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The Typical Residential

Real Estate Sales Transaction:

An Overview for Buyers and Sellers  

NOTE:  This article is intended to be a brief summary of law only, parts of which may or MAY NOT be applicable to your situation and/or your local jurisdiction(s).  Any information you glean from this article DOES NOT constitute legal advice and should be supplemented with the advice of an attorney licensed to practice law in your locality.

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3.)    Negotiating the Real Estate Contract. Once the buyer decides on a particular piece of real estate to purchase, he/she will want to make a purchase offer on the property. Typically, the Seller will have already formulated an asking price and communicated the same to all prospective Buyers. At this point, the negotiation really begins. . .

a.   For Sale By Owner. Naturally, from a Seller’s perspective, and time permitting, it is always best to have as many different offers from as many different Buyers as possible. This is the most important reason why most Sellers employ the services of a Real Estate Agent or Broker. Having a licensed professional - and the associated real estate office, listing services, etc. - market one’s property saves time and can vastly increase the number of potential buyers attracted to a given piece of real estate. Likewise, since most Sellers of real estate employ agents/brokers and listing services to sell the real estate, most prospective home buyers also employ the services of agents or brokers so that they can fully tap into that enormous pool of agency sold real estate.

However, in certain circumstances, such as when a Seller believes his/her home is in such good condition and is located in such a great area that a suitable Buyer will be found without the aid of a real estate agent or broker, a Seller will choose to market and sell the real estate by him/herself in a “For Sale by Owner transaction. Sometimes, a Seller goes it alone simply because he/she cannot stomach the idea of a real estate agent or broker taking a sizable percentage of the sale price (i.e., typically 1-5 percent). Regardless of the reason for foregoing broker/agent services, a For Sale By Owner transaction typically involves two unrepresented parties who have little if any knowledge or experience in substantial contract negotiation, much less real estate contract negotiation. In such circumstances, it is doubly important that both parties have attorneys to walk them through the process, making sure their respective interests are protected and, in most cases, taking on even more of the document production and review work than is handled by an attorney in an agency sale.
[See The Role of the Attorney in a Real Estate Transaction on page 1 of this document.]

b.       Deciding on the Key Terms. Once a Seller finds Buyers desiring to purchase the Seller’s real estate, and once a Buyer decides that he/she would like to purchase a particular piece of real estate, what typically happens is that the Buyer(s) make an offer to purchase the property. Typically, because real estate contracts must be in writing and the key terms that the Buyer would agree to must be listed in the offer (See The Statute of Frauds), a Buyer will make the offer by filling-in, signing and forwarding to the Seller one of the commonly available real estate contract forms. Generally speaking, assuming all of the requirements of contract formation are met, once the Seller evidences his/her agreement to the terms of the offer by signing his/her name along side that of the Buyer, a contract is formed. Prior to the Seller signing, the form is a mere offer. Once the form is filled out with all necessary terms and signed by both parties, it is a binding contract.


See Also:

Common Law Vs.
Civil Law

The Statute of Frauds

Doctrine of Equitable

in this document:

Preliminary Matters


The Role
of the Attorney


Hiring a Real Estate


Real Estate Seller’s Agent

Real Estate Buyer’s Agent

Real Estate Broker


Negotiating the
Real Estate Contract

‘For Sale By Owner’

Deciding Key Terms


Pre-Closing Matters


Mortgage Issues


The Closing

The Deed

Affidavit of Title
ALTA Statement

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If you would like further information about this topic, or would like to request attorney services for the writing, negotiation or closing of a real estate contract, click here to contact us today.

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* Licensed to practice law in New York and Illinois.

© Roger Galer, 2004

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