It Pays to Understand Your Real Estate Contract

Man's Hands Signing Document

While every home buyer should have a real estate attorney working with them during their purchase transaction, they should also have a basic understanding themselves of what a real estate contract does and how it works.

Contract Protects Both Parties A real estate contract details such information as the price, the date of closing, and other factors involved in the transaction.  It should allow you sufficient time for your attorney to review it and to have a home inspection conducted if you so choose.  Be aware that you have a right to negotiate anything that arises from a home inspection or an attorney review.

Insist on an Attorney Review If you haven’t yet selected a real estate attorney (and remember you’re looking for one with special expertise in real estate), don’t ever sign a contract without an option for an attorney review.  You could be setting yourself up to be taken as far as price, or other terms are concerned, or you could find yourself saddled with issues that arise after closing.  The contract will include what is called a commitment date; this is the date by which you can prove to the seller that you’re able to obtain financing.  A prequalification letter given to the lender at the beginning of the process is based on basic information, including credit, but full approval comes only after the appraisal, title and other such factors are reviewed by the lender.

It Pays to Ask About Seller Credits Always ask about seller credits.  If the seller is willing, he or she may be able to assist with some of your closing costs; this needs to be in the contract as well.  Depending on the financing, you may be able to get 3-6 percent of the purchase price refunded to you.

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