For Sale By Owner - What is it?

Unlike typical property transactions with real estate agents acting as the main point of contact with escrow, a “for sale by owner” (FSBO) transaction does NOT have a real estate agent representing the seller. A buyer can still have an agent. As a result, the buyer and seller are responsible for providing all the parts and pieces needed for the escrow process. This post will help clarify the responsibilities of the buyer and seller during escrow for an FSBO transaction.

Prior to opening escrow, the buyer and seller should meet and discuss the terms and write up their "Agreement," making clear what has been agreed to, including sales price, closing date, who pays for what closing costs, etc. Having this information in a written format will prevent any misinterpretations of what was agreed to. To open escrow, escrow will need to receive the terms of the sale directly from the buyer and seller before escrow instructions can be prepared for signing. 

Escrow does not negotiate terms between the buyer and seller or provide the "Agreement Form."

• Prepare escrow instructions and conveyance documents for signature of Buyer and Seller
• Order preliminary title report from Title Company to verify seller’s ownership and identify any liens against the property
• Order any payoff statements on any deed(s) of trust(s) or other liens of record, that will be paid from Seller’s proceeds at the close of escrow
• Collaborate with Buyer's lender through the entire escrow, including handling of loan documents.
• Prepare estimated and final closing statements for parties’ signatures. 
• Prepare the Seller’s Closing Disclosure.
• Collaborate with title insurance companies on the recording of final documents.
• After documents have been recorded and escrow has received in writing all recording and payoff charges from the Title Company, escrow will then balance the file and disburse the seller’s proceeds and buyer’s refund check, and any other required disbursements. 
• Final closing packages are prepared and sent to parties.

It is important to be mindful and stay on top of the documentation that is required by the escrow office. Real estate transactions are time-sensitive, and the escrow process will move smoothly for everyone if the information required by the escrow officer is given at the beginning of escrow.