Who Draws Up the Contract in For Sale by Owner Home Transactions?

By Amy Beardsley

Posted on August 30th, 2022

What contract do you need for FSBO home sales? | Who draws up the sale contract? | Understanding your purchase agreement | Who pays for drafting the sale contract? | Alternatives to a DIY home sale

Illustration of a contract

Whether you're a buyer or seller, take caution when working with for sale by owner (FBSO) contracts. If there are mistakes in the agreement, both parties can face legal complications and lose money — not to mention, the entire deal could fall through.

So who draws up the contract in a for sale by owner transaction? Should sellers do this themselves or get help?

In general, we recommend entrusting contracts to a qualified real estate attorney, transaction coordinator, or realtor. These professionals provide much-needed peace of mind, reducing your stress during the transaction process and reducing the risk of costly mistakes.

Whether you're set on a DIY home sale or simply exploring all your options, it's always a good idea to shop around and ask questions as part of your research process.

Our friends at Clever Real Estate provide expert advice around the clock — and it's completely free, with zero obligation. You can ask Clever's licensed concierge team questions to prepare for your upcoming transaction.

If you ultimately decide that drawing up real estate contracts is beyond your comfort zone, Clever can help you find real estate professionals in your area and save on listing fees. With Clever, you'll pay just 1% rather than the standard 3% — saving the average home seller $9,000!

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What Contract Do You Need for FSBO Home Sales?

Home sale contracts, also known as purchase agreements, outline the conditions of the sale. Buyers and sellers must agree to all conditions, usually by negotiating an offer and any contingents.

The home sale contract can also include an overview of financing, requests for repairs, closing details, and the date a buyer can take possession of the property. Contracts also spell out the consequences if specific terms aren't met and the sale dissolves.

Once both parties sign the document, it is a legally binding contract.

Who Draws Up The Contract In A For Sale By Owner Sale?

In a traditional home sale using real estate agents, the listing agent typically draws up the contract. If you're selling FSBO, it's up to you to provide the necessary contracts.

The paperwork for selling a house without a realtor can also be done by a real estate attorney or lawyer. Legal professionals have the most experience and can explain the complex addendums and clauses to avoid miscommunications.

Some states require that an attorney draws up home sale contracts whether it’s a FSBO transaction or not. You’ll need to hire a real estate attorney for the contract in three states:

  • Alabama
  • Georgia
  • Massachusetts

Many other states require parties to hire a lawyer to certify the title or other legal documents. They may also require that an attorney conduct closings, in person or virtually.

There are a few states where sellers can legally draft home sale contracts themselves, but it's generally best to hire a lawyer. Purchase agreements are complex and, when completed improperly, can cause your deal to fall through.

No matter where you live, we recommend working with a real estate agent to avoid making costly legal mistakes. Our friends at Clever Real Estate can match you with the best real estate agents from top brokers including Keller Williams, RE/MAX, and Coldwell Banker. Or, if you need a little less hands-on support, Clever can help you find pre-vetted transaction coordinators near you.

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Looking for an agent? Clever Real Estate's licensed concierge team can introduce you to pre-vetted agents near you! You'll choose between top-rated agents from major brokerages like Keller Williams, RE/MAX, and more.

Best of all, you'll save thousands, thanks to Clever's affordable 1% listing fees. Buyers in 41 states and Washington D.C. can also receive 0.5% cash back after closing!

9 Items Included in Your Purchase Agreement

Contracts must contain all required elements to become legally binding, including the purpose of the agreement. All states allow FSBO, but not all states allow sellers to conduct the closing without a professional advisor.

In addition, all parties must be competent at the time of signing. In plain language, that means neither the buyer nor the seller can be a minor, under the influence of drugs or alcohol, or be mentally deficient (such as having Alzheimer's disease or dementia).

In general, the best way to write a purchase agreement is with the help of a real estate lawyer who reviews the contract to make sure it will hold up in court. You can also find your state's standard purchase agreement online (though you should always double check its legitimacy).

Every real estate purchase agreement may include the following elements:

📋 Name of the Contract

The title (e.g., Real Estate Purchase Agreement).

🧑Buyer and Seller Names

Full legal names must be used. It’s good practice to include addresses as well.

🗓️ Applicable Dates

Dates are crucial in the contract because they spell out the time for when the contract is active.

For example, the agreement may include a deadline for the buyer to complete a home inspection or the closing date agreed to by the seller.

