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How to Write a Contract to Sell a House

By Patrick Gleeson, Ph. D., - Updated March 11, 2019

Every "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.

Tip

Contract requirements vary greatly from state to state. The best place to start is by downloading a template contract form from your state's housing agency or a commercial online seller.

Who is Selling and Who is Buying?

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

  • The names and addresses of the buyer and the seller
  • The address and description of your property. For example: "A three-bedroom single family residence at 661 Pleasant Avenue, Sun City, California, 90065." 
  • The effective date of the contract.  

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.

Follow the Money

Documenting the cash aspects of the deal is perhaps the most important part of the contract. The question of who is paying for what falls into three categories:

Purchase price

How much is the buyer paying for the property? 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.

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, title report and title search fees and title policies.

Special conditions

Often, the 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.

Keeping Things Legal

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.

About the Author

I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications.

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