I remember when I began my real estate career how little confidence I had in my own ability to write a good sales contract.  I'm still amazed at how many "seasoned" agents demonstrate so much carelessness in what is such a basic and crucial task.  If that's the state of affairs within an industry that uses sales contracts on a regular basis, is it little wonder that the general public doesn't fully understand them?  That's precisely the danger for FSBOs.  If they are going to sell their house themselves, it's absolutely essential they know how to write them.  

       A good place to begin learning about contracts is with the appropriate State Statutes themselves.  In South Carolina those statues have laid down several requirements for real estate sales contracts to be considered legal and enforceable.  They are:

1.      Written Agreement:  The Statute of Fraud requires that all real estate sales contracts be in writing to be enforceable.  Handshakes, verbal agreements and general understandings are not legally enforceable so make sure all the details of the agreement are in writing!

2.      Offer and Acceptance:  All contracts for sale must have an offer and acceptance between both parties.  Counter offers (or, any changes to the original offer, no matter how small or seemingly insignificant) automatically void the original offer.  Therefore, all counter-offers must be accepted (signed or initialed) by the other party and then all parties must be duly notified of that acceptance before the contract becomes enforceable.  Silence cannot be considered as acceptance.  Prior to notification of acceptance of an offer or counter-offer, the other party has the right of withdrawal without penalty.

3.      Consideration:  There must be an agreed upon legal consideration of value exchanged for the performance or promise of performance by the other party.

4.    Competent Parties:  The parties entering into the agreement must be competent (not insane or intoxicated) and of legal age (18). 

5.    Legal Purpose:  Contracts must be for legal purposes and cannot involve the performance of illegal acts.

6.    Signed Originals:  The original contract must be duly signed and dated by all parties to the agreement.  Don't forget that any and all changes or modifications must also be initialed and dated by all parties.  

       The two most common mistakes made in writing contracts, even by real estate agents are: 1) not getting everything in writing, and 2) not understanding the urgency of signature and notification of acceptance.  Obviously, there are other issues and I'll address ot those in another article.

        To read the follow-up article on understaning contracts, click HERE.

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