For Sale By Owner
A seller is not required by law to sell a property using a real estate agent. You can sell a property yourself without hiring an agent and save the money that you would have paid in commission. Asset Law Firm, PLLC can provide guidance with the entire the process, including legal requirements, disclosures and documents needed to transfer property in Arizona. Attorney Lara Chubaty of Asset Law Firm, PLLC is licensed as a real estate salesperson and is also a REALTOR® with over ten years’ experience with the entire process of selling and buying property. This experience is invaluable in helping clients sell real estate because it provides insight into what is customary and reasonably expected in the local real estate market.
There are practical matters and legal matters that go into selling a home without a real estate agent. You must determine a reasonable price, market the property for sale and show it to potential buyers. Once you have an interested buyer, it comes time to negotiate the price and terms of the sale. Then you put a contract together and carry out the sale from escrow to closing.
A home seller must adhere to certain legal requirements when selling real estate. Included are specific seller disclosures that are required by law.
It will save you time and money to have an attorney help structure the deal and draft the appropriate language at the outset versus paying commission and/or paying an attorney to fix mistakes and save the deal later on. Contact Asset Law Firm, PLLC to help you with your real estate transaction. Evening and weekend appointments available.
Also be aware that there may be tax consequences associated with the sale of the property. Be sure to talk with a tax professional regarding any taxes that may result.
FSBO Pros and Cons
- The biggest advantage to selling a property on your own is the money saved on commission. No matter how you look at it, the 5%, 6% or even 7% on the sale of a home is a lot of money.
- You are personally involved in the communications with buyers or their agents. You will always feel like you are in the loop and actively involved in what’s going on.
- When potential buyers are visiting the property, they can get the owner’s perspective of both the home and the neighborhood. No one knows the property better than you, and you will be the direct source for answering any questions about it.
- Selling on your own might eliminate the frustration that can sometimes come with working with an agent. Many people decide to sell without an agent because of a negative experience they had in the past while working with an agent. Perhaps they doubted the agent’s commitment to their best interests and suspected ulterior motives.
- You are in control of the terms and language included in the transactional documents. If you list with an agent, you will have to use specific forms with boilerplate language that often benefits the buyer.
- You will have to take on the duties that would otherwise be handled by a seasoned professional. This includes marketing the property, showing the property, negotiating terms, drafting documents and facilitating the transaction. That is not to say that you will not be able to do these things, it is just that you don’t have the benefit of having handled numerous sales in the past.
- You will have to make a conscious effort to step back and try to take an objective view of the desirability of your property and how much it is worth. You will naturally have a biased view of the value and market appeal of the property.
- Your property might get passed over and not shown by buyer’s agents. These agents might be concerned that you are unwilling to pay them the commission they would expect to receive from a home that is listed with another agent. Buyer’s agents might also be concerned with the idea of having to do more work in facilitating the transaction since they are working with someone who is less experienced in selling homes.
- Once you put a sign and some online listings up, you will be inundated with agents wanting to solicit your business and list the home. This can be a nuisance and time stealer when you would rather put you time into talking with potential buyers.
FSBO Legal Requirements
There are legal considerations that you want to keep in mind when selling a home without a real estate agent. The initial legal requirement is that an agreement to sell real estate must meet the Arizona Statute of Frauds, A.R.S. § 44-101 and be in writing in order to be enforceable. There are also certain seller disclosures required by Arizona and federal law that must be communicated in a particular manner and at specified times. Failure to disclose can subject a seller to liability and exposure to monetary damages or voiding of the contract.
Another legal consideration is complying with anti-discrimination laws. Title VIII of the Civil Rights Act of 1968, known as the Fair Housing Act, prohibits discrimination on the basis of race, color, national origin, religion and gender in most housing transactions. An 1988 amendment to the Fair Housing Act added familial status (presence of children under 18) and disability. The Fair Housing Act is intended to ensure that all persons receive equal housing opportunity. In some circumstances, the Fair Housing Act exempts owner-occupied buildings with no more than four units and single-family housing sold or rented without the use of a broker.
An additional federal law that may apply is the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). This law authorizes the taxation of foreign persons on dispositions of U.S. real property interests. If you are a U.S. citizen or permanent resident, simply complete an affidavit stating such and provide to the buyer. If you are a foreign seller, not a U.S. citizen or permanent resident, the buyer is responsible for a percentage of the sales price to be withheld for the IRS. The gain on the sale is taxable to the foreign seller, but the buyer is liable if the tax is not paid. There are exceptions to FIRPTA withholding which can be found here: Exceptions to FIRPTA Withholding.
