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10 min read Jan 18, 2023

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

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Selling a house by owner in Texas without hiring a real estate agent is tricky but possible. Home sellers in Texas choose FSBO because it helps save money on the 2%-3% listing agent’s commission.

To ensure a successful FSBO home sale in Texas, you must be mindful of getting the listing paperwork right. Here’s a detailed guide on how to draw up an FSBO contract in Texas.

What Does FSBO Contract in Texas Mean?

An FSBO contract is a legitimate document. It contains information to safeguard your legal rights.

Home sellers in Texas choose a sell-by-owner arrangement to avoid hiring a real estate agent and save on the 6% real estate commission.

How to Sell a House By Owner in Texas?

When selling a home For Sale By Owner in Texas, the home seller is tasked with all the listing agent’s responsibilities. FSBO sellers in Texas should consider getting their homes inspected prior to selling them.

Home prices in Texas surged 19.8% between 2021 and 2022. 77% of FSBO homes are sold in less than 2 weeks. Selling FSBO in Texas is more popular and high-tech than ever.

» Sell My House Texas: Read more about how to sell a house in Texas.

Who Writes Texas For Sale By Owner Contract?

In a conventional house sale, the seller’s realtor or agent would prepare the papers and assist with the negotiations. If you’re selling your property alone, you might be curious about the procedure.

Once you start receiving buyer’s offers, offer negotiations begin, and the contract is drawn up. In Texas, it is not necessary to hire a real estate attorney for an FSBO transaction.

1. A Limited-Service Listing Agent

A limited-service real estate agent is cheaper than a traditional agent. They provide limited services at lower costs, but most property owners do not go for this option. With a limited-service real estate agent, you will spend more than save, as you will handle most of the tasks yourself.

2. The Home Seller

Many property owners are unaware of the starting point for drafting an FSBO Texas contract. Many sellers search online for contract templates.

An FSBO contract in Texas can be difficult to draft yourself as it’s complex and tricky to execute. In Texas, different home For Sale By Owner contract templates is provided by title companies and escrow companies.

» Can You Sell a House As Is in Texas: Read further to know more about selling a house as is in Texas.

3. A Real Estate Attorney

Hiring a real estate attorney can be an option for drafting a For Sale By Owner Texas contract. Having an attorney by your side can be helpful. They would provide professional guidance and ensure that the contract is legally binding for both parties.

A real estate attorney charges around $200- $400 per hour.

» Real Estate Attorney: Learn the role of a real estate attorney in a home sale.

What’s Included in the For Sale By Owner Contract in Texas?

Selling a house without a realtor in Texas means looking into all the details yourself. This means that from listing your home on MLS till the closing date, drawing up the contract is a part of it. Most home sellers aren’t familiar with this document and its inclusions.

» Sell your house: 7 things you need to know

# NoFSBO Contract InclusionsDescription
1Contract TitleHighlights purpose of the FSBO document
2Names of Home Seller & BuyerMentions full names of both parties
3Contract DateContains the date of execution
4Property DetailsShows FSBO property location, description, etc
5Payment TermsExplains the terms of payment in full
6Method of PaymentSpecifies the mode of payment of both parties
7ContingenciesTimeline and conditions of the event
8Closing DateDetails of the closing date, location, time, and place
9Signature BlockSpace at the end to place the names and signatures
10Property DisclosuresDiscloses all the material facts

1. Contract Title

Every document requires a title given to it explaining what the document intends to deliver. You can simply name it “Real Estate Contract.”

2. Names of Home Seller & Buyer

Add the full names of the parties to the contract. Later, you can refer to them as buyer and seller in the contract.

3. Contract Date

The FSBO contract in Texas shall mention the date of execution. The contract also specifies further dates by which both owners must proceed with the sale.

4. Property Address & Description

This is the most crucial part of drafting the contract. You need to be specific with the details of your property. Mentioning the entire property address is very important, and its legal description should be added. Now, you must start specifying the appliances you wish to carry with you or plan to leave them as is. Be as specific as possible. Do consider the below points.

  • Appliances include a refrigerator, washer, dryer, toaster, etc.
  • Home Decor includes decorative items such as wall art, figurines, table accents, etc.
  • Furniture includes closet doors, shelves, sofa sets, etc.
  • Any kind of yard or garden fixtures.

