Our Guide to Seattle Real Estate Contracts

Washington state is an escrow state, not an attorney state - meaning closings are handled by licensed escrow officers at title and escrow companies rather than by real estate attorneys. The standard forms used in most residential transactions in the Seattle area are produced by the Washington Realtors association (formerly Northwest Multiple Listing Service forms), and understanding the purpose of each form helps you read and respond to offers intelligently rather than relying entirely on an agent’s interpretation.

The Purchase and Sale Agreement (Form 21)

The Purchase and Sale Agreement - Washington Realtors Form 21 - is the primary contract document in a residential sale. It establishes the agreed price, the earnest money amount and holder, the closing date, the items included and excluded from the sale, and the conditions under which either party can terminate. Form 21 is accompanied by addenda covering specific contingencies and terms, each of which modifies or supplements the base agreement. The combined package of Form 21 and its addenda constitutes the legally binding contract once both parties have signed and delivered - known as mutual acceptance - and the timelines for contingencies typically begin running from the date of mutual acceptance.

Key elements sellers review carefully in Form 21 include: the purchase price and any seller-paid closing costs (seller concessions that effectively reduce net proceeds), the earnest money amount and whether it is held by the buyer’s broker or by the escrow company, the closing date and any flexibility language, the included items (appliances, fixtures, outbuildings), the excluded items (items the seller is taking), and any escalation clause provisions if the buyer has structured a competitive offer with automatic price increases tied to competing offers.

Earnest Money in Washington State Transactions

Earnest money is a deposit made by the buyer at the time the Purchase and Sale Agreement is executed, demonstrating the buyer’s commitment to the transaction. In the Seattle market, earnest money deposits typically range from 1-3 percent of the purchase price on standard offers, with higher deposits sometimes used in competitive situations to signal buyer strength. The deposit is held in a trust account (typically by the buyer’s broker or an escrow company) and applied toward the buyer’s closing costs or down payment at closing.

In Washington state, the disposition of earnest money when a transaction falls through depends on whether the termination was within a contractual contingency period or outside of one. If the buyer terminates within a valid contingency period - inspection, financing, or appraisal - they are generally entitled to their earnest money back. If the buyer terminates after all contingencies have been removed without a valid contractual basis, the seller may be entitled to keep the earnest money as liquidated damages under the default provisions of Form 21. However, earnest money disputes are common and can require escrow interpleader proceedings or mutual release before funds are disbursed - which is why having clearly written contingency deadlines and buyer waiver language in the contract matters. Sellers who work with an experienced agent and carefully review contingency language before signing are in a much stronger position if a dispute arises.

The Three Primary Contingencies

Most Washington state residential purchase agreements include three standard contingencies that protect the buyer’s ability to exit the transaction under defined conditions. Sellers should understand what each contingency period involves and what their options are if a complication arises.

• Inspection contingency (Form 22Q): Gives the buyer a defined period (typically 10 business days in the Seattle area) to have the property professionally inspected. During this period, the buyer can request repairs, request a price reduction or credit, or terminate the contract and receive their earnest money back. The seller is not required to agree to any requested repairs - if the parties cannot reach written agreement before the contingency deadline, the buyer can walk away. In competitive markets, some buyers shorten or waive this contingency; sellers should understand that a waived inspection contingency does not waive their disclosure obligations under Form 17.
• Financing contingency (Form 22A): Protects the buyer’s earnest money if they are unable to obtain the financing described in the contract (loan amount, loan type, interest rate threshold). The financing contingency typically runs 21 days from mutual acceptance. If the buyer’s lender cannot approve their loan within that period, the buyer can terminate with earnest money returned. Sellers evaluating offers should consider the buyer’s loan type and pre-approval strength - a cash offer or a strongly pre-approved conventional buyer carries less financing contingency risk than a buyer at the edge of their qualification range.
• Appraisal contingency (Form 22AA): Protects the buyer if the property appraises below the purchase price. If the appraised value is lower than the contract price and the parties cannot agree on a price adjustment, the buyer can terminate and recover their earnest money. In the Tacoma market and throughout Pierce County where competitive bidding is common, sellers often see buyers include an appraisal gap coverage clause alongside this contingency - language agreeing to cover the gap between the appraised value and the purchase price up to a stated maximum - which reduces the seller’s appraisal risk on above-asking offers.

