FSOB: Third-Party Reports and Legal Forms: How to Protect Yourself by Using These Important Forms (1)

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One of the most important aspects of selling a house is to make sure it is done with the proper legal documents. From drafting a purchase agreement to providing disclosures, legal forms are essential to completing the sale of your house. It’s safe to assume that the majority of readers of this book are not attorneys and would therefore welcome the assistance provided herein to better understand the various legal documents used when selling a house. In this section, we’ll begin by discussing whether or not you need to hire an attorney to represent you when selling your house, and then take an in-depth look at 10 essential real estate forms that are commonly used by FSBOs.

Professional Legal Services

Using an attorney to help close the sale of your house is completely optional. To my knowledge, there are no laws in any state that require you to hire an attorney to review the closing documents. There are lenders, however, that may require borrowers to pay for certain attorney services that are required to prepare loan documents. While this is often true for larger transactions, it is not always the case. For example, tomorrow morning, I am closing on eight separate loans totaling $1.5 million with one of the lenders I work with. This particular lender prepares all of the closing documents internally so there are no attorney fees. In contrast, I am closing nine separate loans totaling $1.9 million at the end of this month with another lender. This particular lender uses an attorney to prepare all of the closing documents. The fees from the attorney are passed through to the client, which in this case is me. According to the lender, the fees are estimated to be about $3,000, a figure I’m not overly excited about having to pay. I recommend asking your lender or mortgage company what their policy is regarding attorney fees.

Although your lender may or may not require the use of an attorney, you may still want to consider using one, especially if you are not familiar with real estate documents. A sales contract may have language in it, for example, that is written to protect the buyer’s interests rather than the seller’s. In most states, there are many aspects of the sales contract that are negotiable. This includes closing costs. Closing costs are usually shared by both the buyer and the seller, but they don’t always have to be. Some states require that certain costs be paid by either the buyer or the seller, unless otherwise specified. For example, in Michigan the seller is required to pay what is known as a state transfer tax, unless otherwise expressly stipulated in the agreement. A transfer tax is essentially the same thing as a sales tax that is placed on consumer goods, only it is a tax on the sale of land, houses, or any other type of real estate. If you don’t know the law in your area and fail to review the contract carefully, you could end up contractually obligating yourself to terms that are not in your best interests. On the other hand, if you have bought and sold real estate before and are familiar with contract law, then you can probably get by without using an attorney.

I personally rarely use an attorney when buying and selling real estate. My experience with attorneys is that they often tend to justify the fees they charge by making a fuss over minor and seemingly insignificant points. I placed a 70-acre residential development project that was in fore closure by the owner under contract last month. Although the seller was ready to accept my offer, the attorney representing him kept delaying acceptance of the offer by countering on fine points of the law. After two weeks of wrangling with the agent representing the seller, I finally got fed up and gave him an ultimatum. I called the agent first thing in the morning and told him, “Barry, I’m tired of waiting for your client to accept my offer. His attorney is holding this deal up. Your client either wants to sell his property to me or he doesn’t. Tell him that he has until 5:00 today to accept my offer or I will withdraw it and will expect my earnest money deposit to be returned to me in full.” Hearing the seriousness in my voice, Barry immediately called his client and conveyed my growing impatience to him. By 3:00 that afternoon, the seller had accepted my offer and I had a fully executed option to purchase agreement for his property on my desk. I don’t always use this kind of tactic with parties I do business with, but in this particular instance, I had grown weary of dickering with the seller’s attorney over the finer points of law. The seller and his attorney needed a push to get them off the fence. I merely obliged them.

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