Anatomy of a Contract

What exactly does my Real Estate Purchase Contract include?

Steve Millstein: The contract spells out how much you are paying to buy the house. It spells out exactly what you are going to get. Are you getting the house, or you are getting any of the contents in the house? When you move in, is the seller supposed to leave you the chandeliers, the curtains, the washing machine? You may have negotiated who is going to pay the closing costs? Are those fees and costs associated with the transfer of the real estate going to be split between the buyer and the seller, or have you negotiated into the contract that all of those fees are going to be paid by the buyer, or the seller? This contract is the contract to the most important transaction of your life, and you want it to contain every last bit of information that you have thought of with respect to the purchase of this house. Irwin Kramer: You need to protect yourself with the right contingencies in that real estate contract. Steve Millstein: Contingencies in that contract spell out under what circumstances you might be able to back out of this transaction. Irwin Kramer: Don't assume that everyone knows you need to sell your house, or get financing in order to afford it. Steve Millstein: Is there a right for you as the buyer to void that contract, during a certain amount of time if you fail to secure the financing to purchase that house? Steve Lovejoy: There is a financing contingency which says, if I can't get appropriate financing at a reasonable cost to buy the house, then I don't have to buy it. Steve Millstein: Because if I don't get that financing, I may not be able to afford this house. You need to provide yourself with some safety valves, some out provisions, so that if everything falls through, if that mortgage you thought you could get well, while you were turned down, and it's quite a surprise, but it's not a surprise, you can't live with by backing out of the deal. Irwin Kramer: Is there a timeframe during which you can hire an inspector to go, and look at the house, and inspect the roof, and the plumbing, and the heating, and ventilation, air conditioning, the floor, the entire house, and tell you all those things that maybe of concern. And the contract is going to say, do you have the right to terminate the contract based on the results of that inspection, or does the seller have the right to say, that they will cure some of those problems up to a certain dollar amount? The contract spells out all of those things that are critical to you as the buyer. Steve Millstein: If those things are not part of the contingencies, the addenda in that contract, you could be signing a deal that you can't back out of.