A real estate contract is slightly different than other contracts in that it must be in writing. While verbal agreements may be allowable in some situations, they are not binding in real estate.
The basic requirements in a real estate contract must include the parties' legal names, the property description, either by the address of deed reference, the purchase price, earnest money deposit to bind the agreement and signatures of both parties. Without all of these elements, the contract is not binding.
The method of payment to the seller, though not a requirement, is expected. The seller will want to know if the buyer will need to obtain financing or pay with cash. Because of the length of time it takes to receive funding, most sellers will require a letter from a lender stating the buyer is pre-qualified and able to purchase. If the buyer states they are paying cash, the seller may require proof of funds to accompany their offer.
It is common to see a home inspection provision that allows the buyer to inspect the home's structure and working components. If the inspection is unsatisfactory to the buyer or financing is unattainable, they may be grounds for termination of the contract if they are included as contingencies in the agreement.
Other typical elements of a real estate contract usually include items to remain, such as appliances, wood stoves, and other functional components of the home. The parties should consider addressing personal items like furniture and yard tools outside the real estate contract.
As in any contract, it is advisable to consult an attorney before signing.
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