If you are selling your property for sale by owner or FSBO, the contractual matters that arise with offers and counter offers can confuse you. The following is a introductory guide to contracts.
The Fundamental Principles of Contracts for For Sale By Owner or FSBO House Sellers
A contract is an arrangement between 2 or more parties to do something. In the contract, each party agrees to perform something, referred to as "consideration", in return for the other party likewise making some action.
If we view a home loan, the nature of an agreement turns to be pretty clear. If I apply for a house loan from a lending company and am approved, a written agreement is issued that both parties must sign. Two things come about with that thick contract. The banking company agrees to let me borrow cash. In consideration of this amount, I agree to make monthly payments to repay the loan. Obviously, other items such as maintaining homeowners insurance are included, however this is the basic idea.
As a FSBO seller, you will receive offers on your property at some point from prospective buyers. The offer is not a legitimate agreement, however it could become one. The offer is but a statement of what the purchaser is assuring to do if you accept the offer; to wit, the purchaser is promising to pay $300,000 or whatever for your property. You can make the offer legitimate on both parties by accepting the offer as shown by your signature. Alternatively, you can reject the offer and counter-offer with alternative conditions that are normally price-oriented. In such a situation, your counter-offer is binding on you if the potential purchaser accepts it.
There are a couple of important points you need to remember with this procedure. First, the offers must be in writing. Courts don’t like to deal with "spoken" contracts and will rarely implement those agreements. Any offer for your home must be in writing or the prospective buyer is merely screwing around. Always keep in mind that everything needs to be in writing when handling real estate proceedings. If it isn’t, then the subject covered by the spoken offers will be really tough to impose on the other party.
The next issue that is going to develop is the "good till" clause. Neither you nor the purchaser desires the offer procedure to be dangling over your head for weeks or months. As such, each offer/counter-offer must have a good till clause. This clause tells here is what I’m tendering, but you must accept it by this date and time. If you do not, this offer is going to expire and will no longer be binding on the party making it. Always include this words in any offer you make. It is typically contained within offer/counter-offer forms.
As a for sale by owner (FSBO) seller, you need to understand the basic principles of the contract procedure. If you’re uneasy with it, a real property lawyer can help you and for much less than paying a real estate commission.
