Real Estate Contracts When Buying or Selling a House in North Royalton – What You Need to Know

How familiar are you with real estate contracts? Buying or selling a house is a big step financially and serious business with legal ramifications. That’s why legally binding contracts are such an important part of the process – there simply must be legal safeguards in place to protect both buyers and sellers. These contracts can be utterly confusing to the layperson. We want to dispel some of that confusion to put you on firmer ground when you’re involved in buying or selling a house. Below, you’ll discover everything you need to know about real estate contracts when buying or selling a house in North Royalton.

Real Estate Contracts Overview

So let’s begin with an overview of rea estate (RE) contracts – the basics or what those buying or selling a house in North Royalton need to know.

Real Estate Contract – What It Is

In short, such a RE contract “is a legally binding document between two or more parties participating in a purchase and sale, exchange or transfer of real estate.” A well-crafted contract outlines expectations and obligations for both the buyer and the seller. “A real estate contract generally covers terms of finance, seller assistance, home inspection, fixture and appliances, closing date, sale of an existing home, what title company is being used, etc.”

How These RE Contracts Work

The three main steps in the drawing up and finalizing of real estate contracts are . . . 

1. An RE contract is filled in by the home buyer’s agent and submitted to the seller’s agent. This initial offer will outline the description of parties involved, the property details, purchase price offer, earnest money deposit, contingencies, title company, closing costs, and closing dates.” 
2. On receipt of this initial offer, the seller will accept, reject, or counter it. A counteroffer may include “proposed modifications or negotiated terms such as purchase price, closing costs, contingencies, etc.” 
3. After both parties (buyer and seller) have accepted and signed the contract, it becomes a legally binding RE contract.

Creating RE Contracts

Often, the buyer’s agents prepare real estate contracts. If not, the buyer can have a contract drawn up by a real estate attorney but that is not a common practice in the state of Ohio. 

“You can find templates online (which I don’t suggest) or you can often call a local title company and request a real estate contract if you are doing a For Sale By Owner. However, it is advised to consult a real estate professional to ensure a smooth deal.” To discover more about this, you can consult a North Royalton agent at (440) 628-1321.

Real Estate Contracts Essential Elements

The essential elements of real estate contracts are the financial terms, areas of seller assistance, paying of closing costs, home inspections, fixtures/appliances, closing dates, and contingencies.

Financial Terms

Unless you have enough funds on hand to make a cash offer, you’ll have to get a mortgage to buy a house. So as a buyer, you’ll want the contract to be contingent on your getting financing at a specified interest rate (and sometimes on obtaining a certain type of loan).  

Some buyers may look to an FHA or VA loan for financing. These loans offer attractive rates and flexible credit requirements, allowing many potential buyers to become homeowners. However, sellers that accept a contract with an FHA or VA loan may be responsible for additional costs associated with the sale of their home.

Sellers should be aware that there are certain fees associated with selling a home when FHA or VA financing is involved.

Areas of Seller Assistance

“If you want the seller to pay for, [say], part or all of your closing costs, you must ask for it in your offer. Closing costs are typically expenses above the property price that both buyers and sellers pay to execute a real estate deal. When you put in a concession for a seller assist, you are asking the seller to cover some of these additional expenses.”

In a buyers market and buying a home, seller concessions are an important factor that should be taken into consideration. Seller concessions are payments made by the seller of a property to the buyer in order to help cover certain costs associated with purchasing the home. These costs can include closing fees, title charges, appraisal fees and even down payment contributions.

Seller concessions can often help buyers who need additional funds for closing costs or may not have enough money for a large down payment. By agreeing to pay some of these expenses on behalf of the buyer, sellers can make their property more attractive in a competitive market and increase the likelihood that it will sell quickly.  It is important to note however that many lenders limit how much they will allow sellers to contribute as part of their loan approval process. The home will often need to appraise for the full amount to avoid issues at closing.

In a sellers market, its not uncommon so see buyers paying sellers closing costs to make their deal more attractive.

Payment of Closing Costs

“The agreement should specify whether the buyer or seller pays for each of the common fees associated with the home purchase, such as escrow, fees, title search fees, title insurance, notary fees, recording fees, transfer tax, and so on.” 

Home-Inspection Contingency

Contracts often include a clause specifying that the sale is contingent on the property passing a home inspection. If you’re the buyer, “[t]his clause allows you to walk away from the deal if a home inspection reveals significant and/or expensive-to-repair flaws in the structure’s condition.”

Fixtures/Appliances

If, as the buyer, you want to keep appliances like the refrigerator and washing machine, this must be spelled out in the real estate contract. You simply cannot rely on a verbal agreement alone.

Closing Date

The common timeframes for closing are 30, 45, or 60 days. But the buyer and/or seller may have reasons for a longer or shorter timeframe, This, too, has to be spelled out in the contract.

Home-sale Contingency

“If you are an existing homeowner and need the funds from the sale of that home to buy the new property, you should make your purchase offer contingent upon the sale of your current home. You should also provide a reasonable time frame for you to sell your old home, such as 30 or 60 days.”

Your Source for Assistance with Real Estate Contracts in North Royalton

What we’ve laid out here are the basics of real estate contracts, but it can and often does get a lot more involved and complex. And if you don’t make sure you cover everything, you could be opening yourself up to legal ramifications. That’s why it’s so important for both buyers and sellers to work closely with an experienced North Royalton agent. And we have the agents with the knowledge and expertise to help you get it right.

If you’re buying or selling a house in North Royalton and don’t want to have any worries about real estate contracts, contact us today at (440) 628-1321.