Fsbos -the Secret Of
By Raynor James, Fri Dec 9th

Most FSBOs (people who are selling their own homes) are aware ofthe conventional use of escrow. In this article, we look at waysto use escrow to solve problems.

Escrow

Escrow means different things in different parts of the country.In California it's part and parcel of the settlement process. InVirginia, while there's no formal escrow before settlement, thesettlement agent gathers title information, draws or has a deeddrawn, coordinates with the lender, receives various inspectionreports and in general conducts an informal escrow in the daysbefore settlement. The difference is that, in Virginia, usuallydocuments aren't signed by the parties until they meet at thesettlement table. It's the use of escrow after this period thatwe're concerned with here.

A



Problem Rears Its Head

What's possible varies from state to state, but creating anescrow account (usually held by the settlement agent) after ahome is sold can solve problems. What sorts of problems? Let'slook at a few.

First of all, let's assume the buyer or seller needs, or wants,to settle by a certain date. Lots of things can cause thisincluding the date school starts, the date a breadwinner startsa new job or the date of settlement on the seller's new home.

Now, let's suppose a problem crops up which would prevent thatsettlement deadline from being met. Such problems might becaused by the discovery of termites and termite damage, thediscovery of encroachment on a utility right of way by a gardenshed on the property being sold or the discovery of high levelsof radon gas within the home.

Let's further suppose that the buyer and seller have agreed onthe basic solution of the problem. In the above examples,typical solutions might be that the seller will have the hometreated for termites and have a licensed contractor repair thedamage. Or the seller will have a contractor move the shed outof the right of way. Or the seller will install a radonmitigation system. Of course, everything is negotiable, and abuyer who wants a property badly enough could agree to fix thedefects himself.

What if the pest control company, contractor or the radonmitigation company can't finish their work until after theplanned settlement date? What happens then? Most frequently,settlement is delayed until these sorts of things are taken careof, but sometimes that isn't desirable. Sometimes delay ofsettlement can be a deal killer.

Problem Solving 101

Enter the "after settlement escrow." The parties agree that anamount of money (usually a bit larger than the estimate) is setaside in escrow pending completion of the work. The escrow agenthas clear (usually written) instructions about what must be donebefore the money is released to the person who put it up (orbefore the work is paid for and any excess returned to theperson who put it up).

The funding of an after settlement escrow usually comes from theproceeds of the sale, so it can be used where there are no fundsto take corrective action any other way. Even if the personresponsible could get a loan for the purpose, the process couldtake too long to meet the settlement deadline. In that way, itcan be a "cash flow" solution, too.

No matter what problem you encounter, it's usually possible fora willing seller and a willing buyer to work things out.Remember that all sorts of needs can be accommodated withoutanyone's being a loser. Situations in which both buyer andseller are winners happen frequently. With any luck, that's whatwill happen in your case. It just takes creativity andpersistence.

About the author:Raynor James is with http://www.fsboamerica.org - providing FSBOhomes For Sale By Owner. Visit our "sell my home" page athttp://www.fsboamerica.org/seller.cfm to list and sell your homefor free for one month. Visithttp://www.fsboamerica.org/buyer.cfm to see homes for sale byowner.

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