Some FSBO contracts may describe penalties for failing to meet deadlines, but it isn't expected.

🏡 Property Description

The property description should be as detailed as possible.

The contract must include the property address, the legal description that is on the deed to the property, and details about which items are excluded and which items are included in the sale, such as:

  • Appliances
  • Decorative items
  • Garden furniture and/or yard fixtures
  • Above-ground pools/hot tubs
  • Closet doors, shelves
  • Furniture

✍️ Space for Signatures

The purchase agreement also includes space for all parties to sign the contract. Usually there is space for both printed and signed names of buyers and sellers. Again, everyone must use their full legal names, not nicknames or shortened versions.

Some states also require initials on specific sections or each page of the purchase agreement. Check your state’s laws to ensure your contract complies with all mandates.

💰 Payment Terms

Because home buying is a significant investment, don’t leave the payment and financing to chance. Your purchase agreement should include payment terms, including:

  • Full purchase price
  • Earnest money deposit (amount, date due, where it will be held)
  • How the outstanding balance will be paid (usually at closing)
  • Property taxes (usually prorated)

🔎 Disclosures

Another critical section in your purchase agreement is the legal disclosures. Of course, disclosure requirements vary by state.

It’s important to disclose everything required by law. Withholding information can invalidate the contract and leave you vulnerable to lawsuits.

For example, you must include information about flooding, termite damage, or nearby disruptions that could lower the home's value (such as an airport or environmental hazard).

💬 Contingencies

Finally, every purchase agreement will have a list of contingencies, such as an appraisal contingency. These clauses permit the buyer to back out of the deal under specific circumstances and explain how to handle a contingency removal.

Agreeing on contingencies are a major aspect of negotiations, so be sure you know what is — and isn't — up for debate:

Type of Contingency
Description
Financing
Gives the buyer time to secure financing and allows them to receive their earnest money back if they cannot get financing.
Inspection
The buyer has the right to get the home inspected within a specified period.
Existing Home Sale
The buyer can withdraw the offer if they cannot sell their current home within the specified time.
Appraisal
Protects the buyer and ensures the property's value reaches a specified minimum amount.

🤝 Closing Procedures

The contract also includes details about the closing procedures, such as the date, time, and location. If any information changes, the agreement must be amended and signed by both parties.

Who Pays for Drafting the Contract?

Typically, the seller pays to draft the contract in an FSBO transaction.

Fees could include a real estate attorney, buyer's real estate agent commission, escrow administration, HOA transfer, inspections, appraisals, and taxes. Your fees depend on what services your transaction requires and your state's laws.

What to Do If You Don’t Feel Comfortable Drafting Contracts

Drafting a contract can be overwhelming, just like the entire process of selling FSBO alone. It’s a complicated process that can go sideways if one element is missing and voids the contract.

If the seller doesn't have an agent, the buyer's agent can write the contract or the seller can hire a real estate attorney to do it.

One of the most significant benefits of working with a real estate agent is not having to face the paperwork alone.

If you're thinking about FSBO to save money, consider reaching out to our friends at Clever. Their licensed concierge team can provide expert guidance that will help you understand all your options. You can shop around for local real estate agents and transaction coordinators, or simply get the lay of the land as part of your research process.

If you do meet a real estate professional you'd like to work with, Clever can help you save thousands with pre-negotiated listing fees of just 1%.

Clever also offers a free online home value estimator — just plug in your ZIP code below to see how much your home is worth, then connect with a Clever agent who can save you thousands on your home sale!

💰 How Much Is Your Home Worth?

Before listing your home, find out how it compares to others in your local market.

Recommended Reading

FAQs About For Sale by Owner Contracts

Who draws up the contract in a for sale by owner transaction?

In a typical home sale, the listing agent draws up a purchase agreement, but some states require home sellers to work with a real estate attorney. If you're selling FSBO, these responsibilities will fall on you. Learn what contracts and paperwork you need to sell a house, plus the best way to avoid complications and risks.

Who handles the contract when buying a house?

When you purchase a home, your lender will guide you through most of the necessary paperwork. When signing a purchase agreement, you'll also work with the home seller, who may be represented by a real estate agent or transaction coordinator. In some states, you may also have to entrust portions of the transaction to a real estate attorney. Learn what paperwork is required to sell a house.

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Posted in Selling a House