General information, not legal or tax advice

Selling a House by Owner in Tennessee

Every so often a Manchester or Coffee County owner asks me whether they can sell their home on their own, without listing it. The short answer is yes. Tennessee law lets an owner sell their own property without a real estate license. But selling by owner does not change what the law expects of a seller. The disclosure rules, the federal lead paint rules, fair housing law and the closing paperwork all still apply, and without an agent, every one of those jobs is yours.

This guide walks through what Tennessee and federal law require of any home seller, with or without an agent, and the steps owners most often ask me about. It is general information from the Tennessee Code, federal law and regulations, the IRS and the Consumer Financial Protection Bureau (CFPB). It is not legal or tax advice. If you sell on your own, a Tennessee real estate attorney can draft or review your contract and deed, and a title company or attorney can handle the closing.

Can you sell your own home in Tennessee?

Yes. The Tennessee Real Estate Broker License Act, TCA 62 13 104(a)(1)(A), says the licensing chapter does not apply to an owner of real estate with respect to property owned or leased by that person. The same section also leaves out an attorney in fact acting under a duly executed and recorded power of attorney from the owner, an attorney at law performing an attorney's duties, and a person acting as executor, administrator, guardian, trustee or receiver under a will, trust, court order or similar instrument.

The exemption is for the owner. If a relative or friend will handle the sale for you, ask an attorney whether they need a recorded power of attorney or a license. Selling a home from an estate? My guide to selling an inherited home covers the executor's role.

Your disclosure duties are the same

Tennessee's residential property disclosure law applies whether or not a licensed broker is involved. TCA 66 5 201 says the law covers sales, exchanges, installment land sales contracts and leases with an option to buy of residential property with one to four dwelling units, site built or not, whether or not the transaction is completed with the help of a licensed broker or salesperson.

Here is what the law asks of the owner:

• A statement or a disclaimer. Under TCA 66 5 202, you give the buyer either the residential property disclosure statement, covering the condition of the property including any material defects you know about, or a disclaimer statement that the home is sold as is. The disclaimer is allowed only when the buyer waives the disclosure.
• Before the contract is accepted. TCA 66 5 203 says the statement must be delivered before acceptance, which means full execution of the purchase contract by all parties. It can be in the contract, an addendum or a separate document.
• No inspection required of you. TCA 66 5 202 says the owner does not have to make an independent investigation or inspection to make the disclosures. TCA 66 5 201 adds that the statement is not a warranty and is not a substitute for inspections.
• Reports from licensed experts help. Under TCA 66 5 204, an owner is not liable for an error that was not within the owner's actual knowledge, or that was based on information from public agencies or certain experts, if the owner reasonably believed it and was not grossly negligent. Delivering a report from a licensed engineer, land surveyor, geologist, wood destroying insect expert or home inspector on a matter within their expertise can satisfy the duty for that item.

TCA 66 5 203 also says that failing to provide the statement does not let the buyer terminate the contract, but it does not stop the buyer from bringing other claims the law allows. My seller disclosure guide explains the form and the exemptions, and my post on what you have to disclose covers the questions sellers ask most.

Homes built before 1978

If your home was built before 1978, the federal lead based paint rule applies to your sale, agent or no agent. Before the buyer is obligated under the contract, 40 CFR 745.107 says the seller must:

• Give the buyer an EPA approved lead hazard pamphlet, such as Protect Your Family From Lead in Your Home
• Disclose any known lead based paint or lead based paint hazards in the home, with any details available
• Give the buyer any records or reports about lead based paint in the home that you have

If those steps happen after the buyer has made an offer, the rule says you must finish them before accepting the offer and let the buyer review the information and possibly amend the offer.

Under 40 CFR 745.110, you must give the buyer a 10 day period to have a risk assessment or inspection for lead, unless you both agree in writing on a different period or the buyer waives it in writing. And 40 CFR 745.113 says each contract to sell a pre 1978 home must include an attachment with the federal Lead Warning Statement, your disclosure, a list of the records you provided, the buyer's acknowledgments and dated signatures. The seller must keep a copy of the completed attachment for at least 3 years after the sale. When an agent is involved, the agent is supposed to make sure this happens. When you sell on your own, it is up to you. My lead based paint disclosure guide has the details.

Fair housing applies to owners too

Some owners have heard that a person selling their own house is exempt from fair housing law. That is mostly not true, and the parts that are true are narrow.

The federal exemption is limited. Under 42 USC 3603(b), most of the Fair Housing Act's sales rules do not apply to a single family house sold by a private owner who owns no more than three such houses, and if the owner was not living in the house or was not the most recent resident, the exemption applies to only one such sale in any 24 month period. It also applies only if the house is sold without using any real estate broker or agent and without any advertising that violates 42 USC 3604(c).

The advertising rule applies to everyone. The exemption expressly does not reach 42 USC 3604(c), which makes it unlawful to make, print or publish any notice, statement or advertisement about the sale of a dwelling that indicates a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin. HUD's rule at 24 CFR 100.75 says this covers written or oral statements and things like flyers, signs, banners and any documents used in the sale, including words, phrases, photographs or symbols that suggest a home is or is not available to a particular group.

Tennessee law has its own rules. The Tennessee Human Rights Act, TCA 4 21 601, makes it a discriminatory practice for a person, because of race, color, creed, religion, sex, disability, familial status or national origin, to refuse to sell after a bona fide offer, to discriminate in the terms of a sale or to publish a notice, statement, advertisement or sign that indicates a limitation or preference. The exemptions listed in TCA 4 21 602 cover certain rentals, religious organizations, single sex dormitories and housing for older persons. They do not list an owner's sale of a single family house.

