How to Review a Purchase Contract as an FSBO Seller: Key Clauses & Red Flags

Selling a home on your own (FSBO) can save you $15,000–$30,000 in commission fees, but the bargain comes with a new responsibility: reading the purchase contract yourself. A single missed clause can delay closing, force a price concession, or even put you back on the market. This guide walks you through every line‑item you’ll see in a typical residential purchase agreement, shows you how to spot red flags, and gives you practical, step‑by‑step actions so you can protect your bottom line without a real‑estate attorney.

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1️⃣ Get the Right Document First

*Prices vary by market; the title‑company fee usually covers the contract, recording, and title insurance.

Pro tip: Start with Sellable’s AI‑generated contract. It’s built to meet each state’s legal requirements and flags missing addenda before you even open the file. 👉 Start free

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2️⃣ Break the Contract into Six Core Sections

1. Parties & Property Description – Who is buying, who is selling, and what’s being sold.
2. Price & Financing – Purchase price, earnest money, loan contingencies.
3. Closing & Possession – Date, location, and who pays for what at closing.
4. Representations & Warranties – What the seller promises about the home’s condition.
5. Contingencies & Addenda – Inspections, appraisal, HOA, lead‑based paint, etc.
6. Default & Remedies – What happens if either side walks away.

Read each section aloud. If a term sounds vague (“as‑is” without definition) highlight it and move to step 3.

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3️⃣ Numbered Review Process

Tip: Use a highlighter color‑coding system—green for “good,” yellow for “needs clarification,” red for “red flag.”

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4️⃣ Red‑Flag Checklist (What to Stop and Fix)

If any red flag appears, do not sign until it’s corrected. You can request a “clean version” of the contract from the buyer’s agent or escrow officer.

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5️⃣ Real‑World Example: Dallas, TX Corner Lot

Seller: Maria Lopez
Buyer: 2‑family investor group
Listing price: $525,000

After renegotiating, Maria closed in 38 days, netting $459,700 after fees—$12,300 more than the original draft would have allowed.

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6️⃣ Using Technology to Speed Up Review

1. Sellable’s AI Clause Analyzer – Upload your PSA, and the tool highlights every contingency, compares state‑specific thresholds, and suggests alternative language.
2. DocuSign or Adobe Sign – Secure electronic signatures with automatic timestamping, eliminating the “missing date” problem.
3. Google Sheets Tracker – Create a “Contract Review Tracker” with columns for clause, status (green/yellow/red), and notes. Share with your escrow officer for real‑time updates.

Sample Tracker (copy‑paste into Sheets):

| Clause               | Status | Notes / Red Flag                               | Action Needed |
|----------------------|--------|-----------------------------------------------|----------------|
| Earnest Money        | Red    | Only 0.5% of price                             | Increase to 2% |
| Inspection Conting.  | Yellow | 7‑day window—tight for older home               | Extend to 14 days |
| HOA Documents        | Green  | All attached, up‑to‑date                       | — |
| Closing Costs Split  | Yellow | Seller paying 100% unusual in this market      | Negotiate 25% split |

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7️⃣ When to Call a Professional

If you’re comfortable with the checklist above, you can confidently sign the contract. If a clause still feels fuzzy, a 30‑minute consultation (often free) can save you thousands later.

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8️⃣ Closing the Deal – Final Checklist

• All signatures dated on or before the “effective date.”
• Earnest money deposited and receipt attached.
• All required addenda (lead‑paint, HOA, radon) included.
• Contingency dates clearly marked (inspection, financing, appraisal).
• Closing cost allocation matches your negotiation notes.
• Possession & rent‑back terms documented.
• A copy of the buyer’s proof of funds or loan pre‑approval attached.

Once you tick every box, upload the signed PSA to your escrow portal, confirm the closing schedule, and start preparing the home for the buyer’s walkthrough.

Bottom line: Reviewing a purchase contract yourself is doable—and when you combine a systematic checklist with Sellable’s AI‑powered tools, you protect your profit without paying a commission.

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Frequently Asked Questions

### What if the buyer refuses to add a financing contingency?

A financing contingency protects both parties. If the buyer insists on an “all‑cash” clause, ask for a proof‑of‑funds letter from their bank. If they can’t provide it, you’re free to walk away without penalty.

### How much earnest money is standard for a $300k home?

Typical earnest money ranges from 1%–3% of the purchase price. For a $300,000 sale, $3,000–$9,000 is common. Higher amounts signal a serious buyer and reduce the chance of a last‑minute default.

### Can I sign a contract electronically in Texas?

Yes. Texas recognizes electronic signatures under the Uniform Electronic Transactions Act (UETA). Just ensure the platform you use (e.g., DocuSign) timestamps the signature and stores a tamper‑proof record.

### What’s the difference between a “contingency” and an “addendum”?

A contingency is a condition that must be satisfied for the contract to remain enforceable (e.g., inspection). An addendum is a separate document that modifies or adds terms to the main agreement (e.g., HOA rules). Both are legally binding when signed.

### Should I negotiate the “as‑is” clause?

If you’re comfortable with the home’s condition and have disclosed everything, the “as‑is” clause can protect you from post‑closing repair claims. However, consider offering a repair credit instead of a blanket “as‑is” if the buyer’s inspection reveals minor issues; this can keep the sale moving faster.

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Ready to draft a bullet‑proof contract? Try Sellable’s AI‑generated purchase agreement today and keep more of your home‑sale profits. 👉 Sellable pricing