It's great to finally find just the right home for you and yours. The price is right, the home checks off all (or most) of the boxes, and the neighborhood has you feeling that you'll fit right in. What's the next step? The purchase contract is as close to sealing the deal as you'll come prior to the closing, so read on to learn more about this important document and how to handle it.
Settle on a price and come to an agreement
Making an offer (also known as a bid) on that home and then agreeing on a price forms the most important aspect of a sales contract. Don't be discouraged if your initial offer is rejected; just up the price and keep going until you've either reached your hard limit or the seller agrees with the price. The price you and the seller agree upon must become binding and legal through a contract.
The purchase contract
The agreement to purchase at a certain price is not binding or legal until it's signed by both you and the seller, so verbal agreements or handshakes can only do so much when it comes to the law. Purchase contracts tend to come in templates because real estate purchases tend to be standardized. Some common inclusions in your purchase contract might be
1. The agreed-upon price of the home.
2. The parties in the agreement (the buyers and the sellers).
4. Some boilerplate contract language that lays out the legal power of the contract.
5. Any contingencies.
6. What is included in the purchase price. While it can vary from state to state, some items are automatically considered part of the house and some are not. It's best to check with your real estate agent if you have your heart set on the window coverings or the hot tub.
7. The amount of the deposit or earnest money. This is a percentage of the home price and is provided by the buyer to secure the contract. In some cases, earnest money may be returned if the contract to purchase falls through.
8. Closing costs estimates. A more accurate assessment will be provided to you before the closing takes place, but this can give buyers a ballpark idea of what to expect.
9. An estimated closing date.
Most contracts are easy to comprehend and fairly straightforward, but speak to your real estate agent if you don't understand any part of your contract.