And one federal law has no exemption at all. 42 USC 1982 says all citizens have the same right, in every state, as is enjoyed by white citizens to purchase, lease, sell, hold and convey property.

The simple rule I follow, and the one I suggest to every seller: describe the home, not the buyer you hope to find, and treat every buyer and every offer the same way. Ask an attorney if you have a question about your situation.

Put the deal in writing

Under Tennessee's statute of frauds, TCA 29 2 101, no action can be brought on a contract for the sale of land unless the agreement, or a memorandum or note of it, is in writing and signed by the party the other side is trying to hold to it. A handshake deal on a house is not enough.

A purchase contract usually covers at least:

• Price and earnest money: how much, who holds it and when it is refunded. My earnest money guide explains how deposits work.
• Contingencies: financing, inspection, appraisal and any home sale contingency, each with a deadline. See my contract contingencies guide.
• Closing and possession: the closing date, who the closing company is and when the buyer gets the keys.
• What stays and what goes: appliances, fixtures and anything else you want to spell out.
• The required disclosures: the Tennessee disclosure or disclaimer statement and, for a pre 1978 home, the lead attachment.

Ask a Tennessee real estate attorney to draft or review the contract before anyone signs.

Check the buyer's financing

If the buyer is getting a loan, ask for a preapproval letter with the offer. The CFPB describes a preapproval letter as a statement from a lender that it is tentatively willing to lend up to a certain amount, says it is based on assumptions and is not a guaranteed loan offer, and notes that sellers frequently require one before accepting an offer. The CFPB also says these letters typically expire in 30 to 60 days, so check the date. My mortgage preapproval guide explains what a letter does and does not mean, and my home appraisal guide covers what happens if the appraisal comes in low.

The deed, the transfer tax and the closing

A few Tennessee recording rules shape the paperwork:

• The deed must show who prepared it. Under TCA 66 24 115, the county register will not record a deed or other instrument affecting title unless the name and address of the person who prepared it appears in it, for example a statement that reads This instrument was prepared by, followed by the name and address.
• Owner and taxpayer names. TCA 66 24 114 says a deed will not be accepted for recording unless it includes the name and address of a property owner and of the person or entity responsible for paying the property taxes.
• Transfer tax. TCA 67 4 409(a) sets a state tax of 37 cents per $100 on the transfer, based on the price or the value of the property, whichever is greater. The statute says the tax is paid by the grantee, which is the buyer, and collected by the register of the county where the deed is recorded, and the buyer or the buyer's agent states the consideration or value under oath.

In Coffee County, deeds are recorded with the Coffee County Register of Deeds in Manchester. You will also need a payoff from your lender if you have a mortgage, and the year's property taxes split at closing. My guides on selling a house with a mortgage, property tax proration and seller closing costs cover those steps.

The tax form at closing

The IRS Instructions for Form 1099 S say the sale of real estate is generally reported on Form 1099 S, filed by the person responsible for closing, usually the settlement agent listed on the Closing Disclosure. If no one is responsible for closing, the duty falls, in order, to the mortgage lender, the seller's broker, the buyer's broker and then the buyer. The instructions also say a main home sale of $250,000 or less, or $500,000 or less for a married seller, does not have to be reported if the seller signs a written certification that the home was their principal residence, there was no period of nonqualified use after 2008 and the full gain is excludable. My capital gains guide explains the home sale exclusion. Ask your tax professional about your sale.

Protect the money at closing

The CFPB warns that scammers send spoofed emails posing as a real estate agent, settlement agent or attorney with false wiring instructions. Its advice is to confirm the closing process and payment instructions in person or by phone with people you trust, using a phone number you agreed on earlier, and never to follow wiring instructions that arrive by email. If money is misdirected, the CFPB says to contact your bank or wire transfer company immediately to ask for a wire recall and to file a complaint with the FBI at ic3.gov. My wire fraud guide has more.

What you take on without an agent

Beyond the legal duties, these are the jobs an owner handles alone:

• Setting a price from recent nearby sales and the homes buyers are seeing now
• Photos, the listing description, signs and advertising that stay within fair housing rules
• Scheduling and attending showings, and keeping your home and belongings safe
• Answering buyer questions without saying more than you know
• Comparing offers, checking financing and negotiating repairs after the inspection
• Tracking every contract deadline and working with the buyer's lender, appraiser, inspector, title company or attorney

Some owners handle all of that well. Others find it is more than they expected once the calls start. Either way, it helps to know the list going in.

How I help

I do not give legal or tax advice. If you are weighing a sale on your own, I am glad to prepare a free home value report from recent nearby sales so you start with a realistic price, whatever you decide. If you would rather hand off the work, I can price and market the home, handle showings, review offers and financing with you, keep the disclosures and deadlines on track and work with your attorney and the closing company through closing day. My guide on how to sell a house in Manchester walks through that process.

Keep reading:

• Tennessee seller disclosure explained
• Lead based paint disclosure
• Real estate contract contingencies
• Seller closing costs in Tennessee
• How to choose a real estate agent
• All Manchester guides

Fair housing note: I work with every buyer and seller and follow the same steps for everyone.

This guide is general information from public sources, not legal or tax advice. Laws and forms change, so ask a Tennessee real estate attorney and a tax professional about your sale.

Thinking about selling your Manchester home?

Whether you sell on your own or with me, start with a realistic price. Call or text me at (615) 497 1658, or request a free home value report below.

Common questions

Matt Sargent is a Tennessee licensed affiliate broker with Keller Williams who helps buyers and sellers in Manchester and Coffee County. Call (615) 497 1658 or send a message.