Every home sale starts with a real estate purchase agreement – a legally binding contract signed by home buyers and sellers that confirms that they agree upon a certain purchase price, closing date and other terms.
Here are some items you are likely to come across in an agreement and is suggested that you check carefully before you sign on the dotted line.
- Earnest Money – that’s the cash buyers commit to completing the sale to show sellers they are serious.
- Contingency(ies) – A contingency in a deal means there’s something the buyer has to do for the process to go forward, like selling a property they already own.
- Settlement Date – Or ‘closing’ is the day when all involved parties meet to make the sale official.
- Possession Date - that’s the day when buyers can move into their new home.
- Escrow – Is a secure holding area where important items (like the earnest money check and contracts) are kept safe until the deal is closed.
- Home warranty – Is a policy that covers the cost of repairing many of a home’s appliances if they break down after closing.
If you have questions about any other details of documents signed while buying a home, be sure to talk to your real estate agent. They can explain it to you and help you understand what you're signing up for.