How to Read a Real Estate Purchase Contract

Whether you’re buying or selling a home, the purchase contract is one of the most important documents in the entire transaction. It’s legally binding and full of clauses that affect your timeline, your money, and your obligations. Let’s learn how to read a real estate contract

Overview: Breaking Down the Real Estate Purchase Contract

Key Points:

Purchase Price and Financing Terms
Contingencies and Deadlines
Closing Costs and Who Pays What
What Stays with the Property
Inspection, Appraisal, and Default Clauses

1. Purchase Price and Financing Terms

This section outlines the agreed-upon sale price and whether the buyer is paying in cash or with a loan. It may also specify loan types and timelines for approval.

2. Contingencies and Deadlines

Contingencies protect both sides. Common ones include:

Inspection contingency
Appraisal contingency
Financing contingency

Each comes with a deadline, and missing it can mean losing your deal—or your deposit.

3. Closing Costs and Who Pays What

The contract outlines whether the buyer or seller covers costs like title insurance, transfer taxes, HOA fees, and more. These vary by region and should be reviewed carefully.

4. What Stays with the Property

Buyers and sellers often assume things like appliances, window treatments, or shelving units are included—but only if the contract says so. Clarify what’s staying and what’s going with the seller.

5. Inspection, Appraisal, and Default Clauses

These sections explain what happens if something goes wrong—like a failed inspection, low appraisal, or if either party backs out. Always read these carefully.

Conclusion

A real estate contract is more than a formality—it’s a roadmap for your sale or purchase. Understanding what’s in it protects your interests and helps you avoid surprises.

How to Read a Real Estate Purchase Contract