A real estate Contract is a document that outlines the terms and conditions of a transaction between two parties. It is often used when buying or selling property and can be very useful for avoiding legal issues. It should be written by a real estate attorney and be legally binding between the buyer and seller.
The most important thing to remember when reviewing a real estate Contract is that it should be clearly worded so that the parties understand their obligations. It should also state what happens if either party defaults. This will help to eliminate the possibility of litigation and set clear expectations for both parties.
Term Sheet: This is a short document that outlines the basic details of a sale, including a description of the property, purchase price, closing date, and any other relevant terms. It should be signed by both parties and sealed to become legally binding.
Offer: Once a potential homebuyer has found a property they want to purchase, they can make an offer on the house. The seller will then accept, reject or counter the offer. The offer may include any modifications or negotiated terms, such as purchase price, closing costs, and contingencies.
Inspection: After the initial offer has been accepted, the buyers arrange for a home inspector to take a look at the property. The inspection will show any problems with the house that need to be addressed. The home inspector will report to both the buyers and sellers on any issues he or she finds. The buyers will need to sign the inspection report before closing can occur.
Earnest Money: The buyer will pay a down payment, which is usually 10% of the purchase price. This down payment is held in escrow until the deal is complete. The seller will then pay the remainder of the money over to the buyers after closing occurs.
Obtaining Mortgage: In the real estate market, most people buy homes with the help of a mortgage loan. This is why it’s common for a contract to require the buyer to obtain a mortgage within a certain amount of time after signing. If the buyer fails to do so, the buyer can cancel the contract without penalty or owe an additional fee for waiving the mortgage condition.
Restrictions: A real estate Contract should state any restrictions on the home that need to be met in order for the sale to go through. These restrictions can include requirements for the buyer to purchase home warranty, to be able to have pets in the house, and other limitations.
Many contracts contain contingencies, which are specific conditions that must be met in order for the contract to go through. These contingencies can be very helpful for buyers, because they allow them to back out of the agreement with little monetary loss. These conditions can include getting financing, a favorable home inspection, or a warranty for the property.