The Basics of Contracts for
FSBO Sellers
By: Raynor
If you are selling your home for sale by
owner, the contractual issues that arise with offers and counter offers may
confuse you. Here is a basic guide to contracts.
The Basics of Contracts for FSBO Sellers
A contract is an agreement between two or more parties to do something. In
the contract, each party agrees to do something, known as “consideration”,
in exchange for the other party also taking some action.
If we consider a home loan, the nature of a contract becomes pretty clear.
If I apply for a home loan from a bank and am approved, a written contract
is issued that both parties sign. Two things happen with that thick
contract. The bank agrees to lend me money. In consideration of this money,
I agree to make monthly payments to pay back the loan. Obviously, other
items such as maintaining homeowners insurance are included, but this is the
basic idea.
As a FSBO seller, you will get offers on your home at some point from
potential buyers. The offer is not a binding contract, but can become one.
The offer is simply a statement of what the buyer is promising to do if you
accept the offer, to wit, the buyer is promising to pay $300,000 or whatever
for you home. You can make the offer binding on both parties by accepting
the offer as evidenced by your signature. Alternatively, you can reject the
offer and counter-offer with alternative terms that are usually
price-oriented. In such a situation, your counter-offer is binding on you if
the potential buyer accepts it.
There are two key points to keep in mind with this process. First, the
offers must be in writing. Courts hate to deal with “oral” contracts and
will rarely enforce them. Any offer for you home must be in writing or the
potential buyer is just screwing around. Always keep in mind that everything
should be in writing when dealing with real estate transactions. If it is
not, then the subject covered by the oral offers is going to be very hard to
enforce on the other party.
The second issue that will arise is the “good till” clause. Neither you nor
the buyer wants the offer process to hang over your head for weeks or
months. As such, each offer/counter-offer should contain a good till clause.
This clause says here is what I am offering, but you must accept it by this
date and time. If you do not, this offer will expire and no longer be
binding on the party making it. Always include this language in any offer
you make. It is customarily contained within offer/counter-offer forms.
As a FSBO seller, you should understand the basics of the contract process.
If you are uncomfortable with it, a real estate lawyer can help you and for
much less than paying a real estate commission.
If you are selling your home for sale by owner, the contractual issues that
arise with offers and counter offers may confuse you. Here is a basic guide
to contracts.
Raynor James is with the site - FSBOAmerica.org -http://www.fsboamerica.org/
FSBO homes for sale by owner
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