Who Draws Up Contract In For Sale By Owner

March 10, 2022

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A quick outline

Selling a house on your own can be a daunting process, and one of the first things that can trip sellers’ up is the purchase agreement. Don’t panic, this isn’t as difficult as it may seem and there is a standard procedure to follow when creating this contract. Read on, as we dive into answering the question; who draws up contract in For Sale By Owner?

If you’re considering putting your house on the market, you may want to sell your house without a realtor. Whether that be to save costs or because it’s a sellers’ market, the way to do it is to list a house For Sale By Owner or FSBO. Typically, one of the things a realtor would do is draw up the sales contract for the property, however if you’re selling a house on your own, you will need to figure this part out yourself. There’s a way to do this yourself, which we’ll outline in more detail below.

Who draws up the contract in For Sale By Owner?

The purchase agreement is one of the first steps towards closing the deal on your home. Once a buyer has made an offer and the seller has accepted, they will sign the purchase agreement which is the written contract between the two parties that defines the terms of the sale.

In the case of FSBO sales, there are a few options for getting the contract drawn up.

You can write the contact yourself, or
The buyer’s agent could play dual agent and write up the contract, or
A real estate attorney can draw up the contract

It’s important to note that the last two options will require payment.

How do I write a contract to sell my house?

When you’re selling a house yourself, you may need to write the FSBO contract yourself. This will specify the terms and conditions of the sale in detail, along with the rights and obligations of both the seller and the buyer. You can get the contract right by making sure it abides by the legal requirements of your state, including the sections outlined below, and making sure that the language you have used is correct for such a document.

Important sections to include in your FSBO contract

Real estate purchase agreements need to include a few important sections to be usable in a sale, so we’ll go through the sections with a description of what should go in each.

Basic information

The details of both the buyer, seller and the property should be made clear in this section.

Contract name: The title of the contract needs to be made clear at the very top, for example “Real Estate Purchase Agreement” or “Real Estate Sales Contract”.
Buyer and seller names: The full names of both parties need to be included (first, last and middle).
Contract date: This is an important piece of information to include in case it is needed for reference later. Particularly, if any disputes arise.
Offer and acceptance: The contract will need to outline the offer on the property from the buyer and the acceptance of this offer from the seller.
Property description: A detailed description of the property needs to be included, along with the legal description according to deed, and the property’s address. This section should include anything else that’s part of the sale as well, such as appliances, fixtures that aren’t usually part of the sale and so on.
Signature block: You’ll need a signature block at the bottom of the contract, where both parties need to print their names and sign. Depending on your state, each party may need to initial every page as well.

Payment terms

The details of the payment terms for the property need to be outlined fully in this section.

Purchase price: The full purchase price that is to be paid must be stated, and this is before any earnest money is deducted.
Earnest money: The details of how the earnest money will be paid, the amount to be paid, the date it will be paid and where it will be held, should be explained in this section.
Purchase price payment: How the purchase price will be paid, is the topic that should be covered in this section, as well as when it will be paid. For example, if it is to be paid in full at the closing of the sale, this will need to be specified here.
Property taxes: Property taxes are usually prorated between the buyer and seller at the time of selling, which means that this should be stated in the contract. If this is not the case and the seller agrees to continue paying the taxes until a specific point before the buyer is responsible, this will all need to be included here.

Disclosure

This section is all about informing the buyer of any important information they need to know before they go ahead with the purchase. This will include information on:

Easements: Any restrictions form the HomeOwners Association (HOA) or easements on the property should be described in this section, as both of these can impact the buyer’s decision and what they can and can’t do with or on the property.
Disclosure: Depending on the law in your state, you may need to disclose certain defects in your property. These defects can be the likes of water leaks, roof damage, zoning issues and so on.
Contingencies: Sometimes there are clauses that are added which allow a buyer to back out of the sale if certain events take place. These should be explained in detail in this section. Contingencies can be financial, or based on the home passing its inspection, and so on.
Termination: The contract needs to state the consequences of contract termination by either the buyer or the seller, which could happen for a variety of reasons. For example, if the buyer terminates the contract, the seller will be entitled to the buyer’s earnest money.

Closing procedures

The final section in the contract involves outlining the house closing process so that both parties are fully aware of how this will happen. You should include:

Closing information: The date, time and location of the closing of the sale, and how it will take place.
Closing costs: The contract should stipulate which party is responsible for which closing costs, such as deed preparation and recording, and title insurance. It should also state when and how these should be paid.
Date of possession: The date where the buyer takes possession of the property needs to be included in the contract so that all parties are clear on when this will take place.

What legal documents are needed to sell a house?

Selling a property can be confusing as there are a variety of documents needed for a sale to take place. Here are some of the most important legal documents that you should get, in order to sell your home:

Original sale contract: This is the contract that was signed between the previous owner and the current seller. It should include the previous sale price, contingencies, and any disclosures at the time. The buyer will usually need to see this.
Preliminary home title report: This report will show any outstanding financial or legal obligations on the property so that the seller is aware of these before the sale.
Disclosure statement: The seller will need to disclose any known issues or defects on the property, this can either be disclosed in the purchase agreement or on its own, however it will need to be outlined for the buyer.
Purchase offer: This outlines the buyer’s offer on the property and lays the initial building blocks for an agreement between the parties. It is not the final agreement and is subject to change.
Sale agreement: This is a vital part of the real estate selling and buying process, which makes the sale legal and binding, as well as indicates everything about the sale, which both parties sign and agree to.
Appraisal report: A property appraiser will need to appraise the property, particularly if the buyer is using financing to purchase the property. The appraisal value is also useful for sellers to know.
Home inspection report: After making an offer, buyers will need a professional home inspector to do an inspection on the property and provide a report on any defects, pest infestations and other issues there might be on the property.
Deed: The sale deed is the last step in the closing process, and it is drafted according to the sale agreement. This serves to officially transfer ownership of the property from the seller to the buyer.

Additional tips for setting up a purchase agreement without a realtor

It’s important to know what constitutes a legal agreement, and these guidelines should be adhered to when making a purchase agreement:

Both parties should be competent at the time of signing and not under the influence of any substance. The offer and acceptance thereof should be clearly stipulated in the agreement, and there needs to be mutual consent between the parties with no coercing, tricking or forcing. Both parties need to agree to the terms of the contract by signing it, and each party must be giving something of value (in this case a property in exchange for money).

Closing thoughts on a contract in For Sale By Owner listing

Selling a property without a realtor is doable, however it will require extra effort and research to make sure that the correct documents and agreements are being used. Do your homework, make sure that you know what it entails, and you should have a smoother ride towards getting your home sold FSBO-style.