingencies.
But if you opt against using a contingency removal form, don’t worry– contingencies automatically expire after a set time, or after their conditions are satisfied.
Final Purchase/Sale Agreement
As you can probably tell from the name, this is the absolutely final, definitive version of the purchase agreement; if the purchase agreement is written in pencil, the final purchase agreement is written in ink. This document will be drawn up by both agents and any real estate attorneys involved, and will include final sale price, the terms of the deal, the closing date, the earnest money amount, and any contingencies that are included in the deal. Once this document is signed by both buyer and seller, it comes a legally binding contract that’s no longer subject to negotiation or changes.
Closing Documents
You’re almost at the finish line! The documents in this final phase of the sale process are mostly about crossing all the T’s and dotting the I’s, getting final, definitive accounting done, and actually, legally and irrevocably transferring the property from the seller to the buyer.
Most Recent Tax Statement
The seller is responsible for paying property taxes right up until the day of closing. How and when they pay will depend on the local municipality’s tax schedule; if they collect taxes in advance, the seller may even be up for a refund.
Either way, sellers are required to produce property tax receipts at closing so the tax issue can be properly resolved.
Closing Statement
The closing statement is the final statement of how much the seller stands to clear from the sale after all costs and fees are paid. Think of this as a definitive form of the seller’s net sheet. The title company or the closing agent (if you’re using one) will fill out and supply the closing statement.
1099-S Tax Form
This tax form will specify any taxes you’ll owe on the home sale. Most sellers qualify for a capital gains tax exclusion on their home sale (up to $250,000 for individuals, or $500,000 for couples filing jointly), but if your capital gains exceed that amount, or if you don’t qualify for any reason, this form will clarify what you owe the IRS.
Deed
The deed is the physical document that confers ownership on the holder, and describes the property in detail, as well as identifies both parties. When the seller hands the buyer the deed at closing, ownership is officially transferred.
There’s a Lot of Paperwork Involved in Selling Your Home – Clever Can Help
That’s just some of the paperwork you’ll need to have on hand if you’re selling your home yourself. And paperwork requirements vary from state to state, so make sure you consult your local regulations.
Even if you’ve done your research, it’s a good idea to consult a local real estate attorney to make sure you’ve got all the required documents, and that they’re properly filled out.
At that point, though, paying an agent would be just as cost-effective, especially when you consider that they do a lot more for you than just getting your paperwork in order. According to the National Association of Realtors, agent-assisted homes sold for an average of $280,000, while FSBO listings sold for an average of only $200,000.
If you’re dead set against paying a 6% commission, there are alternatives. Our partner, Clever Real Estate, connects sellers with local, experienced agents who’ve already agreed to work for a flat fee of $3,000, or 1% if your home sells for over $350,000.
That means that you can save big on commission, and still get a full service, top-of-the-line sale experience. You won’t have to spend all that time gathering paperwork yourself, and your home will likely sell for tens of thousands more than if you’d sold it yourself. What’s not to like? Contact Clever today to start your home selling journey!
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