How to Draft a For Sale By Owner Contract in California (2025)

10% of sellers find it difficult to draft a For Sale By Owner contract in California. It can be confusing to navigate through California real estate laws or the complexities of legal jargon.

But here’s a silver lining! High-tech FSBO websites in California, like Houzeo, provide automatic access to local MLS paperwork and state-specific seller disclosures. That’s not it! You get licensed broker assistance to review your FSBO paperwork too!

What Is a For Sale By Owner Contract?

A For Sale By Owner purchase agreement is a legally binding contract between a property owner and a buyer. It outlines the terms and conditions of your home sale which includes contingencies, deadlines, and the closing procedures.

Who Prepares ‘For Sale By Owner Contract’ in California?

You, as a seller, are responsible to draw up the purchase contract for selling a house by owner in California. You can hand-draft the FSBO real estate contract and get it reviewed and approved from:

• A Real Estate Attorney: They specialize in real estate contracts and charge approximately $150 to $500 per hour.
• The Buyer Agent: They used to charge a 2% to 3% buyer agent commission. However, after the NAR Settlement, this fee is now negotiable.
• A Transactional Agent: The attorney will draft the contract but will not represent you in negotiations. Their service typically costs between $350 to $500 per transaction.

How to Create a FSBO Contract in California?

A well-drafted FSBO purchase agreement in California protects both the buyer and seller in a real estate transaction. This guide will walk you through options and help you create a legally sound contract for your California property:

1. Draft It Yourself: You have to be familiar with real estate laws to draft a FSBO contract yourself. A mistake or an oversight can lead to legal and financial issues.
2. Hire a Real Estate Attorney: An attorney can address specific legal concerns and ensure the contract is accurate and error-free. However, their services can be expensive.
3. Leverage Online FSBO Platforms: FSBO websites offer tools to create a legally compliant contract, without the need of an attorney. They automate most of your paperwork which minimizes the risk of mistakes and saves time.

Things to Include in Your California FSBO Contract

Here are a few important clauses that should be included in your California FSBO contract to ensure your interests are protected:

1. Purchase Price and Closing Details

A simple For Sale By Owner contract in California must mention the purchase price, down payment, and closing date. Specify who will cover the closing costs or if they will be split between both parties. Also, include contingencies if the home sale conditions aren’t fulfilled.

2. Financial Details of the Deal

Specify if the buyer is paying in cash or opting for a loan to purchase the property. If it’s a mortgage, include the loan type, the earnest money deposit, and a timeframe for the buyer to secure the funds.

The FSBO purchase agreement should also include the option to return the buyer’s earnest money if the financing falls through. Also, mention the minimum transfer amount in case of a cash transaction.

3. Home Inspection Contingency

Include specific clauses to address significant issues discovered during home inspection and add a deadline for the inspection or repairs.

For major issues, identify dealbreakers that could lead to the termination of the sale. For minor problems, mention if the sale price can be renegotiated.

4. Deed for Title Transfer

A warranty deed is the most common way to transfer a property title. First verify the owner’s name in official land records via the county assessor’s office. For joint ownership, decide on the title structure. At the time of purchase, the deed can be modified to include or exclude certain names.

In your FSBO contract, include the timeline for the transfer of the title. Also, specify the title company and who will cover the title insurance cost in California.

5. Default Provisions

Clearly outline the consequences of contract breaches, including missed and delayed payments. Also, specify how you will handle these situations. In case a contingency is triggered, the contract should explicitly state your right to withdraw from the agreement without penalty.

6. Seller Disclosures

Attach all relevant California seller disclosure forms. They contain details like the ownership history, tax status, and any known home defects. Additionally, if your property was built before 1978, submit the “Lead-Based Paint Disclosure” (addendum) along with the contract.

3 Key Contingencies in a FSBO Contract in California

When creating a For Sale By Owner home contract in California, consider including these contingencies:

1. Subject to Finding Replacement Property Contingency: You can cancel the sale if you can’t find a new property within the specified timeframe (e.g., 30-60 days). Avoid the crisis of being pushed into a hasty purchase.
2. Sale of Seller’s Current Home Contingency: You can withdraw from the sale within a specified period. This will protect you from overlapping mortgages or the financial burden of owning two properties.
3. Appraisal Contingency: This contingency protects you if the buyer doesn’t appraise for the agreed-upon purchase price. The contract may require the buyer to cover the gap, allow renegotiation, or permit termination.

What Should You Clarify in Your FSBO Purchase Agreement?

When you review contingencies and clauses for selling a house in California, clearly outline the basic elements in your contract, such as:

• Seller’s Name: Your name should match official records. If incorrect, the title company will not close on the property without an explanation.
• Earnest Money Deposit: The final purchase price should include an earnest money deposit. This protects you in case the buyer backs out under the wire.
• Closing Deadline: The deadline should include an exact closing date. Add dates for contingencies about financing and inspections as well.

California For Sale By Owner Contract Template

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**Remember: While this blog covers key aspects of a purchase contract ‘For Sale By Owner’ in California, consulting a real estate attorney is highly recommended. This will ensure your California FSBO contract complies with all state regulations.

Ready to Draw Up Your FSBO Agreement in California?

Even if you’re confident in your ability to create a For Sale By Owner contract that protects your interests, proceed carefully. This contract ensures legal clarity, minimizes risks, and complies with regulations. So, it’s crucial that it’s drafted accurately.

If you are still unsure about handling the paperwork for selling a house without a Realtor in California, sell with a FSBO website. They help you draft contracts, review offers, and ensure compliance with all legal requirements. So, what are you waiting for?

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