When a property is listed for sale by an owner, without the assistance of a listing agent or broker, it’s called a ‘For Sale By Owner‘ (FSBO) listing.
Many people choose this route as it cuts out the need to pay real estate agent commission fees. This could save the seller around 6% of the home’s value.
While it may seem an attractive idea, it’s rife with risks and complexities. The seller must handle all the affairs alone and risk liability.
In particular, the contractual process brings a lot of questions, such as who draws up the contract in a For Sale by Owner sale?
Who Writes a ‘For Sale by Owner’ Contract?
Usually, a home is sold with the contract drafted by the buyer or seller’s real estate agent. They also help negotiate the terms of the purchase and sale.
If you go at it alone without the help of a real estate agent, who writes the contract? What happens when a buyer brings an offer? Here are your options:
You Can Write the Contract Yourself
The internet makes anything DIY seem possible and easy and can give you templates for writing up a purchase/sale agreement real estate contract alone. Keep in mind, if you go this route, there is not a one size fits all contract and that can lead to a contract not being valid and able to be enforced when particular details are not addressed properly or at all.
In Florida, there is no legal requirement to hire an attorney (unlike in many other states), but a real estate attorney can make sure the details are covered completely and correctly, protecting your interests and finances in the process.
There are other concerns when drafting your own contract. First, buyers may be scared off of a deal if they realize the contract wasn’t drafted by a professional. They may be apprehensive of the lack of legal assistance and the uncertainty of what would happen in a legal dispute. Most people want a quick and stressless purchase, and a For Sale By Owner listing risks that.
Also, this isn’t an easy task. Drafting a For Sale By Owner contract alone is stressful, complex and extremely time-consuming. You’ll lose days of your time from researching and drafting. And you still might make a mistake, as you simply don’t have the professional training or experience.
FSBO contracts are usually legally binding if both parties sign the document, even if the agreement wasn’t notarized. Once you sign it, you’ll face the potential of liability and may be unable to back out of the contract unless you place relevant contingencies.
Never sign a contract before carefully evaluating it. Even if you draft the contract alone, it’s advised that you ask a real estate lawyer to review the document.
Sellers can face legal penalties if they back out of an FSBO contract, if they signed and completed the paperwork.
Dual Agents Are Not Legal in Florida
Dual Agents are not legal in the state of Florida but are in many other states.
If you’re the seller in a For Sale By Owner listing and the buyer has a real estate agent, you may be able to ask that agent to act on your behalf. This is called a ‘transactional agent’ or ‘dual agent’.
The goal here is that the real estate agent will act as a neutral third party. They’ll draw up the For Sale By Owner contract without negotiating for either side.
If someone tries to suggest this route to you, remember that it is not legal in Florida.
Real Estate Attorneys
Your best option is to use a Florida real estate attorney. This can save you a large amount of money compared to the commissions of an agent, while an attorney will have their own costs but the attorney can also close the sale for you.
Real estate lawyers are also considered by many to be the better option over real estate agents.
Attorneys know the fine details of contractual law, in a far more reaching way than agents. This can be very beneficial when it comes to liability and contingencies. It can allow you to back out of a deal without facing the consequences and protect you if the other party doesn’t uphold their end of the deal.
They’ll also ensure the For Sale by Owner contract is legally binding, with your best interests in mind.
Is It Worth Drafting an FSBO Contract Alone?
No. It is widely considered that you do not draft a contract alone for a For Sale By Owner property sale.
Despite the vast number of online services available, these all come with inherent risks that could see you left liable for thousands of dollars. The last thing you want is litigation, with additional attorney costs or the costs of damages.
Plus, it’s going to add considerable stress to your sales process. Will you limit yourself to better offers due to scared buyers? Will you have enough time to learn contract law thoroughly enough?
Remember, your property sale needs to be legally bullet-proof, done properly and leave you protected from liability.
When you consider all the other tasks you’ll have to focus on, is it worth the effort? For example, a For Sale By Owner listing requires you to:
- Determine asking prices by carrying out property value research for similar competition
- Stage the home for sale
- Make any required repairs
- Market the property with ads, online listing, flyers, listings on Multiple Listing Services (MLS)
- Schedule and host all showings
- Negotiate the price and terms of sale
- Prepare legal documents
- Track down documents, including property surveys, permits, certificates of occupants, bills and property title
- Prepare the deed and have it signed, witnessed and notarized
- Prepare, write up and review the contract
- Close the sale
What’s Included in a For Sale By Owner Contract?
Every FSBO contract should include:
- The property sale price
- The buyer’s payment method
- Property tax information
- How a default will be handled
- Closing costs
- Terms and Conditions of the Sale
- Duties for the Buyer and Seller
- Legal Description
- Known damage and problems with the property
- A list of all appliances & fixtures sold with the property
Contact a Florida Real Estate Lawyer
If you need legal assistance with any area of real estate, including the drafting of a For Sale By Owner Contract, then our Florida real estate lawyers can help.
Our St Petersburg and Riverview real estate attorneys at Battaglia, Ross, Dicus & McQuaid, P.A. will review your circumstances and ensure your transaction goes smoothly.