A contract is an agreement between two or more parties to do something. In the contract, each party agrees to do something, known as ?consideration?, in exchange for the other party also taking some action.
If we consider a home loan, the nature of a contract becomes pretty clear. If I apply for a home loan from a bank and am approved, a written contract is issued that both parties sign. Two things happen with that thick contract. The bank agrees to lend me money. In consideration of this money, I agree to make monthly payments to pay back the loan. Obviously, other items such as maintaining homeowners insurance are included, but this is the basic idea.
As a FSBO seller, you will get offers on your home at some point from potential buyers. The offer is not a binding contract, but can become one. The offer is simply a statement of what the buyer is promising to do if you accept the offer, to wit, the buyer is promising to pay $300,000 or whatever for you home. You can make the offer binding on both parties by accepting the offer as evidenced by your signature. Alternatively, you can reject the offer and counter-offer with alternative terms that are usually price-oriented. In such a situation, your counter-offer is binding on you if the potential buyer accepts it.
There are two key points to keep in mind with this process. First, the offers must be in writing. Courts hate to deal with ?oral? contracts and will rarely enforce them. Any offer for you home must be in writing or the potential buyer is just screwing around. Always keep in mind that everything should be in writing when dealing with real estate transactions. If it is not, then the subject covered by the oral offers is going to be very hard to enforce on the other party.
The second issue that will arise is the ?good till? clause. Neither you nor the buyer wants the offer process to hang over your head for weeks or months. As such, each offer/counter-offer should contain a good till clause. This clause says here is what I am offering, but you must accept it by this date and time. If you do not, this offer will expire and no longer be binding on the party making it. Always include this language in any offer you make. It is customarily contained within offer/counter-offer forms.
As a FSBO seller, you should understand the basics of the contract process. If you are uncomfortable with it, a real estate lawyer can help you and for much less than paying a real estate commission.
