When buying a for sale by owner (FSBO) home directly from the seller, a key question is – who is responsible for drafting the real estate purchase contract? Does the buyer need to secure a real estate attorney to protect their interests and draft the paperwork?
Unlike with agent-listed properties, FSBO sellers are not providing professionally prepared contracts. This leaves buyers wondering who ensures proper documentation.
Here are the common options for handling contracts in a FSBO transaction:
Who draws up contract in for Sale by Owner?
In For sale by owner (FSBO) transactions, where the buyer has a realtor, the realtor typically provides a standardized real estate contract form. If neither party is represented by a realtor, the buyer or seller can find standard contract templates online. However, it’s advisable to have any FSBO sales contract reviewed by a real estate attorney to protect their interests. Alternatively, the buyer can provide a standard purchase contract to their attorney for review and necessary amendments before signing.
1. Buyer’s Realtor provides the contract
In a FSBO transaction, the buyer may still be represented by a real estate agent. In this situation, the buyer’s agent will typically present the offer to the seller on a standardized real estate contract form.
2. Buyer or FSBO Seller Provides the Contract
In a FSBO sale where neither party is represented by a realtor, the buyer or seller can locate and present a standard real estate purchase agreement. Resources for sellers to find basic contract templates include:
- Downloading from FSBO websites and other real estate website
- Templates from online legal form companies
However, the parties should still have any FSBO sales contract reviewed by a real estate attorney before signing to ensure their interests are protected.
3. Attorney Prepares Custom Contract
The safest option from the buyer’s perspective is retaining a real estate lawyer to draft a comprehensive purchase agreement tailored to the specific FSBO transaction. Even if a standardized contract form is used, there are several sections that need to be completed properly to satisfy the needs and interests of each particular situation.
Although signing the FSBO contract, which is provided by the FSBO buyer or seller and sourced from generic FSBO template forms, involves no cost at all, choosing to work with a real estate attorney ensures the parties that the contract accounts for their needs during negotiations and throughout the transaction.
4. Attorney Reviews and Revises Contract
A middle ground is the buyer supplying the completed standard purchase contract to their attorney for review. The attorney can revise the contract to include necessary amendments, contingencies, etc. to protect the buyer before signing.
This allows the buyer and seller to get started quickly on a contract while still allowing for legal guidance before it’s too late (since most standard contracts in Illinois provide a 5 day attorney review period for attorneys to make changes to the contract).
Key Contract Areas for Attorney Involvement
No matter the approach, attorneys would review critical areas like:
- Contingencies for financing, inspection, appraisal, title, etc.
- Designation of which party pays certain closing costs
- Possession terms for move-in/out after closing
- Provisions for default, mediation, and contract termination
Failing to involve qualified legal counsel in drawing up or reviewing the real estate purchase contract can leave FSBO buyers exposed.
Before signing anything, seek expert guidance.
Get the complete list of documents and closing paperwork to sell a house by owner or with the help of a realtor.
In Summary
FSBO buyers have several options when it comes to who prepares the documentation, ranging from seller-provided forms to fully customized contracts.
But securing an attorney’s help is key, no matter what. Protect yourself on one of the biggest transactions you’ll likely ever make!
