How to Write a For Sale By Owner (FSBO) Agreement That Protects Both Buyer and Seller (Educational Guide
Below is a practical, plain-English framework for writing a For Sale By Owner (FSBO) real estate agreement that protects both buyer and seller. This is educational only, not legal advice, and is written from an investor/consultant perspective; not a lawyer trying to bill hours.
First: the mindset
A good agreement doesn’t “win.”
It allocates risk clearly, defines expectations, and prevents emotion from becoming litigation.
If something can go wrong, assume it will, and write for that moment.
Core principles that protect all parties
Clarity beats cleverness
No jargon unless defined.
Short sentences.
One meaning only.
Risk belongs to the party who controls it
Title → seller
Financing → buyer
Condition → disclosed, inspected, accepted
Silence creates lawsuits
If it’s not written, it didn’t exist.
Sections every FSBO agreement should include
1. Parties & Property Identification
Protects everyone from ambiguity.
Full legal names of buyer and seller
Legal description + address
Statement of seller’s authority to sell
“Seller represents they are the lawful owner of the Property with authority to convey marketable title.”
2. Purchase Price & Consideration
Protects against misunderstandings and defaults.
Purchase price
Earnest money amount
Where earnest money is held (escrow/title)
When it becomes non-refundable (if applicable)
Never let earnest money be held by either party.
3. Financing Terms (or Lack Thereof)
This is where most FSBO deals blow up.
Cash, conventional, seller finance, or subject-to
Financing contingency with a deadline
What happens if buyer fails to perform
“Buyer’s failure to obtain financing by ___ constitutes termination without penalty.”
No open-ended “subject to financing” language.
4. Inspection & Due Diligence Period
This protects buyers and prevents seller regret.
Inspection window (X days)
Buyer’s right to terminate for any reason within that window
Seller’s obligation to provide access
Explicit “as-is” acceptance after expiration
“After expiration of the Due Diligence Period, Buyer accepts the Property in its current condition.”
5. Disclosures & Known Defects
Protects sellers more than buyers.
Seller discloses known material defects
No duty to discover unknown issues
Attach disclosures as exhibits
Disclosure ≠ warranty.
6. Title, Liens & Closing
This is non-negotiable protection.
Seller delivers clear, insurable title
Closing handled by licensed title company or attorney
Prorations of taxes, rents, utilities
Cure period for title defects
Never close FSBO deals without third-party title.
7. Risk of Loss
Prevents chaos between contract and closing.
Who bears risk of fire, flood, vandalism
What happens if damage occurs pre-closing
Usually stays with seller until deed records.
8. Default & Remedies
This keeps emotion out of disputes.
Buyer default → earnest money as liquidated damages
Seller default → return of earnest money + specific performance or termination
Attorney fees clause (mutual)
Mutual remedies = enforceable contracts.
9. Assignment (or Prohibition of It)
This is often misunderstood.
Allow assignment, restrict it, or prohibit it
Require notice if assigned
If seller doesn’t want wholesalers, say so explicitly.
10. “Entire Agreement” & Governing Law
Protects against “but you said…”
Entire agreement clause
Amendments must be in writing
Governing state law
Severability clause
Smart protection clauses most FSBOs miss
Survival clause (what obligations survive closing)
Access clause (pre-closing measurements, bids)
Time is of the essence
Counterparts & electronic signatures
No reliance clause (buyer not relying on statements outside the contract)
What NOT to do
Don’t download a random template from Google
Don’t copy wholesaler contracts blindly
Don’t write emotional language
Don’t leave timelines open-ended
Don’t avoid escrow to “save money”
That’s how cheap deals become expensive lessons.
Final thought
A solid FSBO agreement doesn’t need to be complicated.
It needs to be honest, balanced, and specific.
If both parties read it and say:
“That’s fair. I know exactly what happens if something goes wrong.”
You’ve done it right.
Have a deal you need help with? Let’s talk.