The National Association of Realtors defines a contract as a deliberate or voluntary agreement entered between by two or more competent parties based on legal consideration to do or refrain from doing some legal act. Each home sale contract is created purposefully for the sale of a home and specifically for the related property. Real estate contracts are legally binding and enforceable as long as they are in writing. Real estate sale contracts start when a buyer places an offer on a home for sale.
Sellers place their home for sale with a specific listing price. When buyers find a home they wish to purchase, they can submit an offer for the seller to review. Once a seller receives an offer, they have several options on how to respond.
- The first option is for the seller to not respond at all.
- Option two is for the seller to accept the offer.
- The third option for the seller is to reject the offer.
- Finally, the last option is for the seller to counter the offer. They can choose to counter the offer based on the price, the proposed settlement date, the concessions or the offer’s contingencies.
If sellers take too long to make a decision, buyers have the option to withdraw their offer. When an offer is accepted by the seller, the next step is to tackle any of the contingencies.
Most offers submitted by buyers include contingencies. For a real estate sales contract to be ratified, all contingencies must be remedied. For a contract term to be considered a contingency it must meet three rules.
- The first rule is that should favor one side of the contract over the other whether that be the buyer or the seller.
- The second rule is that there must be a specific timeline established for the contingency to be resolved.
- Finally, there must be a clear definition of the contingency’s remedy for its removal from the contract. A common contingency for real estate transactions is for the buyer to request for a third-party professional to inspect the property for any discrepancies before the purchase is finalized.
For a home inspection contingency, the home inspection must be completed and the buyer submit an answer within the timeline mentioned in the offer. During a home inspection, a buyer may answer with a release form and can walk away from the property without giving a reason. They can request specific repairs sited within the home inspection to be completed prior to the closing or they can accept inspection and take the home as is. Once all contingencies are fulfilled and both parties agree, the contract becomes ratified and the home sale can move forward.
The settlement date also known as the closing date is the date that the home sale is finalized. This is the day the buyers get the keys to their new home, sellers get their money and the agents receive their commission. It is important to note that the closing date mentioned in the contract is a target date. It is possible to close earlier or later because of the many factors and people associated with the sale. It is the job of your realtor to keep all parties accountable and push the process along.
While in the process of finalizing a real estate home sale contract, your realtor is your greatest resource. Their goal is to help you understand every step of the way. They can provide legal advice within the scope of the sale, but you may need to seek a lawyer for more in-depth legal matters. No matter how simple or complicated your home sale may be, it is crucial to have an agent that knows your contract inside and out. Working with an agent from RedefyFlatFee guarantees you a professional, knowledge agent that will keep your best interests their top priority. Get more information about real estate contracts in our related podcast.