Buying and selling real estate is no monkey business. It always involves serious decision making and large sums of money. That is why you want to be sure that you have the protection of the law. This goes for both sides of the selling process. Both buyers and sellers of real estate properties want to know they aren’t getting stiffed. That is when a real estate purchase contract comes into play. This simple but very powerful piece of paper makes sure that everyone stays on track and that both ends honor their obligations of the selling-buying process.
A real estate purchase contract has a clear-cut purpose
The goal of this document is very simple. It has the purpose to protect both parties that are involved in the property transaction. Also, it makes sure that both parties are aware of what is expected on their end. In order to honor it, you should be familiar with all of the terms that you need to know when buying or selling any real estate.
Don’t sign the contract until you are certain you agree and understand all the noted terms in it. Alt-text: a buyer or seller signing the real estate purchase contract.
Understand every inch of your contract
Don’t jump the gun! Before you start picking out new furniture or making a moving checklist, make sure you meticulously read your contract. Make sure you understand every single word. Don’t get intimidated by the lingo you don’t understand. If that happens, ask for help. Unless you understand all your rights and obligations during this transaction, you could get burned.
Most important components of a real estate purchase contract
So, regardless of your role in this real estate sales process, this document will be your number one guide. Depending on the state, contracts can differ. However, these are some of the most common and important components of a real estate purchase contract.
Specifying the address of the property
This component seems like a given and it is, but it is very important. When selling your home or buying it, you want the location to be clearly noted. There is no gray area when it comes to this component. The property at stake and its location need to be undoubtedly stated.
Who will be participating in this transaction?
Another important component contains personal information of both parties that are participating. So, both buyers and seller’s information are present in the contract. In addition to the buyer’s identity, additional information must be present. The contract must specify the type of tenancy that the buyer will have.
Property price and the agreed terms
Your real estate purchase contract will state the accepted price of sale that has been suggested by the seller and then accepted by the buyer. Yet that is not all that should be mentioned in this very important component. The buyer’s method of payment for this transaction is very important information. Thus, the contract should inform the reader if the buyer will purchase the property by paying in cash, with a loan or any other payment method. The type of payment that will be used to purchase the property must be noted in one of the contract components referring to finances.
Property closing date
Punctuality is very important on both ends when going through a transaction that involves real estate. Therefore, there must be a component in the contract that will guide the buyer and the seller and give them time guidelines. There should be a specific time and date when the property changes hands between the old owners and the new. It is very important to honor all dates and times stated in the contract. Thus, make sure that none of them slips your mind.
Closing costs
Certain costs always follow the closing of the property. There is no specific rule of who is supposed to cover these costs. This practice can differ from state to state. Yet, it can also differ from case to case. That is why it is important to understand the contract. Whether or not this financial burden falls on your shoulders or not is something you want in black and white.
Other important components of a real estate purchase contract
Now you know the most important components that no property contract should go without. Still, there are many more. Here are some other common components that you should be aware of:
- Legal and property taxes
- Special assessments
- Included and excluded items on the selling property
- Common disclosures
- Date of offer expiration
- Inspections
- Appraisals
Legal assistance
If you are a first-time property buyer or seller, dealing with this transaction can be very challenging and stressful. That is why it is wise to hire legal assistance. There are lawyers that specialize in real estate and are experts in handling property sales and purchases. This way you will be sure that you are fully protected during the deal. In addition, there will be no need to stress about parts of the contract that you might not understand. So, if something in the contract is not to your satisfaction, make the change and settle down in your new place without a care in the world.
Conclusion
In the end, it is very important to do your due diligence and make sure you are protected during this entire process. Your real estate purchase contract will do just that. It is a document that will make sure that no parties cross the line in honoring what is expected of them.
Nevertheless, if you do not understand the contract, you might hurt yourself during this transaction without even noticing it. Since buying or selling a property is one of the biggest transactions that you will go through, make sure you ask for help if you need it. Especially if you have no previous experience in such dealings. All that matters is that you do your part and understand what that is. Understanding the components of a real estate contract will help you do just that.
Written By Sophia Perry – Edited by Ashley Pasquale
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