©Mark Cohen, J.D., LL.M., Boulder, Colorado
In today’s dynamic real estate market, Colorado property sellers are increasingly exploring alternative methods to maximize their profits. One such method is the For Sale by Owner (FSBO) transaction, which can potentially save sellers thousands of dollars in real estate commissions. However, navigating the complexities of a FSBO transaction requires a keen understanding of the law to ensure a smooth process and to reduce potential liability. This article highlights how an experienced Colorado real estate lawyer can protect sellers throughout the FSBO process.
Potential Savings in FSBO Transactions
Real estate commissions typically range from 5% to 6% of the property’s selling price, split between the listing and selling agents. For a property sold at $500,000, this can amount to $25,000 to $30,000. By opting for a FSBO transaction, sellers can potentially save these significant costs.
However, it’s crucial to note that while FSBO transactions can lead to substantial savings, they also come with responsibilities and potential pitfalls. This is where the expertise of an experienced real estate lawyer becomes invaluable.
How an Experienced Colorado Real Estate Lawyer Can Protect Sellers
1. Contract Drafting and Review: When a seller hires me for an FBSO transaction, one of my tasks is to draft or review the proposed contract to ensure it is legally sound and protects the seller’s interests. This includes clearly outlining the terms of sale, contingencies, and closing dates. Many people do not know that a lawyer can modify the standard Colorado Real Estate Commission forms to reduce the risk of a seller being accused of non-disclosure. Read the “Are You Really Selling Your Home As Is?” article).
2. Legal Compliance: Navigating the legal landscape of real estate transactions can be complex. I make sure the seller makes all required disclosures, and that the transaction complies with local, state, and federal regulations.
3. Negotiation Support: Even in FSBO transactions, negotiations can become contentious. I can provide strategic advice and represent the seller’s interests during negotiations, ensuring a fair outcome.
4. Title and Liens: Another task I perform in FSBO transactions is to review the title commitment and advise the seller how to respond to any title objections after the title company issues a commitment.
5. Dispute Resolution: In the event of disputes, I advise and represent the seller in any mediation or litigation.
6. Closing Process: The closing process involves numerous legal documents and financial transactions. Although lawyers typically do not appear at closings in Colorado, I review all the paperwork prior to closing to make sure everything is in order and that the seller receives the agreed-upon proceeds.
Don’t sign a contract someone plucked from the Internet or copied from someone else.
Once you sign a contract, you are stuck with it. The best way to ensure a smooth transaction and to minimize a seller’s potential liability is to draft a contract that minimizes the risk to the seller. Don’t subject yourself to potential liability just to save a small amount on legal fees.
Conclusion
While FSBO transactions offer the potential for significant savings on real estate commissions, they also require a thorough understanding of legal processes and potential risks. Hiring an experienced real estate lawyer can provide sellers with the protection and guidance needed to navigate these transactions successfully. By combining the financial benefits of FSBO with legal expertise, sellers can maximize their returns while ensuring a secure and compliant transaction.
I specialize in real estate law and litigation. Expertise.com rates me as one of the best real estate lawyers in Denver. Please call me at (303) 638-3410 if you would like to discuss any potential FBSO transaction.
