How can a contract protect a FSBO transaction?

On Behalf of | Jun 26, 2020 | Firm News |

The internet makes it easy to upload photos of a “for sale by owner” property to a real estate website and attract potential buyers. When you decide to sell your house without a realtor, however, a contract could protect you from liability and help ensure a smooth transaction. 

As noted on the New York State Senate website, the Empire State requires residential FSBO real estate sellers to provide a potential buyer with a property condition disclosure statement. Failure to provide one before signing a contract could result in the buyer receiving a $500 credit toward the purchase price. 

Property condition disclosure statement terms 

The disclosure statement requires you to provide information about your property. If it has problems with its structure, environment or electrical systems, you must describe them to potential buyers. They may conduct an inspection and agree to purchase the property with its known conditions. 

When a seller knowingly provides a false statement on a disclosure form, the buyer may file a legal action after the title transfers. Revealing known property issues before signing an agreement with a buyer helps protect you from litigation. 

Earnest deposit conditions 

A potential buyer may see a property, decide to sign a purchase agreement, and then change his or her mind. Your contract can include terms for an earnest deposit and note how a party can back out without penalties. 

As reported by CNN Business, buyers who sign a contract may lose their earnest deposit when delaying a sale. Although it may appear unreasonable to require a nonrefundable deposit, a buyer failing to follow through with an agreement could cost you time and money. 

An earnest deposit may assist with creating a new listing and help defray your costs if a buyer decides to not complete a closing.