Searching for a new home can be trying at times, but once you find the perfect home for you and your family, it is time to begin the process of making it yours. This article will guide you through the various aspects of the sales contract to help you have a better understanding of the process of what it entails.
Sales contracts are binding legal documents, and regardless of your knowledge and understand of legal jargon, you can be held accountable for the terms of a sales contract whether you understood them when you signed on the dotted line or not. I know this idea can be daunting - and to a certain extent it should - but the most important thing is that you take steps to ensure that everything in your sales contract is factual and completely accurate before you sign.
What Is In a Sales Contract?
Your sales contract will include several key pieces of information, each of which is vital to the sales process. In order to better educate you, I have compiled this list of items that are common to most sales contracts:
* Legal Description - The first and most crucial part of any sales contract is a thorough and accurate description of the proposed property. This is used by local government to identify the exact boundaries of the property in question. Even in the rare case when there is a change in the street address, the legal description cannot be changed unless a portion of the property is sold.
* Sales Price - It goes without saying that the sales contract must include the agreed upon sales price. The price and payment portion of the contract should include details such as the escrow amount, the down payment amount, mortgage loan information and earnest money deposit. Any eventualities should be included as well.
* Closing Details - The closing is the day when the purchaser and the seller meet to finalize all of the paperwork and complete the sale of the property. A closing agent (usually a lawyer) will most likely handle these details. The sales contract should also contain the location, date and time of the closing.
* Miscellaneous Inclusions and Exclusions - Should the seller agree to leave specific items (such as appliances or furniture), this should be included in the sales contract. Also detailed should be any items that will not be included in the sale.
* Warranty Information - Any warranties (warranties on equipment, etc.) should be detailed in the sales contract, along with dates and descriptions.
* Testing Certification - In most cases, such things as wells, septic tanks, termite and pest inspections on the property must pass inspection before a sale can be completed. The sales contract should specify the details of these items and whose responsibility it will be to pay for the inspections and any necessary repairs.
* Date of Possession - The precise date that the purchaser will take possession of the home. This date can be at any time before or at the closing or even after the closing.
* Expiration Date of Offer - The contract should include an expiration date for the offer, by which time the seller must respond with either an acceptance, rejection or counter offer.
* Arbitration Agreement - Not necessary, but an arbitration agreement is most often included to allow for mediation of any disagreements to take place outside of the legal system.
* Interim Property Insurance - The property must be insured at all times, and the sales contract should have details about who is responsible for maintaining the property insurance prior to the closing date.
Working closely with your real estate agent, who will most likely handle the preparation of your offer, will alleviate most of the issues some purchasers may have with the process of preparing a sales contract. Real estate agents are experts in negotiating such specific details as are necessary and will be instrumental throughout the process. For a buyer’s guide go to: Buying Your First Home
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