A real estate Contract is a legally binding agreement between two parties that outlines the terms of a purchase or exchange. It is used to ensure the transaction takes place and explains what each party will be required to do once negotiations have ended.
Price: This is the first thing that a buyer will want to look at when deciding whether or not they would like to purchase a property. A good real estate agent will explain this part of the deal in great detail, so that a potential buyer understands what they are getting into before making an offer on a property.
Earnest money: A small amount of cash, usually one percent of the sales price, will be given to the seller to show that they are serious about the purchase and willing to proceed with it. The amount is usually held by an escrow agent between the time of the contract and closing, and will be transferred to the seller once the deal is finalized.
Inspection: A home inspection is a crucial part of any contract, as it can reveal major issues that will need to be addressed before the purchase can be finalized. Some contracts include a home inspection contingency clause that allows the buyer to back out of the sale if the inspection reveals that there are significant issues with the property.
Financing: A financing contingency is another important stipulation that must be met before the contract can become legally binding. These stipulations can include a requirement that the buyer obtain a mortgage loan at a certain rate, or that the property be appraised at a specific price.
Escalation: If you are in a competitive market, you may wish to consider adding an escalation clause to your contract. This will allow you to automatically increase your offer over any other competing offers that have been made.
It is also a good idea to review the details of the purchase agreement with your clients before signing off on it. This will ensure that you understand what your client’s interests are and how to protect them in the event of a disagreement over the terms of the contract.