For Sale By Owner Contracts – What You Need to Know

Often when I am discussing the merits of using a Realtor versus going it alone in a For Sale By Owner transaction, I talk about one extremely important aspect: the legal clauses of the contract. In Oregon, Real Estate Brokers have a committee called OREF (short for Oregon Real Estate Forms). These individuals gather information from all of us Realtors and law professionals such as Phil Querin (head of PMAR‘s legal council) and meet to make changes and updates to our sale agreement and related addenda on a regular basis. The documents that they provide are the forms that the vast majority of real estate professionals in Oregon use.

The sale agreement that Realtors use is currently 11 pages long. This does not include counter offers, disclosures, inspection addendums, promissory notes, etc. While this length does at times seem excessive, the clauses contained are designed to help facilitate the most fair transaction.

The following information is general, and may not apply to specific situations. Contact a competent legal professional to discuss questions as they relate to your specific situation.

In a nutshell, the OREF sale agreement is designed to do the following:

The biggest thing that the sale agreement provides to all parties are provisions in which the earnest money could be retained by the seller or refunded to the buyer. For example, if the buyer damages the property, this could be a scenario in which the seller gets to keep the earnest money. Or, if the buyer does not approve the inspection or repairs performed during the inspection, the buyer could withdraw and get their earnest money returned to them. Perhaps the property does not appraise, the buyer may have the option of terminating with earnest money refunded. The professional agreement outlines these contingencies in specific detail, so that there are much less misunderstandings about how the real estate transaction is supposed to unfold.

The professional inspection addendum (which is an optional form that not all agents decide to use) informs the buyer of the inspections available to them: whole house, radon, sewer, septic, boundary survey, lead paint, abandoned oil tank, etc.

The contract makes clear definitions on all timeframes, including differentiating between business days and regular days.

It also outlines dispute resolution processes available to all parties.

And much more. The above are just a few of the items that you will find in our agreement.

In the rare instance that a homeowner is going to sell by themselves, without a Realtor, the parties need to provide their own forms to use. Most commonly I hear people saying that they will use the Steven’s Ness legal form that can be downloaded on the internet. I reviewed the gallery of forms that the website posted for sale, and it appears that the sale agreement that the public would purchase is this one.

Note that, in comparison with the current 2017 sale agreement OREF form, the Stevens Ness sale agreement form is only one page. Disclaimer: I am not an attorney. However, I’m struggling to find many of the protections our forms committee have provided in the form that is used when you aren’t using a professional. So these are areas which you’ll need to look at very carefully if you are considering either marketing the property on your own or buying a home without representation. The money that you think you save may cost you substantially more in the long run, in both a monetary and legal sense.

 

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