Contracts are an important part of any business deal. They are the foundation that any agreement is built upon. However, for most people, the concept of a contract is a foreign one. The only time you’re likely to ever see a contract is when you’re signing one. A contract is not some magical piece of paper that you can’t understand. It’s just a document that sets out the terms of an agreement. That’s why legally binding contracts are such an important part of the process – there simply must be legal safeguards in place to protect both buyers and sellers. But these contracts can be utterly confusing to the layperson. We want to dispel some of that confusion to put you on firmer ground when you’re involved in buying or selling. Below, you’ll discover everything you need to know about real estate contracts when buying or selling a house in Effingham County and Savannah.
Overview of Real Estate Contracts
So let’s begin with an overview of real estate contracts – the basics or what those buying or selling a house in Effingham County and Savannah need to know.
What a Real Estate Contract Is
In short, such a contract “is a legally binding document between two or more parties participating in a purchase and sale, exchange or transfer of real estate.” A well-crafted contract outlines expectations and obligations for both the buyer and the seller. “A real estate contract generally covers terms of finance, seller assist, home inspection, fixture and appliances, closing date, sale of existing home, etc.”
How These Contracts Work
The three main steps in the drawing up and finalizing of real estate contracts are . . .
- An official offer form is created by the home buyer’s agent and submitted to the seller. This initial offer will outline the description of parties involved, the property details, purchase price offer, earnest money deposit, closing costs, and closing dates.”
- On receipt of this initial offer, the seller will accept, reject, or counter it. A counteroffer may include “proposed modifications or negotiated terms such as purchase price, closing costs, contingencies, etc.”
- After both parties (buyer and seller) have accepted and signed the contract, it then becomes a legally binding contract.
Creating Real Estate Contracts
Often, the buyer’s agents prepare real estate contracts if they are licensed to practice law. If not, the buyer can have a contract drawn up by a real estate attorney.
“You can find templates online to draw up your own real estate contract. However, it is advised to consult a real estate professional to ensure a smooth deal.” To discover more about this, you can consult a Effingham County and Savannah agent at (912) 695-6932.
Important Elements of Real Estate Contracts
The important elements of real estate contracts are as follows . . .
Financial Terms
Unless you have enough funds on hand to make a cash offer, you’ll have to get a mortgage to buy a house. So as a buyer, you’ll want the contract to be contingent on your getting financing at a specified interest rate (and sometimes on obtaining a certain type of loan).
Areas of Seller Assistance
“If you want the seller to pay for, [say], part or all of your closing costs, you must ask for it in your offer. Closing costs are typically expenses above the property price that both buyers and sellers pay to execute a real estate deal. When you put in a concession for a seller assist, you are asking the seller to cover some of these additional expenses.”
Payment of Closing Costs
“The agreement should specify whether the buyer or seller pays for each of the common fees associated with the home purchase, such as escrow, fees, title search fees, title insurance, notary fees, recording fees, transfer tax, and so on.”
Home-Inspection Contingency
Contracts often include a clause specifying that the sale is contingent on the property passing a home inspection. If you’re the buyer, “[t]his clause allows you to walk away from the deal if a home inspection reveals significant and/or expensive-to-repair flaws in the structure’s condition.”
Fixtures/Appliances
If, as the buyer, you want to keep appliances like the refrigerator and washing machine, this must be spelled out in the real estate contract. You simply cannot rely on a verbal agreement alone.
Closing Date
The common timeframes for closing are 30, 45, or 60 days. But the buyer and/or seller may have reasons for a longer or shorter timeframe, This, too, has to be spelled out in the contract.
Home-sale Contingency
“If you are an existing homeowner and need the funds from the sale of that home to buy the new property, you should make your purchase offer contingent upon the sale of your current home. You should also provide a reasonable time frame for you to sell your old home, such as 30 or 60 days.”
Your Source for Assistance with Real Estate Contracts in Effingham County and Savannah
Real estate contracts are a bit of a minefield, and it’s super important to make sure you know what you’re getting into when you sign one. What we’ve laid out here are the basics of real estate contracts, but it can and often does get a lot more involved and complex. And if you don’t make sure you cover everything, you could be opening yourself up to legal ramifications. That’s why it’s so important for both buyers and sellers to work closely with an experienced Effingham County and Savannah agent. And I have the knowledge and expertise to help you get it right. If you’re buying or selling a house in Effingham County and Savannah and don’t want to have any worries about real estate contracts, contact me today at (912) 695-6932.
