You will probably put your name on many contracts during your lifetime, but few are more exciting than the purchase agreement for the home you wish to buy.
However, a real estate purchase agreement has various terms that you must read and understand before signing.
Basic information
The purchase agreement provides information about the property as well as information about you as the buyer. Both you and the seller must be mentally competent in order to enter into this contract.
Costs and earnest money
Next, there will be a section regarding the offered price and the acceptance of the same. You must explain how you will pay for the property. You might pay in cash or make a down payment and take on a mortgage. This section will address earnest money, usually, $1,000 or more, which is usually absorbed into the down payment. Your closing costs will also appear in this section. They include the costs of transferring the property from seller to buyer, such as recording the deed.
Contingencies
You might wish to include contingencies, which will allow you to get out of the agreement under certain circumstances. For example, the sale might depend on your ability to sell your home before you complete the purchase of the new home.
Expiration and default
The contract should contain a specific date on which the agreement will expire if the seller does not accept it. Also, either you or the seller may cancel the agreement for one of several reasons. The seller might default on a contract for repair work, or the seller might not move out of the property by the agreed-upon date. If either you or the seller defaults on the agreement, the other party may initiate litigation.