The contract and accompanying documents for the sale of real property must be in writing. In Arizona, the Arizona Association of REALTORS® (AAR) provides forms for use in real estate transactions. BUT, these AAR forms are for AAR member use only. The unauthorized use of the AAR forms constitutes copyright infringement. Therefore it is crucial to have appropriately drafted forms for the sale of your property from another reliable source. Asset Law Firm, PLLC can put together all of the documents needed to sell real estate in Arizona.
- A purchase and sale document is a contract where buyer and seller spell out the terms and conditions for the sale of real estate. Just a few of the things a purchase and sale contract sets forth include:
- specific details of the purchase agreement: parties, property, legal description, price, earnest money, close of escrow and much more
- deadlines for actions of both parties
- rights of both parties from offer through to closing
- obligations of both parties from offer through to closing
- form of title to be transferred: quit claim, special warranty deed, general warranty deed
- date of possession
- stipulation as to what (if any) personal property is included
- remedies for default of either party
Asset Law Firm, PLLC can draft a whole array of documents needed to buy and sell real estate in Arizona.
Some common documents used in selling residential real estate include:
- Purchase and Sale
- Property Disclosure
- Due Diligence
- Terms of Sale
- Escrow Instructions
- Affidavit of Disclosure
- Lead-Based Paint Disclosure
- Pool Safety Notice
- Affidavit of Non-Foreign Status
- Warranty Deed
- Special Warranty Deed
- Affidavit of Value
FSBO Seller Disclosures
Sellers are obligated by Arizona common law to disclose all known material facts about a property to the buyer. Many people do not understand that disclosure is of enormous benefit to the seller. Not only will nondisclosure lead a buyer to wonder if the seller has something to hide, a seller may be liable in the event that defects are discovered that the seller knew about. This is why it does not benefit the seller to simply not provide a disclosure and have a buyer provide notice of waiving receipt of a property disclosure. A buyer’s waiver does not excuse the seller’s duty to make disclosures. The same goes for situations where the seller contracts to sell a property in as-is condition. The seller has the legal obligation to disclose all known material facts in as-is sales as well.
The simplest way to disclose all materials facts known to seller is to complete a property disclosure form that has been drafted to comply with the disclosure requirements of Arizona law. Otherwise, a seller might overlook or forget some details that should have been disclosed. The Arizona Association of REALTORS® (AAR) provides a form for this use called the Seller Property Disclosure Statement (SPDS). BUT, this AAR form is for AAR member use only. The unauthorized use of the AAR forms constitutes copyright infringement. Contact Asset Law Firm, PLLC to draft disclosure documents customized to your property and transaction.
Arizona law also requires that sellers make additional disclosures to prospective buyers under certain circumstances:
1. Swimming pool: seller must provide a notice explaining safety education and responsibilities of pool ownership as approved by the department of health services, A.R.S. § 36-1681.
2. Planned community or condominium association: buyer must receive documents, including, but not limited, to disclosures, statement, bylaws, rules and other information, A.R.S. § 33-1806 and A.R.S. § 33-1260.
3. Notice regarding soil remediation: required in certain circumstances A.R.S. § 33-434.01 and A.R.S. § 49-701.02.
4. Affidavit of disclosure: required of a seller of five or fewer parcels of land, other than subdivided land, in an unincorporated area of a county, A.R.S. § 33-422.
5. Military or public airport: seller must disclose if the property is located in territory in the vicinity of a military airport, ancillary military facility or public airport, A.R.S. § 37-102 and A.R.S. § 28-8486.
6. Subdivision pubic report: required of any person who offers for sale six or more lots or who causes land to be subdivided into a subdivision, A.R.S. § 2183 and A.R.S. § 32-2101.
7. Dangerous drug lab disclosure: owner shall remediate property or notify the buyer that methamphetamine, ecstasy or LSD was manufactured on the real property or that an arrest was made pursuant to the applicable statute, A.R.S. § 12-1000.
The above disclosures are required by law in certain circumstances. Said disclosures must be drafted in a particular manner and must be provided at specified times during the sales transaction. Nondisclosure can expose a seller to liability so it is prudent to take steps to avoid allegations of failure to disclose. The buyer can sue for failure to disclose, fraud, intentional misrepresentation or negligent misrepresentation, and damages can include money or voiding of the contract. Contact Asset Law Firm, PLLC to draft the needed disclosures and guide you through the process of timely providing them to the buyer. Evening and weekend appointments available.