An offer to buy real estate is usually submitted by a proposed purchase contract. There are quite a few vocabulary terms found in real estate purchase contracts which you may not fully understand, below are the most common of these:
Purchase price – how much is offered for the property.
Earnest, escrow, hand or good-faith money – these terms are used for money which shows seriousness on the buyer’s part and will be forfeited if the contract is signed by both parties but the buyer cannot consummate to purchase.
Financing terms – how the buyer will pay for the property. This must describe any proposal loan from the cellar and any required loans from third parties. If the buyer cannot arrange the required loans he or she is generally not required to forfeit the earnest money.
Deposit increase – conditions under which the buyer must increase the earnest money to maintain the contract.
Closing – when and where closing is to take place, which party selects a closing agent and also who pays closing agent fees.
Title – what type of title insurance or abstract must be provided and who pays.
Assessments – does the seller or buyer pay for assessments that are a lien?
Expiration – a date and time when the author must be accepted before it becomes void.
Commissions – which party owes a brokerage commission and how much it is.
Pest control inspections – gives fire the right to inspect for insects and certain other rights or options if wood destroying insects are found.
Occupancy are operating permit – this is used to ascertain validity.
Inspections (city and/or county) – to ascertain compliance with local building and permit regulations.
Personal property – a list of what is included in the sale, this is usually furniture and equipment.
Existing leases – these must be delivered to the buyer as they remain binding.
Arbitration – stipulations for settlement to be conducted by a specified arbitration board in the event of disputed terms.
Encumbrances – the buyer is to take title subject to encumbrances, or provide, within a brief period of time, objections to restrictions, easements and unpaid taxes that must be cleared by the seller.
Although not all of these terms will appear in every real estate purchase contract these are some of the normal ones which you should understand fully before signing any purchase contract. Your real estate agent or broker should be very knowledgeable on all of these points and able to further help you understand any of the real estate purchase contract vocabulary terms which you still fail to fully comprehend.
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