Tips on closing cash deals on FSBO

[Zac Willis]

My wife and I have decided to purchase our first rental property. We are purchasing a property from a family member for a nice cash deal. For the sake of discussion let's say it's not a family member, but a regular FSBO with no realtor or bank involved. What is the easy, simple, safe, and quick way to "close" and deed over the property. What do I need to protect myself from? Do we need a closing company? I realize we'll need a contract, should it say anything out of the norm for a cash deal? We're buying in Tulsa, Ok. Any input would be helpful, thanks

[Dave Toelkes]

@Zac Willis

Typically, the buyer presents an offer to purchase and the seller accepts/rejects it or counteroffers.  If you are the buyer, you will want a sale and purchase contract that protects you.  Contact your real estate attorney and ask your attorney to draw up a contract with the terms of the sale and all the appropriate protections, pro-ration of property taxes, receipt of marketable title, etc.  The attorney will also conduct the closing.  Whether the buyer pays the attorney fee or it is shared by the buyer and seller is normally specified in the contract.  You will want a home inspection clause in your contract to discover any significant undisclosed defects that might affect your decision to purchase the property or the price you are willing to pay.  If the property is in a planned unit development, then you will want to receive and review the homeowner's association bylaws and to make sure that there are no restrictions upon your planned use of the property.  The seller typically pays any fee the association requires to reproduce and deliver the documents and the association budget.  This should be one of the terms in your contract.

All terms are negotiable and who pays for what is by mutual agreement between the buyer and seller.

You will also want your attorney to do a title search to make sure there are no undisclosed liens on the property.  You want the seller to give you a warranty deed which your attorney can draw up for you.  The attorney will get title insurance for you and collect the insurance premium from you at closing.  Do not purchase a property without insuring title !!!

After the closing, the attorney will hold funds in escrow until checks clear, settle any outstanding liens, record the deed, and then disburse funds to the seller.  You will be mailed a copy of the recorded deed.