How to Write a Contract to Sell a House

By Patrick Gleeson, Ph. D., Registered Investment Adv ; Updated April 06, 2017

Every FSBO (For Sale By Owner) contract made between a seller and a buyer has a few essential ingredients. Whether you are writing your own contract from scratch – probably not advisable unless you have prior real estate law experience – or using one of the many FSBO contracts available online, here are the elements to include.

The Basics

Two basic groups of information appear at the beginning of the contract:

1. The names and addresses of the buyer and the seller, along with the effective date of the contract.

2. The address and description of your property. For example: "A three-bedroom single family residence at 661 Pleasant Avenue, Sun City, California, 90065." Note that the exact description required may vary from state to state. Some states also require the parcel description you find on your property tax documents, while others do not.

Prices and Costs

These two important items follow the basics:

  1. Purchase price. In addition to the purchase price, also state the particular terms and conditions of the sale, including credit for any prior payments, such as earnest money, and the description of the buyer's deposit of the agreed-upon remainder. This same paragraph describes what happens to the earnest money if the sale falls through. If you, the seller, decide for any reason to cancel the contract, you will normally return the earnest money to the buyer. The contract also stipulates what happens to any earnest money or prior payments if the buyer defaults. 
  2. Closing costs. Here is where you'll state how the various tax and title costs are apportioned. In some states, who pays for some or all of these is at the discretion of buyer and seller. In other states, they are the legal responsibility of one of the two parties. Closing costs generally include annual real estate taxes, transfer taxes,  the title report, title search and title policies.

Special conditions: Often buyer and seller agree to special conditions. You may agree for example, to leave one or more pieces of furniture, or the buyer may agree to accept steps or railings "as is" even though they are not code-compliant. These special conditions probably originated with a verbal agreement, but should also be included in the purchase agreement.

Disclosure and Other State Requirements

Each state's real estate contract requirements are available online or from your state's housing agency. In California, for example, an online search for "California's real estate contract requirements" returns both a California Department of Housing brochure on the subject as well as several commercial sites offering California real estate contract forms, most of them for under $50. A search for Oklahoma returns commercial sites offering similar forms and the Oklahoma Department of Real Estate website, which offers contract forms without cost.

Warning

The above contract description is intended only as a general guide. Contract requirements vary greatly from state to state. Either inform yourself of your state's real estate contract requirements or download a contract form from your state's housing agency or a commercial online seller.

About the Author

Patrick Gleeson received a doctorate in 18th century English literature at the University of Washington. He served as a professor of English at the University of Victoria and was head of freshman English at San Francisco State University. Gleeson is the director of technical publications for McClarie Group and manages an investment fund. He is a Registered Investment Advisor.