Washington State Seller Disclosure Requirements (Form 17)

Washington’s Seller Disclosure Statement (Form 17), required under RCW 64.06, is a legal document the seller completes before or at the time of the transaction disclosing known material defects and conditions of the property. Form 17 covers the structure, systems, environmental conditions (buried oil tanks, asbestos, lead paint, flooding), legal status (encroachments, easements, permits, HOA), and the seller’s knowledge of any deficiencies in each category. Sellers must complete Form 17 honestly and to the best of their knowledge - misrepresentation or omission of known material defects creates legal liability that survives closing.

The buyer typically has three business days after receiving Form 17 to rescind the purchase agreement without penalty. This right of rescission applies regardless of whether the buyer has already done an inspection or removed other contingencies - Form 17 carries its own independent right of review. Sellers who have completed a pre-listing inspection benefit from Form 17 completion because they have documented knowledge of the property’s condition and can answer the disclosure questions accurately, reducing post-closing liability exposure.

Other Common Addenda in Seattle-Area Transactions

In addition to the three primary contingency forms, Seattle-area purchase agreements frequently include several additional addenda that sellers should be familiar with before signing.

• Escalation clause (Form 22E): An escalation clause states that the buyer will outbid competing offers by a set increment (for example, $5,000 above the highest competing offer) up to a stated maximum price. In competitive listing situations, sellers who receive escalated offers should understand that the escalation is only triggered by a documented competing offer - meaning the buyer’s price escalates only to what is actually needed to beat the competition, not automatically to the cap. Sellers must provide the competing offer as documentation to trigger the escalation.
• Seller rent-back (Form 22R): A rent-back agreement allows the seller to remain in the property after closing for a defined period, paying rent to the buyer. This is particularly useful for sellers who need time to find replacement housing or coordinate a move after closing. Washington state caps most residential rent-back agreements at 60 days when the buyer is using owner-occupant financing.
• Lead-based paint disclosure (HUD Form): Federal law requires sellers of homes built before 1978 to provide buyers with a lead-based paint disclosure and give them 10 days to inspect for lead hazards before becoming obligated under the contract. Given that many Seattle-area homes in Capitol Hill, Fremont, Wallingford, and other established neighborhoods date to the 1920s-1950s, this addendum is common in local transactions.
• Community property acknowledgment: Washington is a community property state, meaning property acquired during marriage is generally owned equally by both spouses. Both spouses must sign the Purchase and Sale Agreement and the deed even if only one spouse is listed on the title - a requirement that sellers sometimes overlook and that can delay closing if not addressed early.

Closing Process and Title in Washington State

Washington state closings are handled by licensed title and escrow companies, not attorneys. The escrow officer coordinates document preparation, manages the flow of funds, facilitates the signing of closing documents by both parties (typically separately), and records the deed with King County (or Snohomish, Pierce, or Kitsap County, depending on the property location) upon funding. The seller signs a deed conveying title to the buyer; the buyer signs their loan documents; the escrow officer disburses funds according to the settlement statement, paying off the existing mortgage, real estate commissions, transfer taxes, and other costs before wiring net proceeds to the seller.

Washington state imposes a Real Estate Excise Tax (REET) on real property transfers, paid by the seller. REET rates are graduated based on the sale price: 1.1 percent on the portion up to $525,000, 1.28 percent from $525,001 to $1.525 million, 2.75 percent from $1.525 million to $3.025 million, and 3.0 percent on any portion above $3.025 million. For most Seattle-area transactions, the effective REET rate is between 1.1 and 1.28 percent. REET is a meaningful closing cost that sellers should factor into their net proceeds calculation alongside agent commissions and standard escrow/title fees.

How Cash Sale Contracts Differ

In Kent and throughout south King County, sellers who choose to work with a professional cash buyer experience a significantly simplified contract process. Cash purchase agreements are shorter and more straightforward than standard Form 21 packages - there is no financing contingency because no lender is involved, no appraisal contingency because the buyer is not subject to lender appraisal requirements, and no inspection contingency renegotiation because cash buyers purchase properties as-is. The purchase price reflects the property’s current condition; there are no post-offer repair requests or price adjustments based on inspector findings. Closing timelines are also more flexible - without a lender’s processing timeline to accommodate, a cash closing can occur in as few as 7-14 days or can be extended to give the seller the time they need to arrange their next step. If you want to see what a straightforward cash sale contract looks like for your Seattle-area property, contact us today or call (206) 222-1461. We walk you through every term before you decide - no obligation, no pressure, just a clear picture of your options for a fresh start.