You’ve been looking at houses for weeks and you’ve finally found one you like. What happens next? The next step is your real estate agent will be preparing a contract that contains your offer.
What is in the contract? The contract must contain the names of all of the buyers and all of the sellers. It must identify the exact property that is being purchased. The contract must state the purchase price being offered and it must state the date on which you wish to close. Those are the mandatory terms.
What else will the contract state? Typically, the buyer is making a down payment of part of the purchase price almost immediately after the contract is accepted by both the buyers and the sellers. The contract will state how much of a down payment the buyers are making, when they will make the down payment, and who will hold the money (usually the seller’s lawyer).
Most buyers will need a mortgage in order to raise enough money to buy the property so there will be a paragraph about how much mortgage the buyers will obtain and by what date they must have a commitment from their lender for that mortgage. The contract will usually state that if the buyers cannot get the mortgage by that date, they can cancel the contract and get their down payment back.
The contract will identify what personal property is staying in the house and what is going to be taken by the seller. Personal property is anything that is not permanently attached to the house. Typically, certain appliances (refrigerator, washer or dryer) go with the seller, sometimes window treatments are taken, and sometimes chandeliers are to be removed. If the contract doesn’t explicitly state that something is omitted from the sale, the seller must leave it with the house.
The typical contract contains a great deal of pre-printed language about the seller giving the buyer marketable title, about who has the risk of loss if there’s a flood or fire before the closing, about which inspections the buyers are entitled to conduct and when they need to be conducted, and what happens if either party defaults on the contract.
You should consult with a lawyer when buying a house because the real estate contract creates rights and obligations that real estate buyers are bound by. Your lawyer will explain every word in the contract and how it affects you. A lawyer can also change the language in the contract to further protect you. It’s important to understand your real estate contract.