The prime home-buying season is upon us, and with it, mounds of paperwork. And, let's be honest -- a chunk of that paperwork will be devoted to the real estate purchase contract.
Here's how you can sign on the dotted line without losing your mind.
What it is
A real estate purchase contract is a legally binding document that details the sale of the property. Details range from the basics (e.g., how much the property costs) to the specifics ( e.g., what furniture or appliances stay in the house).
How to prepare
Before you even go near the contract, do a walk-through of the property with a professional land surveyor, engineer, or experienced landowner. Call in an inspector to search for anything that might end up costing you extra money: broken gutters or gates, inadequate electrical circuits, outdated plumbing pipes, and more. Get it all down in writing and attach all building and land inspection forms to the contract.
Review the contract
Once all the paperwork is gathered and reviewed, a real estate purchase contract will be drawn up. The following are common items that appear in traditional contracts:
- Buyer's and seller's list
- Legal description of the property, including zoning information
- Purchase price and terms of the sale
- Down payment to be held in escrow and future payment structure
- Closing date
- Response time frame before the contract is void
- Any items included in the sale such as appliances, furniture, and flooring
- Disclosure of lead paint (for buildings built before 1978) and other defects
- Home and appliance warrantees
- Pest and environmental inspection results
- Home inspection results
- Title insurance
- Contingency clauses (for example, you can buy this house only if your other home sells, or certain repairs need to be made)
- Commissions, if any
Signing the contract
When you sign this contract -- that's pretty much it. If you come back to the seller and ask for anything else not in the purchase agreement, she or he doesn't have to do it -- and probably won't. The contract states everything you're getting and not getting in your new home, so get a real estate lawyer to go over all the details. Ask the seller for clarification on anything you don't understand, and sign only when you're certain you understand the agreement.
Store the contract in a secure area such as a safe-deposit box. Also store the deed and any other documents registered in the local registry office.
Updated from an earlier version by Cina Coren