The standard Real Estate Purchase and Sale contract can be a very confusing document. Let me help you to understand it.
First it’s an agreement between 2 parties to purchase and sell a piece of real estate.
Paragraph 1 identifies who these parties are there after identified as the purchaser and seller.
Paragraph 2 identifies the piece of real estate to be sold. Typically the lot size is marked “as per deed” since most lot sizes are never accurate any where but on the sellers deed.
Paragraph 3 identifies all items that are to included in the contract. Appliances are usually added and typically that are marked “as placed” meaning the ones you saw when you first looked at the home and “in working order” meaning when you move in they must be working.
Paragraph 4 identifies any item the seller is not including in the sale of the home. My experience is the item that gets listed here the most is the dining room chandelier. For some reason people get attached to this light. If they exclude something like that light they must replace it with a like kind of light. I advise sellers to remove something like this first prior to putting the sign in the yard.
Paragraph 5 lays out the purchase price and how it will be paid. There is always an earnest money deposit which is part of your down payment money. This money is usually held in escrow (awaiting the closing) by the listing broker. If there is an additional deposit to made it will indicate when that will happen. Usually after the house appraises, passes inspections or has bank commitment (the bank has given the final ok they will fund this deal).
Paragraph 6 lays out the terms of the mortgage the purchaser will be obtaining. They will have a certain number of days to actually go in to the mortgage lender and physically apply for the loan. Then the lender will be given a certain number of days give the bank commitment. If their is a seller contribution that will be listed in 6B. section. This is very misunderstood by sellers. The purchaser is doing this because they do not have enough money to actually close the transaction. The net to sell in 5D is what the seller should be looking at not the total purchase price. Look at like they are financing their closing costs, which is what they are doing.
Paragraph 7 is a purchaser closing cost. These are all the expenses related to the mortgage and deed. Filing fees, taxes etc….
Paragraph 8 other terms and thing not covered in the contract will be placed here.
Paragraph 9 title and survey expenses are indicated here and this is a negotiated item. Typically the purchase pays for these.
Paragraph 10 Conditions affecting the title. The property must be zoned to be used for whatever you’re expecting to use the home for. i.e. Single Family Year Round Residence.
Paragraph 11 deed. This indicates what type of deed the seller will deliver to the purchaser. In our area it’s normally a Warranty deed.
Paragraph 12 are seller closing costs usually related to transfer tax, mortgage satisfaction fees etc…
Paragraph 13 is called the prorations paragraph. Here it’s indicated the if any taxes, rents, sewer/water fees, assessments or fuel oil is paid in advance the purchase must reimburse the seller.
Paragraph 14 gives the purchase the right to have anyone working on their or their banks behalf is granted access to the property with reasonable (24 hour) notice.
Paragraph 15 identifies the estimated closing date. This is NOT set in stone so don’t make plans based on it.
Paragraph 16 indicates who and where the earnest money deposits are held.
Paragraph 17 time period of the offer is how long the purchaser is giving the seller to either accept, reject or counter their offer. After that date with no response the offer is no longer good.
Paragraph 18 identifies the real estate brokerages and agents that brought the transaction about and how much the listing agent is going to pay the buyer agent.
Paragraph 19 attorney approval is how long the 2 attorneys will have to review and approve the contract.
Paragraph 20 condition of the premises basically means the house is being delivered in “as is” condition. The way you saw it.
Paragraph 21 indicates which inspections if any the purchaser is going to do and how long they have to do them. Normally a structural, wood destroying insect, radon, well water and septic system are done.
Paragraph 22 Identifies all of the disclosures and additional documents that are now going to be a part of this legally binding contract.
Paragraph 23 notices indicates how all notices can and will be given to all parties involved.
Paragraph 24 entire agreement basically means their are no side deals going on. Remember if the bank doesn’t know it’s happening it’s LOAN FRAUD.
I hope this helps you understand the purchase and sale contract.