Deciding to Buy - The Contract

The Contract

A properly written contract sets forth the terms of the sale and
protects the interests of both buyer and seller.
The contract specifies the terms of the sale and the rights and
obligations of the buyer and the seller. A well-written document
protects both parties, while a poorly drafted contract can cause serious
problems.

Get it in Writing

Oral agreements are usually difficult or impossible to enforce, so if
you've negotiated your purchase verbally make sure to have contracts
signed as soon as possible.

Attorney Review

Always make sure that any contract you sign has an attorney review
clause that allows you time (at least three business days - preferably
five) to review the document and have it checked out by your lawyer if
you feel it is necessary. Many states specify a mandatory review
period, whether it is specified or not, but don't take any chances -
make sure it's in writing. This gives you the chance to make sure all
bases are covered before you are committed.

Choose an Attorney or Escrow Company

In some areas it is standard practice to retain an attorney to handle the
closing. In others the norm is to have the title or escrow company
handle the transaction. If you do hire an attorney (which is a good
idea), try and find someone local who specializes in real estate closings.
An experienced real estate attorney can help you move quickly to
closing and sidestep any problems or oversights. If you are using an
escrow company, make sure that they have a solid track record.

Cover All Contingencies

Make sure that the contract covers all contingencies of the purchase
and allows sufficient time for any required activities or testing (i.e.
obtaining a mortgage, home inspections, etc.). Reasonable
contingencies are essential to protecting yourself in the purchase -
don't allow anyone to pressure you into skimping on due diligence.

Learn About Deeds and Title

The deed is a legal document that transfers ownership of the home.
There are several types of deed that can be used for your purchase as
well as a number of special provisions that may apply to your new
home. Your attorney or escrow agent can answer any questions you
have on title and deeds.

Know Your Deposit Obligations

The contract should specify the due dates and disposition of earnest
money and deposits. Typically a small amount is posted at the signing of
the contract with the balance of the deposit (usually 10% of the
purchase price) due within 1-3 weeks. Don't agree to a schedule you
cannot meet - if you need extra time to line up the funds, specify this
in the contract.