Step 4 — Legal Protection
The purchase agreement is the most important document in your home purchase. Without an agent, you're responsible for making sure it protects you. Here's what must be in it.
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Gives you the right to have the home professionally inspected and to negotiate repairs, request a price reduction, or walk away if issues are too severe. Typically 5–14 days.
Protects you if your mortgage falls through. You get your earnest money back if you cannot obtain a loan at the terms specified (rate, type, amount) by a set deadline.
If the home appraises below the purchase price, you can renegotiate the price, make up the difference in cash, or walk away. Protects you from overpaying.
Ensures the seller can deliver clear title — no liens, back taxes, judgments, or ownership disputes. A title company or attorney handles the search.
If you must sell your current home to fund the purchase. Less common in FSBO deals and may make your offer less attractive to sellers.
Agreed sale price. In FSBO deals, this is typically the result of negotiation — not an agent-set list price.
Your good-faith deposit (1–3% of purchase price). Goes to seller if you back out without a valid contingency reason. Returned if deal falls through for a covered contingency.
Target date for transfer of ownership. Typically 30–45 days from contract signing. Build in buffer time in FSBO deals.
Itemize every appliance, fixture, or item you expect to stay with the house. If it's not in the contract, it goes with the seller.
Seller must disclose known material defects. Attach all disclosure forms to the purchase agreement as exhibits.
When you get the keys. Usually the same as closing, but can be negotiated (e.g., seller needs a few days after closing to move out).
Who pays what. Specify seller concessions (credits) if you negotiated any.
Mediation/arbitration clause or litigation. Understand this before signing.
State-specific purchase agreements, attorney review services, and legal guides for home buyers.
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