5. Terms for Payment

Because purchasing a home is a big investment, funding and payment shouldn’t be left up to chance. The buyer and seller should be transparent about their financial situation and clearly convey their expectations. Explain the terms of payment in full. You should include the following in your payment terms:

  • Purchase price of the house
  • Earnest money deposit
  • Payment of the remaining amount
  • Property taxes
  • HOA fee and payment rate for the current year

6. Method of Payment

The For Sale By Owner Contract in Texas contains the entire amount payable for the real estate property (the amount payable excludes the earnest money deposit). At times, the buyer is expected to make a full payment towards the home’s sale. Otherwise, the buyer may enter into a contract stating the amount for monthly installments for the home’s value.

7. Contingencies

In essence, a contingency clause allows parties in the FSBO Texas contract the option to back out of the contract under specific future conditions that must be agreed upon by the buyer and seller. The following are some common contingencies to the FSBO contract in Texas:

💲 Financing Contingency: This contingency clause gives the buyer the right to back out of the contract on failure to obtain financing within the specified time.

However, if the buyer fails to get a mortgage from the lender, he is supposed to inform the seller within that time. Failure to do so will make the buyer liable under the contract to purchase.

🕵️‍♂️ Inspection Contingency: The buyer gets your home inspected by a professional home inspector within a specified timeline. If the inspector reports any major defects in his report, then the buyer may ask you to repair them, or they might even terminate the contract.

🏡 Home Sale Contingency: A home sale contingency gives the buyer a specified time for selling their previous house to raise funds for the new property. This clause protects the buyer. If their house doesn’t sell for their asked price, the buyer can back out from the contract without breaching the contract terms.

💯 Appraisal Contingency: If the seller’s property is not appraised for the minimum specified amount, this condition safeguards the buyer. The buyer reserves the right to terminate the agreement. On rare occasions, even the earnest money is refunded.

The contingency clause contains a timeline and conditions as to the event of a contract. If the buyer fails to inform the seller about the appraisal report within the given time frame, then the buyer has to buy the property at a price initially agreed by both parties.

» How Much is an Appraisal in Texas: Read further to know how much is an appraisal in Texas.

8. Closing Date & Procedures

The home For Sale By Owner Contract in Texas is completed when it contains all the details of the closing procedure. The details related to the closing date, location, time, and place have to be mentioned. This acts as a deadline for the buyer to keep their finances ready. Changes in the closing details must be made by making amendments to the contract and filing it along with the remaining For Sale By Owner paperwork in Texas.

» Sell My House Fast Texas: Check out ways to sell your TX house fast.

9. Signature Block

Leave space at the end of the contract to place the seller’s and buyer’s names and signatures. Make sure to review your state laws to cover all bases in your FSBO Texas contract.

10. Property Disclosures

This is also an important part of your Texas For Sale By Owner Contract. The seller must disclose any issues the property might have that may adversely affect the property’s market value. If you fail to disclose any material defects in your property, chances are that you may face lawsuits in the future. Some states also provide a standardized disclosure form.

» How to Sell Home By Owner in Texas: Read further to know more about how to sell a house by owner in Texas.

Seller Disclosure in an FSBO Texas Contract

Sellers’ disclosure laws in Texas are governed by Section 5.008 of the Property Code. It says that home sellers of single-unit residential properties must provide buyers with a Seller’s Disclosure Notice.

These disclosure forms have to be delivered to the buyer on or before the closing date. If the seller fails to do so, then the buyer has the liberty to back out of the contract within 7 days of receiving the form. Both the seller and buyer have to sign the disclosure form.

» Sellers Disclosure Notice Texas: Understand the seller’s disclosures required in Texas.

Final Word

Any of these items must be present for the For Sale By Owner contracts in Texas to be regarded as legitimate and legally enforceable. An Texas home For Sale By Owner Contract must include at least this fundamental information in writing in order to be valid.

Other details, such as information about the property’s condition and occasionally contingency conditions based on obtaining financing or finishing an acceptable property appraisal or inspection, are typically included in most contracts. “Handshake transactions” or agreements without any of this information are not enforceable or legally binding.

Checkout the Best For Sale By Owner Websites

We have summarized the best paid and free for sale by owner websites for you.

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We’ve reviewed the best paid and free For Sale By Owner Websites in 2022

FAQs

1. Can a real estate agent act as an dual agent in Texas?

No, the Texas law does not permit dual agency under the revisions of TRELA.

2. Do I need an attorney to sell my house in Texas?

No, It is not necessary to hire an real estate attorney in Texas.

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