If you are selling your home without a real estate agent, you may end up need a For Sale By Owner (FSBO) purchase agreement. However, many FSBO sellers are not familiar with this document. It is normal to find yourself asking: what is a FSBO agreement?
You may review the specifics of FSBO agreements right here. Go over what must be included in a FSBO agreement. Find out if this document is legally binding and learn more about your options for completing a FSBO agreement to sell your property.
Defining a FSBO Purchase Agreement
Anytime you sell a property, there must be a purchase agreement. If you work with a realtor, they may draw up this purchase agreement for you. However, if you sell your property on your own, you must provide the document. This document is considered your FSBO purchase agreement.
If you’re asking what is a FSBO Agreement, you should know that it is considered a legal document. It will need to include information to protect your legal rights. Note that if your FSBO agreement is not written carefully, the sale of your property could fall through. You could also end up losing money on the sale.
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Review Basic Templates for FSBO Agreements
Many property owners don’t know where to start when it comes to designing a FSBO agreement. Your state may actually have specific requirements for writing up a FSBO agreement. Colorado, for example, has an entire division dedicated to real estate contracts and forms, called the Division of Real Estate Contracts and Forms. Many title companies provide different templates designed to meet the needs of different states around the nation.
It is important that you use the correct template when designing an FSBO agreement. Failure to include the correct information in your contract may prevent you from closing the sale to your property. Note that, sometimes, the escrow company may provide you with a contract template as well.
There are samples of FSBO contracts that may provide you with an outline for how your completed contract should look and the information it should include.
Information to Include in Your FSBO Agreement
In order to draw up a FSBO agreement, you will need to include a lot of specific information. This includes:
- The sale price of your property
- The method the buyer will use to pay for the property
- Information about property taxes
- The method used to handle a default
- The amounts for closing costs
- The terms and conditions of the sale
- Responsibilities for the buyer and seller
You should also include your full name and the full name of the buyer(s). After you use these names once, you may simply use the terms Buyer and Seller. Ensure that you give the agreement a title (“Real Estate Contract” is often acceptable) and that you date the contract. An FSBO agreement may also need to include information about the property to be sold, including:
- The address of the property
- A description of the home
- A list of everything you are selling, such as appliances
Including all of this information may make a FSBO agreement quite lengthy. Depending upon the nature of your property the contract may become very complicated. However, it is important that you ensure the contract is completed carefully, as the sale of your property may not go through if there are issues with your FSBO agreement.
You May Get Help Working on a FSBO Agreement
As we mentioned, it is generally the seller’s responsibility to draft a FSBO agreement. However, you do not have to handle this duty completely on your own, even if you are not working with a realtor. You may be able to get help drafting your contract by contacting a real estate attorney.
Many real estate lawyers offer specific services to individuals who are interested in a selling their home without a realtor. You may be able to have these lawyers draft a contract for you if you pay a flat fee. This may make you feel more confident that your contract will be legally binding.
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Your FSBO Agreement May Be Legally Binding
Note that, in most cases, a FSBO agreement will be considered legally binding once both the buyer and the seller sign the document. This applies even though most FSBO agreements are not notarized. Once you sign a FSBO agreement, it may be more difficult to back out of the contract.
Ensure that you consider the document carefully before you sign anything. Sellers, especially, may face legal penalties if they take steps to back out of a FSBO agreement once they have signed and completed the document.
Speak to a Lawyer About a FSBO Agreement
What is a FSBO agreement? It is a legally binding document used in the sale of For Sale By Owner properties. This document is usually drawn up by the seller. However, sellers may reach out to a real estate lawyer to get help drafting this document. This may allow them to feel comfortable with the legality of the document.
Find out more about FSBO agreements by calling (407) 578-1334 to speak with Bogin, Munns & Munns. You may also complete our online contact form.