Who Draws Up the Contract in For Sale by Owner in Illinois?

Date: 06/23/2022

Author: Prime Law Group

Did you know that 18 percent of people who sell their home list lack of knowledge about paperwork as one of their biggest struggles during the selling process? If you’re an Illinois homeowner wanting to sell your house without a real estate agent, the contract is an essential part of the process.

However, who draws up a contract in a for sale by owner transaction? If you’re looking to sell your house and not worry about real estate agent commission fees you need to know the correct answer.

Keep reading to learn about how a contract works when you choose not to hire an Illinois real estate agent.

What Is an FSBO?

A For Sale By Owner (FSBO) transaction is a real estate deal where a property gets sold directly from the owner to the buyer. The home gets listed, and the transaction is conducted directly between the two parties. FSBO homes are usually listed on websites like craigslist or Zillow.

What Must You Do to Make an FSBO Purchase?

Unlike traditional real estate purchases, when you buy an FSBO home, you will not have a real estate agent to handle the transaction. In an FSBO deal, the buyer and seller are both responsible for their own due diligence and negotiating the terms of the deal.

What Are the Benefits of FSBO?

Some home buyers prefer an FSBO property over a traditional purchase. This is because FSBO properties are not represented by a real estate professional, so the home buyer has more control over the purchase.

However, there are several benefits to selling your own home that go beyond this. 

Time and Cost Savings

This is a big reason why many potential homebuyers prefer to buy FSBO properties. They get to skip the real estate commission fee and save themselves from paying agent’s fees.

A More Direct and Efficient Connection to the Seller

An FSBO listing has all the contact and transaction details kept confidential from the public. This allows for direct and more efficient contact with the seller.

Lack of Disclosures and Misrepresentations

When buying an FSBO, you have the right to determine if you want any financial documents, disclosures or issues disclosed to you by the seller. If there are issues with the property, you may require that they are disclosed to you so you can make an informed decision. 

How Do You Negotiate an FSBO Deal?

When it comes to FSBO, it really depends on the seller. Some FSBO sellers are open to negotiation, while some are not.

Make an Offer

You can make the first offer. If the seller is willing to negotiate, then you can negotiate the price and other terms. You can tell the seller that he can have the property for $XXX if they will agree to your terms.

Ask for a Better Price

If the seller is not willing to negotiate, ask for a better price. Tell the seller what you have in mind, and the seller can tell you the price he or she is willing to settle for.

If you are okay with the price, then make the purchase. If you are not, then you may have to look for another property.

Who Draws up the Contract in a for Sale by Owner Transaction?

A for sale by owner contract is an agreement that gets made between the buyer and the seller. It is a written document that specifies the payment, rules, and regulations for the sale of the property.

In an FSBO transaction, it is your responsibility to draw up the contract. However, many people choose to hire a real estate lawyer to draw up the contract.

How to Write a Contract When Selling Your Home

Are you writing your own contract in an FSBO sale? If you choose to write your own contract instead of hiring a real estate lawyer, there are several steps to take.

Step One: Draft Your Contract

If you already have a contract drafted and ready to use, it’s best to simply replace the names of the buyer and seller in the contract. You can also purchase templates online.

Step Two: Include Important Details

If you are drawing up your own contract, you will need to clearly specify the names of the buyer and seller, property address, and legal description.

Your contract will also need to include the dates and terms of the purchase. Make sure to include the date of closing. Provide a detailed description of the property being sold. Also, check your local regulations for any specific disclosures.

Step Three: Costs

Make a list of any fees and charges that are included in the sale, such as legal fees, loan fees, or property transfer fees. Pricing the property is a significant factor in a contract.

You will likely want to include an inspection contingency period in your contract. This will allow the buyer an opportunity to have the property inspected by a licensed inspector. The contract should also include a contingency period for financing.

Step Four: Signing the Contract

The seller and buyer must both sign the contract. However, the document does need to get notarized.

Step Five: Get a Licensed Notary

The notary public will confirm that the contract has been written and signed by both parties. After they have signed the contract, they will go over it with both parties again and have them sign it again.

The Problem With Drafting Your Own FBSO Contract

While you can purchase templates and write your own contract, it can be difficult to do so. Some do-it-yourself contracts are missing important details, fail to get the property legally transferred to the buyer, or fail to include important information about the property itself.

The Benefits of Hiring a Real Estate Lawyer for an FBSO Contract

For a for-sale-by-owner transaction, you will need to fill in a lot of details. It can be difficult to get all the information you need, and you have to be sure that you have included all of the necessary details in your contract.

What a Real Estate Lawyer Will Do

A real estate attorney will either draw up the contract with you or help you draw it up. They will also go over the contract and make sure that all of the details are included.

In addition, they will make sure that the legal requirements are met and that the contract is in compliance with any legal requirements.

Ensure Your Contract Is Free of Loopholes

A for-sale-by-owner contract needs to be complete and clear. You don’t want to leave any loopholes in your contract that can be exploited by the buyer or even yourself.

Secure the Best Terms for You

A real estate lawyer can help to ensure that you have the best deal for you. They can help you to make sure that your contract has the best terms for you and your situation.

Make Things Easier for You

Drawing up your own contract can be hard. You don’t want to miss a step or forget a term.

A real estate lawyer can help to write a contract that is clear and easy to follow. They have the experience and knowledge to help you create a contract that is legally sound.

Avoid Mistakes With a Pre-written Contract

You will want to be sure that you have a legally sound contract.

Having a contract that gets challenged or one that is found to be flawed in some way could end up costing you a lot of money. By having a pre-written contract that is already legally sound, you will be sure to avoid having any mistakes.

Protect You Against a Breach of Contract

In the case that the sale falls through and you have to sue the buyer, you will have the protection of a pre-written contract. The pre-written contract can help to force the buyer to make the purchase according to the terms of the contract, rather than in a different way.

The Drawback of Using a Real Estate Attorney

Using a real estate lawyer will likely cost you more money than writing your own FBSO contract. You’ll also have to wait longer to close on the property since you will need to wait for the attorney to write the contract and have it reviewed by the buyers’ and sellers’ lawyers. However, the peace of mind you’ll get from a solid contract can help make up for this.

Hire a Real Estate Attorney Today

Knowing who draws up the contract in a for sale by owner transaction is important. However, just because you can draw up your own contract doesn’t mean that you should. Hiring a real estate attorney an help you ensure that your contract is sound and save you money if anything goes wrong.

Are you ready to draw up a contract? Prime Law Group wants to help you navigate the complexities of your real estate transactions. Contact us today to get the process started. 

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