Walking through the home buying process can bring its own set of frustrations and headaches. The paperwork, approvals, unfamiliar words, and waiting can seem never-ending for both the seller and the buyer. Part of the journey of securing your dream home is signing some type of home purchase contract. But what exactly does that mean?
- What is a home purchase contract? A home contract may be called many things, including a purchase agreement, binder, earnest-money agreement, or simply an “offer”. Once signed, it may be binding. Basically, it defines the legal relationship between the buyer and the broker.
- What should a home purchase contract include? At the very least, a home purchase contract should include which items will remain with the home, the total purchase price, a full legal description (including street address), conditions for earnest money, the type of deed and title, and settlement date.
- What is a contingency? A contingency is a condition attached to the offer you are making on the home you wish to purchase. Contingencies can include: appraisal (giving the buyer an option to cancel if the appraisal minimum is not met), repair (if repair costs exceed a certain amount), and financing (related to buyer’s ability to secure financing).
- Who is involved? Your agent, the seller’s agent, the seller, and you as the buyer. You may decide to hire a real estate attorney, who can review the home purchase contract before you sign in order to ensure everything is ready to go.
- How long does a home purchase contract take to finalize? The finalization depends somewhat on the terms of your offer and if the seller chooses to accept them or not. It may take a few back-and-forth offers and counteroffers before a final agreement is reached. Once you come to an agreement, there are other tasks that will need to be completed, including property disclosures, loan processing, and a final walk-through.
Requirements for home purchase contracts may depend partly on:
- The state in which you are purchasing the home
- Negotiations between the buyer and the seller
- Local regulations regarding home purchases
Of course, other details and requirements will emerge along the way as you continue along this process. Since purchasing a home is not a decision to make lightly or on a whim, all offers and considerations should be contemplated thoroughly before presenting them on paper
Your real estate agent (hopefully a professional, reputable agent) will be able to walk you through all the steps of the home purchase contract and explain any terms or conditions that seem unfamiliar. Never agree to any contract or terms that you do not understand.
Research can prove helpful prior to purchasing a home; understanding the language before you step onto the road of real estate buying can alleviate some confusion later. No matter where your home buying journey takes you, contracts will be a part of the plan. Be prepared and save yourself confusion later!