If you are thinking about selling your home by owner there are some things you should know before putting your home on the market. Most For Sale By Owners (FSBOs) are unaware that there are two mandatory forms required by the State of North Carolina that a seller must complete and provide to the buyer “no later than the time the purchaser makes an offer”. The two required disclosures are the; State of North Carolina Residential Property and Owners’ Association Disclosure Statement (RPD), and the State of North Carolina Mineral and Oil and Gas Rights Mandatory Disclosure Statement (MOG). If these forms are not completed by the seller and given to the buyer prior to them making a written and signed offer, then the buyer may under certain conditions cancel any resulting contract without penalty to the buyer. Stated another way, the buyer could be entitled to be refunded their Due Diligence Money, Earnest Money Deposit, and any expenses they incurred such as inspections, appraisals, lending fees, and the like. Whether you sell your home By Owner or list it for sale with a Realtor, these mandatory disclosures are required by the State of North Carolina. In other words, these forms are mandated by the State of North Carolina, and unlike all other real estate contract forms used by Realtors, they were not created jointly by the North Carolina Bar Association and the North Carolina Association of Realtors, but by the State of North Carolina.
The purpose of the RPD is for the seller to disclose to the buyer material facts about the home in which they have “actual knowledge” about. The form has three boxes for each question in which the seller can check Yes (if they are aware of any existing problems), No (if they are unaware of any existing problems), and No Representation (if they don’t know if there are any problems or not). If a seller is aware of any problems and checks the No box, then they will have knowingly made a “willful misrepresentation”, and could place themselves in legal jeopardy. If they check the No box stating that there isn’t a known problem (as far as they know), and a home inspection uncovers a problem, then they will have made an “unwillful misrepresentation”, meaning that they truly and honestly didn’t intentionally misrepresent the answer to the question. In this instance, the seller should provide the buyer with a corrected and updated RPD. If they check the No Representation box and know there is a problem and don’t disclose it, they will have nonetheless made a “willful misrepresentation”. Lastly, if they check the Yes box disclosing a known problem, they are required to include a written statement on the form describing the issue. Summing up the RPD Disclosure Statement, it is designed for the seller to provide the buyer with truthful and transparent representations (to the best of their knowledge) about the property, prior to entering into a purchase agreement contract.
The MOG Disclosure Statement is a relatively new seller disclosure that came about because national homebuilders, such as D.R. Horton and the like, were buying up large tracts of land after the 2008 financial crisis and severing the subsurface mineral rights when they sold their homes to buyers. One of the reasons builders were severing these rights was that they were valuable to them in locations where energy companies were fracking and doing a lot of horizontal drilling. Since Alamance County is not known for fracking, sellers in older established neighborhoods are not severing their subsurface rights and are continuing to convey them to their buyers (as has historically been the case when homes were sold).
Moving on, let’s say that the FSBO has provided their buyer with these required disclosures which have been completed and signed, and they have entered into a contract to sell their home. From here, it becomes a matter of managing the process which includes, among other things; coordinating the scheduling of the home inspection and negotiating repairs, making arrangements for the pest inspector and appraiser to come out, and coordinating the closing date and time with the buyer’s attorney.
Let’s now assume that the FSBO successfully navigated through this entire process, finalized the sale of their home, and the attorney recorded the deed and disbursed the money to them from the sale proceeds. Now it’s celebration time! Not only have they successfully sold their home themselves, but they also saved thousands of dollars from not having to pay a commission to a Realtor. However, the FSBO really didn’t save the commission, they earned it, by having invested a lot of time and effort in selling their home themselves.
In conclusion, selling your home by owner can be an appealing option if one knows and understands how to manage the process and complete and provide the buyer with the required North Carolina Disclosures, prior to a formal written offer being made. However, if the seller sees the benefit in receiving help with; pricing their home (researching MLS and public records for comparable sales, listings, and expired listings to form a BPO - Broker’s Price Opinion); marketing; advertising; scheduling showings; record-keeping of all the Realtors who have shown their home with showing feedback; negotiating the purchase price, terms and conditions of the contract; negotiating repairs and any seller concessions; scheduling and coordinating appointments with the home inspector, pest inspector, the appraiser, and closing attorney; then it would be well worth their time to engage the services of a professional and experienced Realtor and enter into a Listing Agreement, and pay them a commission to sell their home.
If you are ready to buy or sell, call Mary Staton or Bert Ward at 336-213-0989 - they’ll be happy to answer any questions.
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