There are many legal obligations that homeowners have to fulfill while selling their property. One of those is providing the sales contract, which serves as a binding legal agreement between buyers and sellers.
Since it is a legal document, sellers should draft sales contracts carefully. It is advisable to work with a real estate agent to make sure that you have the correct information and clauses included in [popup-modal text=“your contract”].
What Is a Real Estate Sales Contract?
A real estate sales contract is a key step towards selling your property. It is a legal document that states the responsibilities you will fulfill as a seller and the things that you expect of a buyer. A real estate contract should not be confused with a deed, which is a document that actually transfers the property from the seller to the buyer.
How Do I Write a Sales Contract?
There are a few pieces of information that should be mentioned in every sales contract.
Parties to the Sale
Who the seller and buyer involved in this real estate transaction are.
Legal Description of the Property
This is a description of the property that you can find on the deed. You can get the sale deed for your property from the office of the Recorder of Deeds in your county.
Purchase Price and Earnest Money
Every sales contract has to mention, as you'd expect, the purchase price of the property. It will also make a record of the earnest money deposit made by the buyer.
Mode of Financing
This is proof of the payment type that the buyer is using to purchase the property. In certain cases, buyers may pay in all cash. If they're getting a loan to purchase the house, the contract will mention the type of loan and require a letter confirming the loan from the lender.
It is possible for home sellers to write a sales contract themselves. However, it is advisable that you have a real estate attorney go over your contract to make sure that you haven't omitted any key details. If you work with a real estate agent, they will help you draft a sales contract.
Can I Use a Real Estate Sales Contract Template?
There are various real estate sales contract templates available on the Internet. You can use these as guidelines when drafting your own sales contract.
That said, remember that real estate laws vary from state to state. It's possible that there are specific details your contract should mention that aren't in a template. If you're unsure at any point, have a real estate agent review your contract.
What Type of Contract Is a Real Estate Sales Contract?
There are a few different kinds of real estate sales contracts. The most common one that home sellers will use is a purchase agreement. These contain details such as the closing date of the purchase, signature of the two parties, and the selling price.
Real estate assignment contracts are used when an investor is acquiring a property which he may flip or rent later on.
Lease agreements are contracts that record an agreement between a landlord and lessee, who gets to reside on the property for a specified period of time.
What Is Earnest Money in a Real Estate Sales Contract?
An earnest money deposit is a way for sellers to avoid having to deal with potential buyers who may back out of the sales. To prevent that, sellers collect a non-refundable amount known as an earnest money deposit from buyers when they sign the contract.
There are no clearly defined rules about how much a buyer needs to pay in earnest money. Depending on the state of the market you could have buyers pay up to 3% of the price of the house.
What Is an “As Is” Real Estate Contract?
“As is” contracts are written up when the buyer and seller want to complete a real estate transaction quickly. These contracts imply that the property is being sold in whatever its current state is and that the buyer accepts the risk involved. Buyers are free to conduct their own inspections when entering such a contract, but the seller doesn't have to make any repairs.
The legal requirements of an “as is” contract vary from state to state. Sellers are required to make certain disclosures about the property depending on where they live. Consult a real estate attorney to find out how to go about drafting an “as is” real estate contract the right way in your state.
What Are Contingencies in a Sales Contract?
There are certain contingencies that sellers can put in sales contracts to protect their interest in a real estate transaction.
The kick-out clause is a contingency that's put in sales contracts in response to the home sale contingency put forth by buyers. The clause allows sellers to continue accepting offers even after a buyer has come forward. If you do find a new buyer, the existing one has to produce funds within 72 hours or you can go forward with the new buyer.
The suitable property contingency is put in contracts in cases when sellers are looking for a house of their own while their property is on the market. The contingency allows sellers to revoke a purchase agreement if they are not able to find a house in time. This contingency isn't used often since it puts too much power in the hands of the seller.
Given the legal and financial ramifications, home sellers should work with a real estate agent when writing a sales contract. Clever Partner Agents assist sellers with drafting contracts that protect their interests without putting off potential buyers.
Partner Agents charge sellers a flat fee of $3,000 or a commission of just 1% on a home over $350,000, saving them thousands of dollars in the process. They are full-service realtors and will sell your home fast and for top dollar.