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I handle a fair amount of Maryland for sale by owner (“FSBO”) transactions and clients often ask me to walk them through the settlement process. While each settlement has its own nuances, this piece will provide a broad overview of the process.

Maryland FSBO Settlement Process

Let’s assume you decide to list your Baltimore home as a FSBO and someone wants to submit an offer . . . what happens next? At this point you should have certain FSB documents available (jurisdictional addendums, a list of inclusions and exclusions, a property disclosure / disclaimer form, etc.) to provide to the buyer. Some of these forms are required by Maryland law and some will provide information the buyer needs to prepare her / his contract.

If the buyer has an agent – great, that agent will usually take the forms you have supplied and prepare a contract for you to review and sign. While this agent may be very nice and helpful, it is wise to keep in mind that they work for the buyer and will not be protecting your interests.

You should ask how the buyer’s agent is getting paid. Sometimes a buyer will pay an agent but more often I see the buyer’s agent asking for compensation from the seller.

If the buyer does not have an agent, either the seller or buyer will have to engage an attorney or real estate agent to prepare a contract. There are forms available on the Internet for the brave soul looking to go that route, but most times those forms are from some other state or are outdated and may not address Maryland requirements or recent changes to Maryland law.

You should have any offer presented to you reviewed by your attorney to ensure it captures the agreement between the parties. Along with the offer the buyer should submit proof of deposit and proof of financing.

Once the contract is signed, the buyer provides a copy of it to her / his lender and settlement company. The lender will take the contract and other documents provided by the buyer and begin processing the loan. The settlement company (which is selected by the buyer) will take the contract and search title, secure payoffs from your current lender, and prepare documents that the lender will need to get the loan approved for closing. The settlement company will also make sure all tax and water prorations will be included on the settlement statement.

While the buyer’s lender and settlement company are processing the file you may have to do certain things such as ordering a condominium or homeowner’s association resale package. If the buyer performs a home inspection this is also the time that any repairs that will have to be made are discussed and agreed to between you and the buyer.

If all goes well the buyer’s loan is approved and a loan package is transmitted to the settlement company. The settlement company will coordinate the time, date and place of signing with the parties. It is a good practice to request that the settlement company send you copies of the deed and anything else you will be signing at settlement in advance so you can have your attorney review this paperwork.

At settlement you and the buyer will meet with the settlement agent to sign a deed and loan documents. You will likely receive a check or wire on the day of settlement. The settlement company will return the signed loan documents to the lender and will send the deed for recording to the county in which the property is located. The paperwork the settlement company submits to the county will usually trigger a transfer of the water and property tax bill so there will be nothing for you to do in regards to those items.

Do you have additional questions about the Maryland FSBO settlement process not covered here? Give our Baltimore-based real estate law office a call at 410-276-1983.

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Heise & Heise, LLP
3233 Eastern Ave
Baltimore, MD 21224
(410) 276-1983