Real Estate Purchase Agreement: 9 Clauses to Protect You

A real estate purchase agreement is the written contract that turns an accepted offer into a binding home sale. It names the buyer and seller, locks the price, sets the closing date, and lists every condition that has to be met before money changes hands. Get it right and closing is boring. Get it wrong and you lose weeks, or the deal.

I’ve watched sellers treat this document like a formality. It isn’t. The real estate purchase agreement decides who pays for what, when the buyer can walk with their deposit, and what happens if someone flakes. Below are the nine parts I tell every homeowner to actually read before they sign, plus how this works when you’re selling without an agent.

Think of it as the rulebook for your sale. An offer starts the conversation. The real estate purchase agreement ends it, by putting the agreed terms in writing and making them enforceable.

Real estate is one of the few things you cannot sell on a handshake. Under the statute of frauds, a contract to sell land or a home has to be in writing and signed to hold up in court. So that stack of pages isn’t your agent or your attorney being fussy. It’s the law.

Once both sides sign, you’re both on the hook. The buyer commits to buying at the stated price. You commit to selling and delivering clean title by closing. Everything after that, the inspection, the appraisal, the loan, runs on the clock this document sets.

The 9 clauses that decide your sale

Most real estate purchase agreements run 8 to 15 pages, and honestly, a lot of it is boilerplate. These nine sections are where the money and the risk live. Read them twice.

If you only stress-test three of them, make it financing, contingencies, and default. That’s where a clean-looking contract quietly turns against a seller.

Contingencies and earnest money: where deals fall apart

A contingency is a condition that has to be satisfied or the deal can be canceled, usually with the buyer’s deposit refunded. Buyers love them. Sellers should understand every single one before signing.

The four you’ll see most:

• Inspection. Buyer can hire an inspector and, depending on the wording, ask for repairs, a credit, or a full walk-away within a set window.
• Financing. Deal is void if the buyer’s mortgage falls through by the loan deadline.
• Appraisal. If the home appraises below the price, the buyer can renegotiate or exit. In a soft market this one bites.
• Sale of buyer’s home. Buyer has to sell their current place first. This one I’d think hard about accepting.

Fewer contingencies with shorter deadlines means a stronger, faster offer. That’s why a slightly lower “clean” offer sometimes beats a higher one stuffed with conditions. When two offers land on your kitchen table, compare the contingencies, not just the top-line price.

Then there’s the deposit. Earnest money is the good-faith money a buyer puts down when the real estate purchase agreement is signed. The CFPB spells it out plainly: it’s held by a third party, applied to the buyer’s costs at closing if the sale goes through, and can be forfeited to the seller if the buyer bails for a reason the contract doesn’t allow.

Most deposits run 1% to 3% of the price. On the current national median existing-home price of $440,600 (June 2026, per NAR), that’s roughly $4,400 to $13,200 sitting in escrow. I push for the higher end. A buyer who wired $12,000 is a lot less likely to ghost you over cold feet than one who put down $1,000.

Here’s the catch sellers miss: earnest money only protects you if the default clause is written so you actually keep it when the buyer breaches. Read that section with the deposit amount in mind.

Can you write your own real estate purchase agreement?

Short answer: usually yes, and plenty of FSBO sellers do. You are allowed to prepare a real estate purchase agreement yourself. The smarter move is to start from a vetted template instead of a blank page.

In most states, the local Realtor association or the state real estate commission publishes a standard residential contract. Colorado’s Division of Real Estate, for example, posts a fillable Contract to Buy and Sell Real Estate that’s used statewide. Those forms already contain the contingency, disclosure, and default language attorneys expect to see, which is exactly what you want backing your sale.

What I would not do is scribble your own terms on a generic online form and call it done. One vague contingency or a missing disclosure line can cost you far more than an hour of a real estate attorney’s time. If you’re selling for sale by owner, spend the money to have a local attorney or title company review the contract before signatures. It’s cheap insurance on your biggest asset.

