What Goes in a Private Real Estate Sale Contract (Family or FSBO)

When you're selling a home to a family member, friend, neighbor, or other known buyer — without an agent or title company drafting paperwork for you — you still need a real contract. Not a handshake. Not an email. A signed document that describes what each party is agreeing to do and when. Here's what belongs in it and why.

Important: this article is not a contract template. Writing real estate contracts is generally the practice of law, and the specific terms that should be in your contract depend on your state, the property, and the parties. If you're doing a private sale, the cheapest insurance you can buy is one to two hours of a real estate attorney's time ($200–$600 in most markets) to draft or review the contract. This article tells you what to discuss with them.

The bones of any real estate purchase contract

At minimum, a private real estate sale contract needs to clearly state:

The parties. Full legal names of buyer(s) and seller(s), with addresses. If buying as a couple, specify joint tenants with right of survivorship vs. tenants in common — this matters for what happens if one of you dies.
The property. Street address plus the legal description (lot/block or metes-and-bounds from the existing recorded deed) and parcel/folio number. The street address alone isn't enough; the legal description is what binds the contract to a specific parcel.
The price. Total purchase price in dollars. Specify whether any closing costs, taxes, or HOA dues are being prorated.
The deposit / earnest money. How much, paid to whom, held where (escrow account, attorney trust account, etc.), and what happens to it if the deal falls through. (See our earnest money explainer.)
The financing terms. Is the buyer paying all cash? Getting a mortgage? Is the seller financing part of it (carrying back paper)? If financing is involved, state the type, amount, and what happens if the loan doesn't come through.
The closing date. A specific calendar date or a "no later than" date. "When the seller is ready" is not a closing date.
Title and deed. What kind of deed the seller will deliver (quitclaim, grant, warranty) and what title condition the seller is promising. Will the buyer get title insurance? Who pays for it?
Possession. When does the buyer get physical possession of the property? At closing, or some agreed-on date after?
Signatures and dates. Real estate contracts must be in writing under every state's statute of frauds. Email confirmations don't count.

The contingencies that protect each side

Contingencies are conditions that have to be met for the deal to close. If they're not met, the contingent party can typically walk without losing the earnest money. Common ones in private sales:

Financing contingency

If the buyer is getting a mortgage, the contract should give them a deadline by which they must have a loan commitment. If the loan doesn't come through, the buyer walks and gets their earnest money back. Without this, a buyer whose mortgage falls through is in default and may lose their deposit.

Inspection contingency

The buyer hires a home inspector within X days, and if the inspection reveals significant defects, the buyer can either renegotiate, request repairs, or terminate the contract and get their earnest money back. In private sales — especially among family — there's a strong temptation to skip this. Don't. Even with a family member you trust, surprises happen.

Title contingency

The buyer (or their title company) does a title search and confirms the seller can actually convey clear title. If unexpected liens, easements, or ownership defects surface, the buyer can require the seller to cure them or terminate the contract.

Appraisal contingency

If the buyer is getting a mortgage, the lender will require an appraisal. If the property appraises below the purchase price, the loan may be cut short — meaning the buyer either makes up the gap in cash or walks. The appraisal contingency lets them walk without losing earnest money.

Sale-of-current-home contingency

If the buyer needs to sell their current home to fund this purchase, the contract should say so. This is risky for sellers because the deal depends on a separate transaction; sellers often refuse this contingency or charge a premium for it.

What's different about private sales

In a typical broker-managed sale, the brokers' standard forms and the title company handle a lot of details quietly. In a private sale, you have to think about them explicitly:

Who holds the earnest money? Without an agent or title company, the deposit needs to go into a neutral third party's hands — usually an attorney trust account or a title company you're hiring just for that purpose. Don't hand it to the seller personally.
Who orders the title search? The buyer should hire a title company directly, even if they're not getting full lender title insurance. A basic title search ($100–$300 in most areas) tells you whether the seller actually owns the property free of liens.
Who prepares the deed? This is where ClosingDesk fits in. You can prepare the deed yourself, hire an attorney, or use a service like ours. Whoever drafts it, make sure the deed type (quitclaim, grant, warranty) matches what the contract promised.
Who arranges the notarization? Same as deed prep — DIY, attorney, or service.
Who records the deed? The county clerk in the property's county. Recording fees vary; allow $50–$200 for typical residential deeds.
Tax implications. Family sales below fair market value can trigger gift tax (the difference between price and fair market value is treated as a gift). Talk to a CPA before pricing.
Existing mortgage on the property. Most mortgages have a due-on-sale clause that lets the lender call the loan if title transfers. Talk to the lender first — sometimes they'll agree not to call it for family transfers.

Mistakes that turn into expensive lessons

"We're family, we'll figure it out as we go." Most family real estate disputes start because two reasonable people remembered the same conversation differently. Get it in writing.
Skipping the title search because you "know" the seller owns it. They might own it, but they might also have a lien, an unreleased mortgage from 1998, or a sibling with a claim they don't know about.
Calling it a "loan" when it's really a price-below-market. The IRS doesn't care what you called it; it cares what actually happened.
Skipping the appraisal and later discovering the property was overvalued — leading to capital gains or property tax surprises later.
Using a generic online template without state-specific edits. A Florida contract has different default rules than a California one.

What ClosingDesk does (and doesn't do)

We handle the deed transfer portion of a private sale: drafting the deed, arranging notarization, and filing with the county. We do not draft or review the purchase contract itself — for that, talk to a real estate attorney.

Once you have a signed contract and both parties are ready to formalize the transfer:

Start the deed transfer ($199) Which deed do we need?

This article is general information, not legal advice. Real estate contracts vary by state and by transaction; a one-hour consultation with a real estate attorney before signing is the single best investment you can make in a private sale.