A home purchase contract is a legally-binding agreement between a purchaser and a person or entity that is buying or selling a home. For example, if you want to buy someone’s home, you will offer them a contract with certain terms, such as the price you are willing to pay. They will then negotiate with you and determine whether they will agree to those terms. You’ll then have to sign paperwork at closing, when ownership is transferred.
Many people assume that this process is simple when it can actually be very complex. Let’s look at a few potential issues that can affect the successful execution of home purchase contracts and why you need to understand them so thoroughly before signing one.
Real estate agents cannot make them
First and foremost, only lawyers and attorneys can create actual real estate contracts. Real estate agents cannot do so because they do not have a license to practice law. They are able to get pre-formatted contracts that they can fill in, but this is different than creating a unique contract that reflects the unique needs and circumstances of every transaction.
You must understand your obligations
Next, you’ll want to make sure that you really understand all of the terms and the obligations that both sides are agreeing to. For instance, it is very common for possession of a home to change immediately at closing, but this is not always how it works. If the contract stipulates that you can’t move into the home until the seller has purchased a new home, that is definitely something you do not want to overlook upfront.
It’s a binding legal agreement
Finally, remember that these agreements are binding and they are a major financial investment. For many people, a home is the most expensive thing they ever buy. This is not an area of experience wherein you’ll want to take a risk of not fully understanding the language within the contract you’re signing. As a result, it’s very important for you to know exactly what legal steps to take when buying a home.
