iowahomeloans

A Look Inside a Home Purchase Contract

Posted on: August 20, 2013

Buying a home starts with an offer, but the process truly gets underway when both parties sign the purchase agreement. But what’s in all that paperwork, anyway? Why is a basic real estate contract 10 pages long, with up to 20 or even 30 pages in specific purchases? If you’re thinking about buying, or if you’re selling but it’s been a while since you bought and want a refresher, here’s a basic primer on what’s inside a home purchase contract:

 

Understanding the Basic Contract

The first page of the contract contains all the important information, like the name of the buyer and seller, the property address, a settlement date – and how much the buyer is willing to offer. The buyer’s offer can be tempered by an addendum later in the contract asking for seller’s assistance, so the number on the front page doesn’t tell the whole story. Flip forward to the “Seller’s Credit to Buyer” section later in the contract to understand the true terms of the offer.

 

The rest of the basic contract includes standard verbiage covering a range of scenarios, which includes everything from financing to buyer/seller responsibilities, and what happens if one of the parties defaults on the contract.

 

Contract Addenda: Where the Real Magic Happens

After the basic contract, buyers and sellers can add a variety of addenda to modify the contract. Some states require certain addenda for informational purposes to make sure buyers are aware of certain things when buying a home in the area. An addendum may also address things like inspection contingencies, homeowners’ association requirements, or even specific things to be repaired or projects to be undertaken before the home sale can be completed.

 

A good real estate attorney can help you understand the home purchase contract, and tailor it for your needs. Make sure you address important contingencies, and include any agreements between the parties in writing.

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