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What should be included in a residential purchase or sale agreement?

Buying or selling a piece of residential real estate will likely be one of your biggest financial moves throughout your entire life. The home that you purchase or sell may represent several years of your salary and could also may be the  largest asset that contributes to your personal wealth.

You obviously want to make a smart choice about what property you buy and how you protect yourself during the transaction. If you intend to sell real property, you also need to protect yourself from future claims that could lead to financial liability or the purchase falling through at the last minute.

What kind of inclusions will properly protect you when selling or purchasing real estate?

When you are the buyer

As someone making an offer on real estate, there are certain terms that will be crucial for your protection. For example, you will likely want to include contingencies in your offer. These terms provide protection if you need to cancel the closing for a particular reason, such as the appraisal coming in low or the loss of a job preventing you from securing a mortgage.

Buyers also need to be clear about the price they would pay for the property and when they expect to take possession. Including special rules that impose daily monetary penalties when a seller does not leave on time can be a crucial form of financial protection for someone about to assume responsibility for paying a mortgage on a property.

When you are a seller

There are numerous inclusions that are key to your protection as someone selling real estate. You need to provide proper disclosures about the condition of the property. Simply listing it in as-is condition will typically not protect you from claims if a buyer alleges you hid known defects or misrepresented the condition of the property.

Additionally, you may need to clarify what items, like appliances or window treatments, will remain with the property. You may also want to include terms confirming that the buyer will pay closing costs.

Negotiating with the other party and adding the right terms to your offer or purchase agreement will be crucial for your protection during a residential real estate transaction.