Where the rules get weird: state by state

There’s no single national real estate purchase agreement, and the differences matter. A few examples I run into constantly:

Attorney-review states. In New Jersey, once both sides sign, a mandatory 3-business-day attorney review period opens, and either party can cancel for any reason during it. New York flips the order entirely: attorneys negotiate and finalize the contract before anyone signs, so there’s no post-signing review window.

Promulgated-form states. Texas sellers use the TREC promulgated contract, a standardized form the state requires for most residential deals. You don’t get to freelance the structure there, which actually protects DIY sellers.

Disclosure rules. What you must reveal about defects varies a lot by state, and it’s usually attached to or referenced inside the purchase agreement. Getting this wrong is one of the few things that can follow you after closing.

Bottom line: pull your own state’s standard form, don’t borrow a neighbor’s from three states away.

Purchase agreement vs. the other paperwork sellers confuse it with

People mix these up all the time, so here’s the clean version:

If you’re handling the whole sale yourself, it helps to see how these fit together. I walk through the full stack in our guide to the paperwork for selling a house by owner, and the for sale by owner contract piece goes deeper on the FSBO-specific version. If you did hire a broker, the listing agreement is a separate contract worth reading just as carefully.

The bottom line: protect the equity you kept

Here’s the part that ties back to your wallet. On a $440,600 sale, a traditional 5% to 6% commission runs about $22,000 to $26,400. Selling FSBO with a flat-fee MLS listing, like HomeRise’s $95 plan, you keep the listing-side commission, often $11,000 or more, in your own pocket.

But that savings only sticks if the sale actually closes. A sloppy real estate purchase agreement is how DIY sellers give it back, through a blown contingency, a forfeited deposit fight, or a disclosure mistake. The contract is where you protect the money you saved by skipping the listing agent. Read it like the $11,000 is riding on it, because it is. For the closing-cost side of the math, see our breakdown of what buyers and sellers owe at closing.

A real estate purchase agreement isn’t paperwork to rush through so you can celebrate. It’s the one document standing between “we have a deal” and “we have a lawsuit.” Nail the price, the contingencies, the earnest money, and the default clause, start from your state’s standard form, and get a quick attorney or title review before you sign. Do that, and selling on your own terms is a lot less scary than it sounds.

Frequently asked questions

Can I write my own real estate purchase agreement?
Yes. Buyers and sellers are allowed to prepare a purchase agreement without an agent. In practice, you’re far better off starting from your state’s standard residential contract, published by the state real estate commission or Realtor association, and having a local attorney or title company review it before you sign. That gives you the tested contingency and disclosure language without paying full commission.

Is a real estate purchase agreement legally binding once signed?
Once both the buyer and seller sign, it’s a binding contract. Real estate sales fall under the statute of frauds, so the deal has to be in writing to be enforceable. The built-in contingencies are the legal ways a party can still exit, but outside those conditions, backing out can mean losing the earnest money or facing a lawsuit.

How much earnest money should go with a purchase agreement?
Most deposits run 1% to 3% of the purchase price. On the U.S. median of about $440,600, that’s roughly $4,400 to $13,200. As a seller, push for the higher end. A bigger deposit signals a serious buyer and gives you more protection if they walk away without a valid reason.

Who prepares the purchase agreement in a FSBO sale?
When there’s no listing agent, the contract is usually drafted by the buyer’s agent, a real estate attorney, or the title company, often on the state standard form. As a for-sale-by-owner seller, you can also start the form yourself, but always have it reviewed before signatures. Never sign a version you haven’t read line by line.

Can a buyer back out of a real estate purchase agreement?
Yes, if a contingency lets them. If the inspection, appraisal, or financing conditions aren’t met by their deadlines, the buyer can typically cancel and get the earnest money back. If they walk for a reason the contract doesn’t cover, you may be entitled to keep the deposit, which is exactly why the default clause matters.