The real estate contract for sale by owner is a legal document summarizing the terms and conditions of the deal in detail. It also underlines the rights and obligations of both the parties involved - the buyer and the seller.
Having such a contract in place not only safeguards the interests of both the buyer and seller, but it also helps the seller save up to 6% of the property selling price by not involving the real estate agent in between. .
Why is Real Estate for Sale by Owner Contract Important?
In general, the law in many countries requires you to document everything when selling and buying a property. Thus, consider preparing an agreement as your civil responsibility. An absence of such a contract could land you in legal trouble.
Besides the legal responsibility, the real estate contracts for owners serve important purposes, such as:
- Verification of the property
In this digital age, fraudulent activities related to real estate are not uncommon. But when this property is used in a legal agreement, then it is almost impossible to produce fake documents. Many times, such transactions take place with an attorney as an intermediary. When verification will take place as part of the buying process, the authenticity of the property is also verified. So you can be sure that you’re dealing with a legal property.
- The exact price of the property
Many properties are bought on mortgages or in installments which run for years, even a decade. Therefore, the total price can become vague over time. An agreement forces you to set a price for the property which remains unchanged, depending on the clauses.
- The agreement serves as a proof of property transfer
A legal real estate for sale contract serves as a proof that the seller has transferred the property to a buyer at a given price. This document will be recognized everywhere. But without such a contract, the authenticity of the deal will be questioned.
- In accordance with local laws and regulations
In the United States, laws are applied at three levels: federal, state, and local. Since the property is located in a particular locality, the laws as to how to proceed with the transaction should be in accordance with the local laws while also satisfying federal and state laws. An agreement or contract makes this happen.
What To Include In A Real Estate For Sale By Owner Contract?
Ideally, a real estate contract should include the following:
- Complete details of the property
The foremost thing the contract should include is complete and exact details of the property being sold. This includes the size of the land, any house developed, amenities, and lead-based paint disclosure among other details. The seller must disclose everything there is to know about the property.
- Payment clause
Many buyers tend to pay for the property on an installment basis which can extend 5 to 10 years. How, when, and in what installment the buyer should pay the fees should be detailed in a contract. The transactions often happen via a financial institution like a bank. Therefore, an authorized person from the above-mentioned institution should also sign the contract after reviewing it.
- Penalty clause
There are instances where either party backs out of the deal either willingly or forcibly. In such a case, the contract must dictate the protocol that should be followed. Additionally, if the buyer delays the payment, any applicable penalty fees must be included in this section.
- Indemnity clause
Including an indemnity clause into the contract is extremely important. This clause serves as a precaution against any damages that may take place in the future because of the seller. With this clause in place, the seller takes it upon himself or herself if he/she fails to meet the contract agreement clauses.
How Does A Real Estate for Sale by Owner Contract Work?
The contract works as proof of the transaction, similar to a receipt from a grocery store. Essentially, a contract is prepared to contain the information about the property and the clauses which the seller and buyer agree to. Then it is written down in a proper format and signed. In most cases, this takes place in the presence of a third person like an attorney or an agent.
So, are you convinced to have a for sale by owner contract template? Explore CocoSign’s vast collection of free-to-use real estate for sale by owner contract templates.
Just fill out the necessary details in a free printable real estate purchase agreement PDF, print the document out, and you’re ready to go. Check it out now.
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