How to Write a Real Estate Purchase Contract

When figuring out how to sell your own home (FSBO), it’s easy to get lost in the paperwork. But one document you really want to know your way around is the purchase contract. It will dictate the terms of the sale, reveal state-required disclosures, and delineate who is responsible for covering which costs.

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If you’re selling your home without an agent, hopefully, you’ve hired a real estate attorney to help you navigate your state real estate laws. An attorney can also review your purchase contract to make sure you’re not getting taken advantage of, but you still need to understand what you’re signing.

Common Terms in a Real Estate Contract

If you are looking to learn how to write a contract to sell a house, here are the 10 basic components of a typical purchase contract:

Property Identification

The first thing the contract will do is identify the property you are selling. It should show the property address, as well as a clear legal description. It should also include the identity of the parties involved (i.e. buyers and sellers).

Purchase Price

The next most important piece of information in the purchase contract is the sale price. The purchase price is one aspect of the contract that is likely to change if any issues come up during the home inspection or appraisal (see the contingency section below). So make sure you’ve completed your own home inspection prior to listing your home and then price it correctly.

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Closing Date and Costs

On what date will the sale close and who will pay the closing costs? Usually, the seller pays for the title insurance plan and for the buyer’s agent (via commission), while the buyer pays for the home inspection and appraisal. But the customs may be different depending on location — and everything is subject to negotiation. Regardless of who is paying for what, it must all be delineated in the purchase contract. (See 5 Things To Remember At Closing Time For Home Sellers.)

Earnest Money

What sort of deposit are you requiring from the buyers in order to confirm the contract? Whether you charge an exact amount or a percentage of the proposed purchase price will depend on what is customary for your location, but you should receive at least $1,000. If the sale closes, this money will go toward the down payment. As the seller, you can add a contingency that says if the sale doesn’t close because the buyer has somehow defaulted on the agreement, you get to keep the earnest money. But the buyer is likely to counter with a contingency request that if you are the one in default, they get their earnest money refunded.


This section is where both parties say, “The sale will close except if these following things occur.”  Common contingencies are:

  • Title. The title search must show that you are, in fact, the owner of the property and are thus legally allowed to sell it.
  • Financing. If the buyer can’t get a mortgage high enough or at a low enough interest rate to be able to afford your home, they won’t be able to buy it. So the buyer will most likely have a clause in the contract that says the purchase of your home is contingent on them arranging a specific type of financing. This is why you want to deal with pre-approved buyers. When a buyer is pre-approved for a loan, you know a lender has already done its due diligence and these people will most likely be able to get the financing they need.
  • Home Inspection. Unless the buyer is purchasing your home simply to tear it down, they will include a contingency that says the purchase of the home is dependent upon a satisfactory home inspection. You can request your own language that stipulates the home inspection must be completed within 10 days — that way the sale doesn’t drag on for too long.
  • Appraisal. How much is my house worth? Unless your buyers are purchasing your home all cash, their lender will include a contingency in the contract that states: the amount of money it is willing to lend is dependent upon the value at which the home appraises. What does appraisal mean? The lender will hire its own appraiser to evaluate the home and the market, and then to determine value. As long as that number is equal to or greater than the purchase price, the buyers will receive their loan.
  • Home sale. The buyers could need to sell their home prior to purchasing yours. If that is the case, they will include a contingency in the purchase contract that states that the sale of your house will only close in the event they can sell theirs.


You as the seller are required by law to make certain disclosures about the safety and value of your property. The exact disclosures required differ from state to state, but here is a list of common ones:

  • Termite damage
  • Personal interest
  • Subsurface sewage disposal system
  • Radon gas
  • Lead paint
  • Potential annexation
  • Adequate facilities taxes

Fixtures and Appliances

What, other than the shell of the house itself, is included in the purchase price?  Are you leaving the washer and dryer? The refrigerator? What about all that hardware in the kitchen and bathroom? Whatever you are planning on taking or leaving, it all needs to be spelled out in the purchase contract.

Some other fixtures that are sometimes removed from the home are: doors, windows, window treatments, light fixtures, and heating and cooling equipment. If you’ve become attached to any of these items and want to take them with you, you must notify the buyer and put it in the purchase contract.

Real Estate Taxes and Special Assessments

This section will outline the prorated taxes, HOA fees, maintenance and other costs that are tied to the property. In most places, it’s customary for the seller to pay for these costs up to and including the sale date.

Delivery, Acceptance and Offer Expiration

How should the executed purchase agreement be delivered? You can choose either email, fax, or in person, but you must explicitly state your preference. Also, you must place an expiration date on the offer (this is to protect both parties from languishing in limbo while contingencies get sorted out). Typical time frames include 30, 45, and 60 days from the date of the initial offer.


If either you or the buyer fails to satisfy any of the demands of the contract, how will those defaults be handled? In the event of a buyer default, it’s usually customary for the contract to be considered null and void and for the seller to keep the earnest money.

Can a seller back out after accepting an offer? If it’s the seller who fails to satisfy their responsibilities, then it’s usually customary for the contract to be considered null and void and for the seller to return the earnest money. However, in some cases, a default will trigger legal action, so it’s not a decision to be made lightly.

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