Posted by kathy lewis President Capstone Institute of Mortgage Finance on October 07, 1999 at 18:11:30:
A “For Sale by Owner” is allowed to sell his or her home financing FHA without a Realtor. FHA does, however, have certain disclosures that you are required to provide to the buyer. The buyer’s mortgage company should be able to provide these disclosures, or write me at my email and I’ll get them to you.
Closing costs on an FHA loan do not run more than closing costs on other types of loans, however some fees typically charged by the lender, such as an Underwriting Fee, Real Estate Tax Service Fee, Courier Fee, and Document Preparation fee, (called “non-allowable fees”)may not be paid by the borrower. If they are charged, the seller must pay.
On an FHA loan, the seller is permitted to pay up to 6% of the sales price for the borrower’s closing costs, discount points, and prepaids, plus the seller may pay the fees mentioned above that the borrower may not pay. You simply negotiate with your buyer exactly what you are willing to pay, and what you negotiate can include paying those “non-allowable” fees mentioned above. It’s all what you and your buyer agree to. Since most buyers have a problem coming up with the necessary money to close, you can simply negotiate a higher sales price, but apply the extra money built into the sales price toward as much of the buyer’s costs of closing at you wish. This gives you a tremendous advantage if you agree to pay as much of the buyer’s costs as possible.
REMEMBER: On an FHA loan, every $1,000 in a sales price equals $30.00 in a down payment. If you negotiate a sales price that is, say, $3,000-$4,000 higher than you would have been willing to accept (subject to the appraisal supporting the sales price), but apply that extra money to the buyer’s closing costs, discount points, prepaids, and “non-allowable fees” you make the same NET profit on the loan, the buyer saves $3,000-$4,000 out-of-pocket, AND YOU SELL YOUR HOUSE QUICKER! There are tons of ways to sell your home yourself. Contact me if you have questions.