You think you’re getting a great deal when you purchase a For Sale by Owner (FSBO) property, but buyer beware – things aren’t always as rosy as they seem. Here’s a real-life example of just one of the many things that can go wrong.
I had a seller on the sale of a condo in the White Mountains. My seller listed their property with me and during the normal disclosure reported that they had no mortgage on the property. As the transaction moves forward and it comes time to close, we should expect a simple transaction and no lender to chase for a discharge, right? Wrong!
It turns out my clients purchased the condo directly from a seller without the use of a Realtor and without an attorney doing a title search. The folks they bought from had a mortgage briefly and paid it off seven years prior to selling "privately".
Fast forward seven years my client hires us to sell the property and we negotiate the sale with a buyer who plans to close in 30 days "Job well done-everybody happy" - I wish! Unfortunately, upon a title examination it is discovered that the prior owner's mortgage was never discharged at the county registry. The bank that issued the original loan is no longer in business, and the bank that took them over would love to help…. but they need the prior owner’s social security numbers and other information to chase down the account. How do you find an out of state seller, who has since moved and in all likelihood tossed the paperwork years after completing the “simple” For Sale by Owner?
The new issues are will the buyer wait until we can resolve the discharge issue; how much will it cost my seller to chase the discharge and record it; will we have to ask the court to issue a petition for a quiet title. The good news is with a local attorney and many phone calls I was able to work it out (cost the seller $300 more in legal fees).
This is just one example of the problems that arise when sellers don't have an experienced real estate professional working on their behalf from the start. Always use a licensed agent! For more information on FSBO's or other real estate issues, contact Steve Loynd, (603) 381-7898.