A purchase agreement is the contract between the buyer and seller which outlines the conditions for the sale of a home.
Because the purchase agreement would normally be provided by the seller’s agent, what happens when it comes to properties for sale by owner (FSOB)?
Whether you are selling your home without an agent or are the buyer of an FSBO property, it’s important to understand the various approaches to closing an FSBO sale.
In the end, there is more room for negotiation and open negotiation between the buyer and seller is key in deciding how the purchase agreement will be produced.
The Purchase Agreement Contract
Purchase agreements need to cover important items that are central to closing the sale.
These include defining home financing methods, necessary repairs, necessary dates, and contingencies like property appraisals and inspections that the sale depends on.
The contingencies in a purchase agreement outline items that need to happen before the sale takes place.
For example: If the buyer is unable to secure the right type of financing by a certain date, then failing to meet that contingency means they can back out of the sale without penalty.
Another example would be if the property doesn’t pass an inspection due to damage or infestation, then the seller will have to fix these issues before the sale can continue.
Defining contingencies and the closing details of the sale is why carefully drafting and following through with the contract is so important.
Purchase agreements are especially useful for stipulating terms of conflict resolution to provide both parties with safe, agreed options for terminating the contract.
Options for Sellers
As the seller, if you choose the FSBO route then you can employ the services of a real estate lawyer or attorney to write the contract.
It is recommended that sellers consult with a real estate lawyer when closing a sale to ensure that they adhere to all state and federal laws.
During one of these meetings, sellers should also ask for the contact details of a real estate professional who can write a purchase agreement if needed.
States can differ in their requirements and customs for real estate sales.
Some states require that purchase agreement contracts need to be written by state-licensed real estate lawyers, solving the problem for both buyer and seller.
Others allow for the buyer’s representative to do the transactional paperwork, but it is best that you contact an attorney and see what practice your local state expects for the sale of your home.
Options for Buyers
In FSBO scenarios, buyers can turn to their own representatives to take care of the transactional paperwork and most of the work related to closing the sale.
When the buyer’s agent acts as both their representative and the transactional agent, they are referred to as a dual agent.
Some states view dual agency as an ethical dilemma since the agent is representing the buyer while also acting as an objective third party for both buyer and seller.
In these states, the buyer’s agent cannot fill both roles.
However, buyers and their agents can contact a title company or other real estate agency to find a licensed legal professional who can create a contract, ensure the purchase agreement conditions are satisfied, and close the sale.
Getting advice from experienced real estate professionals is the best way to succeed in selling your home. If you have any questions or require professional services for a smooth process, feel free to contact us.
Who Pays the Fees for Writing the Contract?
The fees related to writing the purchase agreement are part of the closing costs, which are negotiable between buyer and seller.
In a normal situation, when the seller is represented by their agent and they provide the purchase agreement, then the fees for generating the contract would be included in the real estate agent’s commission fee to the seller.
In the FSBO scenario, when the buyer’s agent does most of the transactional work and/or provides the contract, the buyer doesn’t necessarily have to cover the bill.
Buyers can ask for the seller to cover the cost of the contract.
Sometimes, buyers will cover a percentage of the costs if the seller covers other expenses but all of this needs to be negotiated and agreed upon by both parties.
The best way to approach this is for the buyer and seller to communicate through the buyer’s agent.
The buyer can explain the situation to their agent who in turn discusses their compensation with the seller in order to begin the negotiation.
We are experienced real estate professionals who know how to work with you to achieve your goals. Contact us for tips, advice, or professional services to sell your home.