10 min read Jul 28, 2022

How to Create a For Sale by Owner Contract (2022 Update)

Cover - For Sale By Owner Contract

👉 Jump To: What is FSBO ContractWho writes it | What to include | State-wise contracts | Is it legally binding | Alternative | Sample | FAQs

Selling a house by owner is tricky and requires a lot of patience and extensive paperwork. Home sellers choose FSBO because it helps save money on listing agents’ commissions.

To ensure a successful FSBO home sale, you must be mindful of getting the listing paperwork right. Here’s a detailed guide on drawing up a For Sale By Owner Contract.

What is a For Sale By Owner Contract?

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

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

What does For Sale By Owner Mean?

For Sale By Owner simply means selling your home yourself. When selling FSBO, the home seller is tasked with all the listing agent’s responsibilities.

This means that FSBO marketing, prospecting, negotiating, and closing—everything related to the FSBO sale happens at the pace of the homeowner. A listing agent’s primary role is to get the property listed on the MLS.

» Selling a House: Check out the 7 steps to selling a house in America.

Who Writes the FSBO 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. Usually, a real estate attorney does it.

1. The Buyer’s Agent

You can also choose the buyer’s agent to act as your agent. A transactional agent does the task for you. They are also known as “Dual Agents.” In this scenario, the realtor will act as a third-party person and will not negotiate for either of the parties.

If you choose to do so, the cost of drawing up the paperwork will be added when closing the sale. There might be a chance that the agent’s commission would land on your plate, so make sure you ask to split the cost in the initial stage itself. However, few states prohibit the Dual Agent concept.

2. A Real Estate Attorney

Hiring a real estate attorney can be an option for drafting a For Sale By Owner 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 $150 to $300 an hour.

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

3. 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 of the property owners do not go in for this option. With a limited-service real estate agent, you will spend more than saving as you will handle most of the tasks yourself.

4. The Home Seller

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

Drafting a For Sale By Owner Contract yourself can be difficult as many states require a realtor to draw up the contract. Title companies and escrow companies provide different FSBO contract templates made per different state laws.

What’s Included in Your Home For Sale Contract?

Selling a house without a realtor 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 Without A Realtor: Steps to Selling Your Home Yourself

# 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 shall mention the date of execution. The contract also specifies further dates by which both owners must proceed with the sale. In some FSBO contracts, there are fines for missing deadlines.

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 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 full payment towards the home sale. Otherwise, the buyer may enter into a contract stating the amount for monthly installments for the home value.

7. Contingencies

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

💲 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.

8. Closing Date & Procedures

The house for sale by owner contract 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 like 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 paperwork.

9. Signature Block

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

10. Property Disclosures

This is also an important part of your 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.

» Seller’s Disclosure: What Home Sellers Need To Disclose

State-Wise For Sale By Owner Contracts

If you can’t find free stuff, there are paid options like USLegal. Many legal forms, such as tax records, property surveys, and deeds, are usually found through local or state government offices, such as your tax assessor’s office or the department of revenue.

Is a For Sale By Owner Contract Legally Binding?

Yes, of course!

For Sale By Owner Contract is a legally binding agreement between the buyer and seller. Selling your home can get overwhelming at times. Because in an owner-to-owner sale, you have to do everything yourself. The things a realtor does are:

  • List on MLS
  • Arrange an open house
  • Schedule showings
  • Negotiate buyers’ offers
  • Draw up the contract

With the help of a professional, it becomes easier for the buyer and seller to deal with the contract and its contingencies. They help with the negotiations and often provide the best price for the house.

A home sale is a complicated process, and it requires a lot of paperwork to be done. It is essential to have a contract to make this sale legally binding for both parties.

» FSBO Paperwork: Understand the paperwork required for Selling a House Without a Realtor

Alternatives to FSBO Contract

If you feel that the listing paperwork is quite complex, you can consider high-tech, online For Sale By Owner websites like Houzeo.com & finish the listing formalities in 60 minutes.

    🎯 Houzeo Helps You Create Your FSBO Contract Effortlessly

    Houzeo is the best alternative for you to complete the FSBO paperwork, from listing on the MLS, to seller disclosures, and closing.

      💲 List your property with Houzeo’s Freemium Plan

      💲 Purchase the “Contract to Close Upgrade Package”. A Licensed broker will review your paperwork to make sure it is appropriate.

      In addition, you should also have the settlement agent review the paperwork so you cover all bases. Houzeo takes FSBO to the next level with its innovative technology.

    » More: Start your FREE listing NOW!

Interesting Facts about For Sale By Owner Contract

FSBO contract can be written on a blank A4 size sheet of paper or legal paper, or even a handkerchief! It can be handwritten or printed. Everything works if all the terms are highlighted, and the contract is duly dated and signed by both parties.

Here’s a sample handwritten FSBO Purchase Agreement:

For Sale By Owner Contract


1. How do I write a For Sale by Owner Contract?

1. Enter the basic information in your contract
2. Decide the payment terms
3. Disclose the material facts relating to the property
4. State the closing procedure and closing costs

2. Who writes a contract when selling a house?

The buyer's agent or a real estate attorney typically writes the contract.

3. At what point is a For Sale by Owner contract legally binding?

The For Sale by Owner contract is legally binding when the buyer and seller agree upon the sale price and duly sign the contract.

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