A Buyer’s Guide to the Sales Contract

Once you’ve found the home that you want to purchase the next step is to make is yours. This is done with a series of steps one of which is signing the sales contract. The sales contract should include several pieces of information that have an impact on the sale. Here are the key pieces of information that most sales contracts will include.

• A legal and physical description of the property being purchased. The legal description is used by the county government to identify the property even if the street address changes. The legal description of the property will never change.

• The selling price and method of payment should be included. In most cases, a mortgage is the method of payment. In this section of the sales contract, there should be details about the amount of the down payment, mortgage loan, and earnest money deposit. The name of the escrow that will hold the earnest money must be included. If you have any contingencies about the mortgage, they should be listed as well.

• The closing date must be laid out. Details about when and where should be included in the sales contract.

• What’s included and what’s not included in the sale should be detailed. If the seller agrees to throw in appliances, it must be listed in the sales contract. Otherwise, you could end up purchasing your own appliances.

• Any warranties that are included with the home should be detailed in the sales contract. A description of the warranty should also be listed.

• If there is a well and septic, they must pass testing.

• Termite and pest inspection should be conducted. The sales contract should detail not only who will pay for the inspection, but also the party responsible for any repairs if infestation or damage is discovered.

• The exact date that the buyer will take possession of the home should be included. This date can be anytime before, at, or after closing.

• The sales contract should include the amount of time that the seller has to respond to the offer, whether it is to accept or counter the offer.

• Provision for arbitration is sometimes included.

• Either the seller or the buyer will have to pay for property insurance up until closing date. The sales contract should stipulate the responsible party.

• Any property disclosures pertaining to the house should also be included in the sales contract.

Since the seller will very likely request to see a copy of the sales contract sooner rather than later, it is a good idea to have extra copies made and kept on hand. Be sure to review any contracts with your realtor before any parties sign them, and be sure that the seller understands each part of the contract before they sign as well, since contracts, once signed, cannot be amended.