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The seller cannot convey the property as promised.
The "typical" problem that occurs when dealing with a FSBO is the failure of the transaction to close. Only after a buyer is found, and a
contract entered into, is it likely to be discovered that the sale cannot, in fact, be completed.
Usually, this is due to failure to understand, and research, the details outlined in Part I - preparing the home for sale legally. The result is
that both the buyer and seller end up wasting valuable time and incurring expenses only to find that:
Typically this is due to state, local or association restrictions. Example: The purchaser agrees to buy for the purpose of using the
property for a "home based business, or for keeping horses, or with the intention of adding a garage only to find out that the desired use
is prohibited.
The seller cannot sell within the time frame specified in the contract.
The failure to realize that a deed will be required from the previous owner, or that it will take 45 days in order to obtain a Certificate of
Occupancy (from inspection through repairs, re-inspection and issuance) or even that the local building department cannot approve the
purchaser's building plans in a timely fashion often terminates a sale that could have been completed if it had been proper planned.
The seller cannot sell according to the terms of the contract.
It's not uncommon for sellers to agree to sell their property and allow the purchaser to assume the loan, only to find out the loan is either
"due on sale" or permitted only if the purchaser applies for and obtains approval from the original lender.
Many a seller has also attempted to sell part of their real estate in a manner that would require partitioning. This is common for the sale
of vacant land, but also occurs when the home is being sold, but the seller wishes to keep part of the land for themselves.
The average FSBO is completely unprepared to fully understand the complexities that many governmental agencies now place on the
partitioning of real estate; and is often unable to complete the sale as negotiated due to this restrictions.
The seller cannot afford to sell.
Without fully understanding the costs associated with the sale of real estate, or the common requirement that future payments on
special assessments be paid at closing, it is not unusual for a seller to find that they must actually bring money to the closing table.
This is most common where the owner has only purchased the property recently, has a government backed loan where the closing
costs were added to the loan amount (creating a mortgage that's actually greater than the purchase price) or where substantial
municipal improvements have been performed in the last few years, but are collected in smaller payments on the annual tax collection.
Once a seller in this position is faced with a closing statement that clearly requires they bring money to the closing, they may very well
back out of the transaction. While the buyer may have the legal right to sue for performance, the length and cost of this type of proceeding
seldom warrant it.
The "typical" problem that occurs when dealing with a FSBO is the failure of the transaction to close. Only after a buyer is found, and a
contract entered into, is it likely to be discovered that the sale cannot, in fact, be completed.
Usually, this is due to failure to understand, and research, the details outlined in Part I - preparing the home for sale legally. The result is
that both the buyer and seller end up wasting valuable time and incurring expenses only to find that:
Typically this is due to state, local or association restrictions. Example: The purchaser agrees to buy for the purpose of using the
property for a "home based business, or for keeping horses, or with the intention of adding a garage only to find out that the desired use
is prohibited.
The seller cannot sell within the time frame specified in the contract.
The failure to realize that a deed will be required from the previous owner, or that it will take 45 days in order to obtain a Certificate of
Occupancy (from inspection through repairs, re-inspection and issuance) or even that the local building department cannot approve the
purchaser's building plans in a timely fashion often terminates a sale that could have been completed if it had been proper planned.
The seller cannot sell according to the terms of the contract.
It's not uncommon for sellers to agree to sell their property and allow the purchaser to assume the loan, only to find out the loan is either
"due on sale" or permitted only if the purchaser applies for and obtains approval from the original lender.
Many a seller has also attempted to sell part of their real estate in a manner that would require partitioning. This is common for the sale
of vacant land, but also occurs when the home is being sold, but the seller wishes to keep part of the land for themselves.
The average FSBO is completely unprepared to fully understand the complexities that many governmental agencies now place on the
partitioning of real estate; and is often unable to complete the sale as negotiated due to this restrictions.
The seller cannot afford to sell.
Without fully understanding the costs associated with the sale of real estate, or the common requirement that future payments on
special assessments be paid at closing, it is not unusual for a seller to find that they must actually bring money to the closing table.
This is most common where the owner has only purchased the property recently, has a government backed loan where the closing
costs were added to the loan amount (creating a mortgage that's actually greater than the purchase price) or where substantial
municipal improvements have been performed in the last few years, but are collected in smaller payments on the annual tax collection.
Once a seller in this position is faced with a closing statement that clearly requires they bring money to the closing, they may very well
back out of the transaction. While the buyer may have the legal right to sue for performance, the length and cost of this type of proceeding
seldom warrant it.
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