5 Essential Components of Residential Real Estate Contract Negotiations
Buying or selling a home is often one of the biggest financial decisions a person will make, so real estate transactions should be navigated carefully. Negotiating the terms of the contract is one of the most critical stages of any real estate deal. Here are some key elements you should pay attention to during contract negotiations and why working with a real estate attorney is a smart move.
Purchase Price and Earnest Money
Perhaps the most obvious term in a real estate contract is the purchase price, but that is just the beginning. For example, buyers often include earnest money deposits as a show of good faith. The contract should clearly state the minimum acceptable amount, as well as what happens to those funds if the deal falls through. Negotiating these terms upfront helps prevent surprises later.
Contingencies in the Real Estate Contract
Contingencies give buyers and sellers a legal way out of the contract under certain conditions. Common contingencies include:
- Financing Contingency – Protects the buyer if they’re unable to secure a mortgage.
- Inspection Contingency – Allows a buyer to back out or renegotiate based on the results of a home inspection.
- Appraisal Contingency – Gives the buyer the right to cancel without penalty if the home appraises for less than the agreed price.
- Home Sale Contingency – Allows buyers the opportunity to withdraw from the contract if they cannot sell their current home within a specified time period.
Negotiating the timelines and conditions of these contingencies is crucial to keeping the deal fair and balanced for both parties.
Closing Date and Possession Terms
The closing date isn’t just about when money changes hands. It also determines when the buyer takes legal ownership of the property. Possession may be the same day, or delayed depending on the seller’s needs. All of this should be clearly laid out in the real estate contract to avoid confusion or last-minute disputes.
Included and Excluded Items
What stays and what goes must be clearly defined in the contract to avoid any confusion. For example, light fixtures, appliances and window treatments may seem like they come with the home, but unless they’re specified in the contract, they might not. Negotiating the list of included items upfront ensures everyone is on the same page at closing.
Repairs and Credits
After the inspection, buyers may request repairs or a credit to address certain issues. This can turn into a new round of negotiations. A well-drafted real estate contract will outline how repair requests should be handled and whether the seller must complete them before closing or provide a credit instead.
Working with Churchill, Quinn, Hamilton & Van Donselaar, Ltd for your Real Estate Transaction
Real estate agents might understand pricing, marketing, and even some negotiation strategy, but they are not licensed to give legal advice. That’s where one of our expert real estate attorneys becomes invaluable. Here’s why:
- Legal Protection – We understand the legal language and implications of each clause in the contract. We can spot red flags and help protect your interests.
- Customized Advice – Unlike pre-filled forms, our attorneys can draft or modify terms to fit your unique situation.
- Closing Support – We can help review or prepare closing documents, explain settlement statements, and ensure that title and ownership issues are resolved.
- Problem-Solving – If any issues arise, like title defects, zoning questions, or unexpected legal complications, we can address them quickly and effectively.
As the real estate season heats up, be sure to reach out to us at 847-223-1500 early in your process so you have proper legal support through the entire transaction.