FSBO Contract – Paperwork Required During Sale of Home by Owner
These days more and more home owners are taking the leap and selling their homes themselves, forgoing the realtor. Is that a good idea? The answer to that is yes. However, there is quite a lot of paperwork involved with doing that. In this article we will review some of the forms you will need when doing a for sale by owner (FSBO) of your home.
The first document you will need to have is the sales contract. This form will contain all of the terms of the deal between you and your buyer. This contract is a legal agreement, so don’t forget ANY of the important details. Of course it will include the purchase price. However; with regards to your protection and the protection of your buyer, it ought to contain a contingency clause as well. A qualifying contingency could be the buyer not being able to secure the financing OR if your home fails its inspection. If your buyer is buying your home “AS IS,” details of this MUST also be incorporated into the sales contract.
The next form you must have is the property disclosure form. In this document any defects your home currently has HAVE to be listed. Quite a few states and countries require this form be used no matter what type of real estate transaction you choose. If you fail to disclose any of these problems with your home to your buyer, you can be legally held liable for damages and have to pay them a lot of money. Do yourself a favor: DO NOT FORGET THE PROPERTY DISCLOSURE FORM!!
Another important document for you to have is an occupancy agreement form. This form will state all of the terms of the moving periods for both you and your buyer. If the buyer intends to move in before the deal is secured, you will also need a pre-occupancy agreement. This is important because once YOU move out of your home the homeowner’s insurance plan most likely will NOT cover you. So if damage is then done to the home and/or you incur losses to it, you will be plain out of luck. So be certain to remember the occupancy and/or pre-occupancy form. A great real estate lawyer should be consulted to make sure you don’t forget anything important relating to this document.
If your home was built prior to 1978 you will also need “lead paint records” in a separate form. This form must fully disclose; with written notice to the buyer, any trace of lead paint that was used when constructing it or to enhance its interior later on. It is a federal law that you MUST have this form. You also are required to supply your buyer with a lead paint information pamphlet that is approved by the EPA. Additionally, the warning form MUST be sign by all people who will be involved in the purchase of your home. Again, it would be wise to consult your attorney to make sure you do everything in accordance with the law. Otherwise there could be dire consequences for you later on.