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8 min read Aug 10, 2023

How to Create a For Sale By Owner Contract in Texas?

Are you planning to sell your house without a realtor? If yes, then you will need a For Sale By Owner contract to seal the deal.

However, many FSBO sellers are clueless about the contract and often ignore its complexities. All purchase and sale agreement should be error-free because it is legally binding. One mistake could make the deal fall through.

Home sellers wouldn’t have to bother with the contract in a traditional sale because the agent takes care of it. But in case you forego using an agent, you have to create your own FSBO contract. This guide will help you draft it the right way.

🚀 The Rise of FSBOs

  • According to Zillow, 26% of Gen X’ers and 36% of millennials listed FSBO.
  • National Association of Realtors found that FSBO homes sold faster than agent-assisted homes. 77% of FSBO homes sold in less than 2 weeks.
  • MLS is an important FSBO tool. Homes on the MLS sold faster and for 17% more than homes not on the MLS.
  • is Texas’s #1 For Sale By Owner website. Beycome and List With Freedom are the next best options.

What is a For Sale By Owner Contract?

An FSBO contract is a legally binding document to formalize the sale of the house. In a traditional real estate transaction, the seller or buyer’s agent creates the purchase agreement.

However, in an FSBO deal, the seller is responsible for the contract. They must hire a real estate attorney to make the For Sale By Owner Contract legally binding.

The For Sale By Owner agreement protects the rights and interests of both parties to guarantee a smooth process.

What is For Sale By Owner?

FSBO or For Sale By Owner is the process of selling a property in Texas without the assistance of a listing agent. Often sellers take this route to save on agent commissions and may use a Flat Fee MLS service.

The average listing and buyer commission is between 2.5% and 3%. This amounts to 5% – 6% of the sale price.

» For Sale By Owner Meaning: Read in-depth about the term “FSBO” to understand its meaning.

Is For Sale By Owner Real Estate Contract Enforceable in Texas?

Yes, the contract is enforceable if both parties agree and sign the document. Take the following steps to make the contract legally valid

  • Legal Validity: Your proposed contract should be admissible in court. You can hire a lawyer who can review your contract for legal validity to ensure everything holds up in court.
  • Competent Parties: Both the signing parties should be able to understand the terms of the contract. Neither party can be a minor, under the influence of alcohol or drugs, and mentally ill.
  • Fair Compensation: There must be a reasonable value exchange between the parties.
  • Offer and Acceptance: The FSBO contract should contain an offer from the buyer and an acceptance from the seller.
  • Bona Fides: Bona fides (in good faith) means that both parties should agree to the terms of the created binding agreement.
  • Mutual Consent: The contract is only valid if it is signed with joint consent. If one party threatens or coerces the other, the contract becomes invalid.

Who Draws Up Contract For Sale By Owner in Texas?

The seller is accountable for drafting the FSBO contract. But a contract written by a common person cannot be considered legal. But, there are two ways to get the FSBO contract that is legally binding:

  • Hire a Real Estate Attorney: They have the knowledge and ability to draft a real estate contract. In some states, you may need to hire one to ensure the transaction is legally binding. They charge approximately $150 to $300 per hour. Companies like Emerald Coast Title Services offer FSBO contract assistance that can help sellers immensely.
  • Ask the Buyer’s Agent: If the home seller doesn’t have an agent, the buyer’s agent can step in to help. You can engage them as a dual agent who represents both you and the buyer. Alternatively, they can just be a transactional agent and not represent either party but just help ensure that the transaction remains on track and provides all the necessary forms and disclosures.

A dual agent would charge significantly more for their services. Since a transactional agent is not representing either party, they are significantly cheaper.

If you plan to draft the FSBO contract yourself, consider looking at a real estate FSBO contract template online.

9 Must-Have Inclusions in Texas FSBO Contract

To draft a complete FSBO agreement, it should have a few essential things, they are as follows:

  1. Title of the Contract: The contract’s title defines the document’s purpose. You may name it a ‘Purchase Contract’ or ‘Real Estate Sales Contract’.
  2. Name of Home Seller and Buyer: The document should include the legal names of both the buyer and the seller.
  3. Date of the Contract: The date acts as a deadline for both the buyer and seller to complete their formalities. If any of the parties exceeds the deadline, then they will have to face the penalty.
  4. Property Details: The location, size, and boundaries of the lot should match the tax records. You also have to ensure you do not give any false information about the property.
  5. Payment Terms: Payment terms are critical for any real estate transactions. Explicitly highlight the price expectations, who pays closing costs, and related expenses.
  6. Closing Procedures: Your FSBO contract should include details about the closing procedure such as the closing date, time, and location. In the event of any change in information, the contract must be amended and both parties must sign it.
  7. Signature Block: You have to leave some space at the bottom of each page for all parties i.e., the buyer, seller, and witness to sign the contract. In some states, initials are required on certain sections of the contract. Check your state requirements and ensure they are met.
  8. Property Disclosures: Legal disclosures are an essential part of your purchase agreement. It is the seller’s responsibility to disclose all information required by law.
  9. Contingency Clauses: Contingencies are contractual rights allowing parties to back out of the agreement safely, without any penalty.
    • Common Contingencies in an FSBO Contract Include:
      1. Financing Contingency: This gives buyers time to secure financing and the option of getting their earnest money back.
      2. Inspection Contingency: The buyer has the right to back out of the deal if the home inspector reports any serious problems.
      3. Home Sale Contingency: If the buyer is unable to sell their current home within the specified timeframe, they can withdraw their offer.
      4. Appraisal Contingency: The buyer can back out if the home is appraised for less than the purchase price.

Final Thoughts

An FSBO contract is a legally enforceable purchase agreement for For Sale By Owner transactions. Unlike traditional home sales, the FSBO agreement is the owner’s responsibility.

The process of putting together the contract can be lengthy and tedious for many. In fact, first-time FSBO sellers may find it overwhelming to handle the task of drawing up a contract themselves. But worry not, there are title companies and attorneys who help FSBO sellers at every step to draft a contract.

» Paperwork for Selling a House Without a Realtor: Mandatory paperwork that FSBO sellers must know when selling their homes!

How Houzeo Helps FSBO Sellers

Houzeo is a tech-centric FSBO platform for homeowners in America. They provide advanced tools like Showings Management and Offer Management that make a seller’s work easy when selling a home.

For Sale By Owner sellers may not get the FSBO agreement from Houzeo. But they can consult the right professionals to get assistance for their contract. We have reviewed & ranked the best FSBO sites that can help on your FSBO voyage.

Reviews: America’s Best FSBO Websites

We’ve reviewed the best paid and free For Sale By Owner Websites in 2023

» NEED MORE CLARITY? Read these exclusive Houzeo reviews and learn why it is one of the best Flat Fee Multiple listing Service in Texas.

Frequently Asked Questions

1. Is For Sale By Owner legal in Texas?

You can write a for sale by owner contract by including details such as name of the parties involved, the address of the property, home price, and disclosures.

2. How long does a seller have to back out of an FSBO contract in Texas?

Texas law does not give sellers a statutory right to cancel a contract out of any kind of reason. A seller may only cancel a contract under a very restricted set of circumstances, so be careful to seek legal advice from a professional.

3. How does a for sale by owner contract work?

An FSBO contract works when all parties involved sign the document. You need to make sure that all details about the property and transaction is included in the contract for it to be legally valid.

4. Who draws up contract in for sale by owner deal in Texas?

The seller draws the FSBO contract in the home by owner sale. However, the seller can hire the buyer's agent or a real estate attorney to write it.

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