Buying or selling a home is one of the biggest decisions you'll make in your life. So, it's important to make sure you have everything covered by your real estate contract. As an someone who has helped hundreds of clients buy and sell homes, I've seen many issues arise after the sale has closed. Fortunately, most of these problems can be avoided if both parties know what details need to be included in their contracts before signing on the dotted line.
Here are seven things that every real estate contract should include:
Include the names and addresses of both parties as well as their signatures (or initials if they can't sign) at the bottom of the contract. If possible, also include telephone numbers so that you have an easy way to reach them after signing if you need more information or clarification on anything in the contract.
The offer is a written proposal that outlines what one party agrees to do in exchange for something else of value from another party. In real estate contracts, offers typically come in two forms: an offer to purchase or an offer to sell.
An offer to purchase is used when one party wants to buy a home from another party (the seller). They specify how much they're willing to pay for it and what they'll do with any additional equity (if there is any). This type of offer may also include contingencies that protect both buyer and seller from unforeseen circumstances during the transaction process that could cause problems for either side and potentially halt progress in closing escrow.
A listing broker is the agent who listed the home for sale. The listing broker is responsible for marketing the home and bringing in potential buyers, so it's important to make sure they are paid appropriately.
The seller will pay their commission directly to them at closing. In most cases, this will be around 3% of your purchase price (but check with your lender).
This deposit shows sellers that buyers are serious about purchasing their home and gives them some financial protection if buyers back out of a deal after signing a contract but before closing on their home (known as breaking off). Earnest money deposits typically range from 1% - 2%.
This is a description of the property being sold, including its address and legal description (such as lot number or parcel number). The legal description should match up with the deed to that piece of property.
You'll want to make sure these dates are realistic so that everyone has enough time to do what they need to before closing day arrives. Also note that there may be additional conditions for closing — for example, if a title search is due 30 days before closing or if there are other inspections required before finalizing the deal.
If a buyer wants to conduct an inspection prior to closing, the contract must specify when and how the inspection will occur. Also, it must specify whether the seller will provide access to the property at a time that is convenient for both parties. It is also important to specify who will pay for any repairs or improvements required as a result of an inspection.
A blank space for buyers to make notes about any repairs or maintenance issues they want sellers to address before closing. This is especially important if there are problems with appliances, fixtures or systems that need fixing before you take possession of the property. It also applies to all upgrades and new construction during the contract. It is best to discuss all this with your lawyer. Type in the search engine best construction lawyers near me to instantly find lawyers you can trust.
This section should cover any problems with the property that weren't disclosed in your offer or during negotiations, such as flooding from nearby lakes or rivers, known mold issues or other environmental hazards that may affect your decision to buy. The seller should also disclose whether they plan on moving back into the house after closing, if they are going through bankruptcy proceedings or if they have other liens on their assets such as unpaid taxes or judgments against them for unpaid debts.
The payment schedule should be spelled out clearly in the contract and include dates and amounts. If those dates change, your mortgage company will notify you by mail or phone call.
If this is a purchase-option agreement (one where the seller retains ownership until certain conditions are met), make sure you specify exactly what those conditions are and when they must be fulfilled by both parties. A good example would be "the buyer shall purchase this property for $x amount upon receiving title insurance for said property.
We hope this article has helped you understand the importance of real estate contracts, and how they can affect your home purchase or sale.
