In Part One, I reviewed the initial stages of selling a home: pricing and marketing. Every stage can be a challenge to even experienced professionals. For someone outside of real estate, a lack of experience may result in some major errors, any of which could lead to a serious problem and, possibly, a lawsuit. In this article, I continue to examine the process.

Buying and selling

Do you know how to handle selling and buying at the same time, for either yourself or the buyer? The logistics can easily get out of hand. Should you accept an offer from a buyer contingent on the sale of his house? Sometimes this makes sense, sometimes it does not. Should you make an offer contingent on the sale of your house? Most experienced agents advise sellers to find a buyer before offering on another home. What happens, however, if you sell first but have not found a replacement home for yourself? 

Negotiating the contract

If a buyer with an agent wants to make an offer, he will have his agent prepare the contract. If he doesn’t have an agent, he may do it himself, have his attorney do it, or ask you to help him put together the purchase contract.

At this point, some FSBO’s hire a real estate attorney. For protection, this could be a good idea, but the lawyer will probably bill between $175 and $250 per hour for his or her expertise. If you are already paying the buyer’s agent a commission, you could end up spending more than if you had simply signed up with a Realtor at the start. This is especially true if you add in advertising and other marketing expenses.

Hiring an attorney, however, may not help you prequalify the buyer. Before getting too far into the process, how can you be sure he really can afford your property? Can you compute how much cash the buyer will actually need to close escrow? What about the buyer’s credit rating? Will he qualify for a home loan? These questions are rarely fully covered by attorneys. 

Some buyers are uncomfortable about sharing personal information even with their agent, more so with the seller of a home they are negotiating to buy. One common mistake of sellers, upon learning the buyer’s income and available cash, is to assume that just because a buyer can afford more than he is offering, the buyer will be comfortable with spending more. This is often not the case, particularly during these times of volatile housing price changes and corporate “downsizing.”

How good are you at negotiating? My experience is that most people relish negotiating about as much as they enjoy an IRS audit. 

When you are representing yourself in the sale of your property, emotions have a way of coloring responses. How will you feel about a low offer on your home -- much lower than you believe it is worth? Will you know how, when and by how much to counter the offer to maximize your chances of a positive response?  What if the buyer takes his time responding? Should you chase him or let him come back to you? 

What if the buyer not only offers low, but wants too many concessions -- a laundry list of items he wants you to pay before or after close of escrow? How will you unemotionally analyze which items are justified and which are not?

Especially if you do not hire an attorney, you must fully understand your obligations and those of the buyer once a purchase contract has been accepted. The following are issues you will want to consider: