You should consult a lawyer before signing any agreement with respect to the sale of your home. Your real estate agent or your financial institution may suggest a lawyer but you can insist on a lawyer of your own choice. Check with several lawyers as to their prices and services. Too often, a lawyer is consulted after the Agreements are signed. Sometimes it is too late to fix the problems because binding legal obligations are created once the parties have signed the Agreement.
You are not legally required to use a realtor to sell your home. However, there are some benefits to using a realtor. For example:
If you use a realtor, you will be asked to sign a “Listing Agreement.” You may want to consult with a lawyer before you sign the Listing Agreement. A standard form of the Listing Agreement establishes the realtor’s commission rate; however, you may freely negotiate the real estate commission with the realtor. The Agreement states that the realtor’s commission is to be paid partly from the buyer’s deposit and partly from the purchase monies provided to your lawyer at the closing date. It is your responsibility to ensure that the commission is paid. The Listing Agreement also states the length of time the realtor has to sell your home.
The realtor will provide the standard form of the “Purchase and Sale Agreement” when an offer to purchase is made. Review the Agreement before you sign it. You should know and understand the terms upon which you were willing to accept the offer to purchase your property. If you do not understand any of the terms in this Agreement, ask the realtor for a written explanation or ask your lawyer. Once you and the buyer have signed the Agreement, binding legal obligations are created. These obligations can only be changed with written consent of you and the buyer.
The buyer should put down a small deposit as an indication of good faith for the offer to purchase. The deposit may range from 5 to 10 % of the purchase price.
The buyer may also impose conditions on the offer to purchase. A conditional offer means there is no binding contract until the conditions are met. For example, the offer may be conditional upon the buyer getting a mortgage or selling their home by a certain date. If the buyer does not get a mortgage or does not sell their home by the specified date, the buyer can be released from the Agreement and the deposit must be returned. Other standard conditions include the buyer getting a satisfactory home inspection or certain repairs completed before the sale. These conditions must be met or waived by the buyer; otherwise there is no binding Agreement. The conditions should be both reasonable and limited in time. Once all the conditions in the Agreement are met or waived by the buyer, the buyer is bound by the offer to purchase. If, after this point, the buyer backs out of the sale, you are generally entitled to keep the deposit.
Representations and warranties concerning the condition and location of the buildings on the property are also stated in the Purchase Agreement. Change any of the terms in the Agreement that you cannot promise about the property. Place your initials beside the term or terms you changed. If you are not sure whether your property meets the standard representations and warranties stated in the Agreement, discuss title insurance with the buyer. Title insurance will compensate the owners of the property if it turns out that the title to the property is not as stated and they suffer a loss as a result.