Selling your home For Sale By Owner (FSBO) means you’re taking charge of the entire process instead of hiring a traditional real estate agent. When you choose to sell FSBO, you’re responsible for everything-from hosting showings to handling negotiations and managing the paperwork.
Among all the documents involved, the most crucial one is the Purchase and Sale Agreement (PSA). This agreement forms the backbone of your entire deal. Without it, you risk confusion, disagreements, or even losing the sale.
In this guide, we’ll break down what a FSBO Purchase and Sale Agreement really is, why it matters, and how it protects you every step of the way.
What Is a Purchase and Sale Agreement (PSA)?
A Purchase and Sale Agreement (PSA) is the most important document in a home sale. It’s a legally enforceable agreement that spells out every detail of the sale between the buyer and seller.
The PSA includes the property information, the agreed purchase price, deadlines for inspections and closing, as well as any conditions that must be met before the sale is finalized, such as financing or appraisal. It also explains who is responsible for paying certain costs, like title insurance or closing fees.
When both the buyer and seller sign the PSA, it becomes official. From that point on, it makes sure everyone agrees on the terms and is legally required to stick to them. For FSBO sellers, it acts as a roadmap that keeps the process clear, organized, and protected from misunderstandings.
Note: The buyer may still use an agent or attorney, but if you are FSBO, you’ll need to provide or accept a solid PSA and manage the deadlines like a pro. Courses at Something Different Real Estate and other FSBO education programs can help you prep quickly and confidently.
Why Do You Need a PSA?
Here’s why a Purchase and Sale Agreement is essential in FSBO:
- It protects you – Texts and handshakes can’t protect you, but a signed PSA can.
- It prevents confusion – Everything is in writing, so there are no “I thought you meant…” misunderstandings.
- It keeps things moving – With deadlines for inspections, financing, and closing, everyone stays on track.
- It’s required – Lenders and title companies won’t move forward without it.
- It saves money – Clear terms help avoid last-minute disputes that could cost you cash.
Also check out a Home Inspection Checklist for FSBO Buyers, since inspections are one of the biggest deal-makers or breakers.
Key Parts Every FSBO PSA Should Include
Purchase and Sale Agreement (PSA) covers all the details of the deal and protects both buyer and seller from confusion or disputes. Let’s break down the key components that every solid FSBO PSA should include:
Basic Information
Every agreement starts with the essentials. This means listing the full legal names of both the buyer and the seller, along with the property’s official address and legal description. While it may sound obvious, leaving out these basics can cause major delays or even invalidate the contract.
Think of this section as the identification badge for your deal-it ensures there’s no question about who is involved and which property is being sold.
Purchase Price and Deposit
The PSA should spell out the final purchase price agreed between you and the buyer. It also needs to include details about the earnest money deposit-a good-faith payment that proves the buyer is committed to the deal.
Instead of going straight to the seller, this money is typically kept safe by a neutral third party, like a title company or attorney, until closing. Including this detail in the agreement protects both parties and prevents disputes about where the money goes if something falls through.
Financing Details
Another critical section is financing. Here, the contract spells out whether the buyer is paying in cash or applying for a loan. If financing is involved, the PSA should specify what type of loan the buyer is seeking and the timeline for approval.
This section prevents endless waiting and keeps the deal on track by ensuring that both sides know how and when the funds will be secured.
Contingencies: The Buyer’s Safety Nets
Contingencies are essentially exit doors built into the contract. They protect the buyer while keeping expectations clear for the seller. The most common ones include:
- Inspection Contingency – Gives the buyer the right to cancel or request repairs if serious problems are found during the inspection.
- Appraisal Contingency – Protects the buyer if the property appraises for less than the agreed purchase price.
- Financing Contingency – Allows the buyer to back out if their loan is denied despite a good-faith effort.
These conditions may feel like hurdles for the seller, but they are standard in real estate and can actually help prevent disputes later.
Disclosures
- Required state disclosures (repairs, leaks, damages, etc.)
- Lead-based paint disclosure if the property was constructed prior to 1978.
- HOA or condo documents if the property is in a community
See a full Seller’s Disclosure Statement to make sure you don’t miss anything.
Closing Costs and Possession
Money and timing are two of the most common points of confusion in real estate deals. The PSA should outline who pays which closing costs, whether it’s title insurance, transfer taxes, or surveys. It should also state when the buyer will officially receive the keys.
Sometimes this happens right at closing, while other times the seller negotiates extra time to move out. Having these details in writing prevents any last-minute surprises.
Default Rules
The PSA should clearly explain what happens if one side doesn’t hold up their end of the deal.
For example, what if the buyer cancels without a legitimate reason? Or what if the seller refuses to close?
Including default rules creates accountability for both parties and ensures that everyone knows the consequences of walking away without cause.
How the FSBO Process Usually Flows
- Offer Made – Buyer submits a signed PSA with their terms and earnest money.
- Negotiation – You decide if the offer works, doesn’t work, or needs changes.
- Agreement Signed – Both sides agree, and the PSA becomes official.
- Inspections & Appraisal – Buyer checks the home; lender orders appraisal.
- Loan Approval – Buyer confirms their loan is approved.
- Closing – Everyone signs the final papers, money is exchanged, and keys are handed over.
Tips for Writing a Strong FSBO PSA
If you’re writing your own agreement, always use a state-specific template-real estate laws vary widely. Attach addendums for special circumstances, like repair agreements or a rent-back arrangement if you need extra time in the home.
Keep copies of all paperwork, both digital and printed. Most importantly, have an attorney review the agreement before you sign. A quick legal check is far cheaper than trying to fix a bad contract later.
Where to Learn More
Selling your home on your own means stepping into many roles at once, from advertising to closing. The great thing is, you don’t have to navigate it without help.
At Something Different Real Estate, we make the FSBO process simple and stress-free. From understanding legal contracts like the Purchase and Sale Agreement to navigating disclosures, timelines, and closing, our expert guides walk you through every step.
For those who want hands-on learning, we also offer FSBO and real estate courses designed to give you the knowledge and confidence to sell smarter, avoid costly mistakes, and keep more money in your pocket.
Schedule your Home Seller Consultation.
Final Takeaway
A Purchase and Sale Agreement isn’t just paperwork-it’s the backbone of your FSBO deal. It protects you, keeps the buyer accountable, and ensures the sale moves smoothly from offer to closing.
With the right PSA in place, you’ll sell with confidence and avoid the headaches that come from “winging it.”
Frequently Asked Questions
Q1: Can I write my own FSBO PSA without a lawyer?
Yes, but state laws vary. Always use a state-approved template and have an attorney review it. The small cost is worth the protection.
Q2: Who holds the earnest money in a FSBO deal?
Usually a neutral third party-like a title company or attorney’s escrow account. Avoid holding it yourself.
Q3: What if the appraisal comes in low?
Your PSA should outline options: buyer cancels, you lower the price, or buyer pays the difference.
