FSBO Paperwork: Contracts, Earnest Money, and Closing Checklist

The paperwork side of a FSBO transaction is where most independent sellers run into trouble. Unlike staging or photography, document errors don't just cost you money — they can expose you to post-closing litigation, kill the deal entirely, or create legal liability that outlasts the sale.

This covers the primary documents you'll use from accepted offer through closing day.

The Purchase Agreement

The purchase agreement (also called a purchase contract, sales contract, or offer to purchase) is the legally binding document that governs the entire transaction. Once signed by both parties, it creates enforceable obligations with specific timelines and conditions.

Do not use a generic online template pulled from a search result. Real estate contract law is state-specific, and a template that's legally adequate in Texas may be missing requirements in California or New York. Use either:

1. Your state's standard form: Most state real estate commissions publish approved purchase agreement forms that are available to the public. Search your state's real estate commission website.
2. A real estate attorney's template: An attorney familiar with local practice will provide a form appropriate to your jurisdiction.
3. A flat-fee MLS service's contract package: Many flat-fee services include state-compliant contract forms at higher service tiers.

Key Sections of a Purchase Agreement

Purchase price and earnest money: The top-line offer price and the earnest money deposit amount (typically 1%–3% of the purchase price, paid within 3 business days of acceptance).

Closing date: The target date for legal transfer of the property. Financed buyers typically close in 30–45 days. Cash buyers can close in 14–21 days.

Inclusions and exclusions: What stays with the house and what the seller is taking. Built-in appliances, window treatments, and fixtures are typically included. Specify any items you plan to remove (a specific chandelier, a detached shed) explicitly in the contract.

Contingencies: The legal conditions that must be satisfied for the transaction to proceed. If a contingency isn't met, the buyer can typically exit the contract and recover their earnest money. Standard contingencies:

• Home inspection contingency: Buyer has 7–14 days to conduct inspections and request repairs.
• Financing contingency: Buyer is protected if their mortgage is denied.
• Appraisal contingency: Buyer can renegotiate or exit if the property appraises below the contract price.
• Title contingency: Buyer can exit if the title search reveals unresolvable defects.

Possession date: When the seller vacates and the buyer takes possession. This is usually on closing day, but seller possession after closing (seller rent-back) is negotiable.

Earnest Money: How It Works

Earnest money is a good-faith deposit the buyer submits shortly after the purchase agreement is executed — typically within 3 business days. Standard amounts are 1%–3% of the purchase price, though in competitive markets buyers sometimes offer more to strengthen their offer.

Where it goes: Earnest money must go into a neutral escrow or trust account. It cannot sit in your personal bank account. The holding entity is typically a title company, escrow company, or closing attorney. This is a legal requirement in most states.

When the buyer keeps it: If the buyer exits the contract during an active contingency period (inspection, financing, or appraisal), the earnest money is fully refundable to the buyer.

When you keep it: If the buyer breaches the contract after all contingencies have been removed — backing out without a contractual reason — the earnest money is typically forfeited to you as liquidated damages. This doesn't happen automatically; you may need to make a formal claim through the escrow holder.

Disputes: If both parties claim the earnest money and can't agree, the escrow holder typically won't release it without written agreement from both parties or a court order. This is one of the strongest reasons to have a real estate attorney on retainer before the situation escalates.

Counter-Offers and Addendums

Sellers rarely accept the first offer as written. Use a formal Counter-Offer addendum — not a verbal agreement or email exchange — to respond to any offer. A counter-offer can address:

• Purchase price
• Earnest money amount or deposit timeline
• Closing date
• Contingency periods (shorten the inspection window, remove a specific contingency)
• Inclusion or exclusion of specific items
• Seller closing cost concessions

Multiple rounds of counter-offers are common. Each counter-offer supersedes the previous one. Track every signed document carefully.

The Seller's Disclosure Package

Disclosure documents are not optional. They're legally required and the source of most post-closing lawsuits against FSBO sellers.

Federal law requires lead-based paint disclosure for any home built before 1978: you must provide the EPA pamphlet "Protect Your Family From Lead In Your Home," disclose any known lead paint hazards, and give the buyer a 10-day inspection period (which can be waived in writing by mutual agreement).

State law adds property-specific disclosures covering structural defects, water intrusion, mold, HVAC condition, electrical and plumbing known issues, HOA status, boundary disputes, and environmental concerns. These forms are state-specific — California's Transfer Disclosure Statement, Wisconsin's Chapter 709 condition report, and Texas's Seller's Disclosure Notice are each different documents with different requirements.

Obtain your state's current statutory disclosure form from your state real estate commission website or a flat-fee MLS broker. Complete it accurately and completely. When in doubt, over-disclose. Disclosing a known issue and pricing for it is legal. Concealing it is fraud.

The FSBO Closing Checklist

Once you're in the final stretch — 1–2 weeks from closing — here's what needs to happen:

Documents to prepare or gather:

• Current mortgage payoff statement (request from your lender; valid for 30 days)
• HOA documents: bylaws, financials, minutes from last two board meetings, any pending special assessments
• Property tax records and receipts for the current year
• Any existing home warranty documentation
• Permits and receipts for major work performed during your ownership
• Appliance manuals and warranty documents

Review the closing disclosure: The title company or closing attorney will provide a draft Closing Disclosure (or HUD-1 Settlement Statement) at least 3 business days before closing. Review every line item — mortgage payoff amount, prorated taxes, transfer taxes, title fees. Errors on these documents are common and must be caught before the funds are disbursed.

Coordinate final walkthrough: The buyer has the right to a final walkthrough, typically within 24–48 hours of closing, to confirm the property is in the agreed-upon condition and any negotiated repairs were completed.

What to bring on closing day:

• Government-issued photo ID (two forms is safer)
• Cashier's check or bank confirmation of wire transfer if you owe money at closing
• All keys, garage door openers, gate codes, and access cards
• Appliance manuals and any remaining warranty documents

The Closing Documents You'll Sign

You'll sign the Warranty Deed — the primary transfer document that conveys ownership to the buyer and guarantees you hold clear, unencumbered title to the property. Do not use a Quitclaim Deed for a standard sale; Quitclaim deeds carry no title warranties and are reserved for family transfers, divorce settlements, or removing a name from a title.

The title company or closing attorney records the deed with the county clerk. Once recorded, the buyer is the legal owner. Your net proceeds are wired to your bank account, typically the same day or within one business day.

The paperwork on a FSBO sale is manageable with the right templates, the right disclosures, and a real estate attorney reviewing the key documents. Getting these right the first time protects your proceeds and your legal exposure long after closing day.

The FSBO Complete Guide includes a state-compliant disclosure reference, purchase agreement guidance, an earnest money tracking sheet, and a complete closing day checklist.