What did I just sign? Contract basics for homebuyers 

 Contracts can be BORING! But you really need to know a few basic things about them to   make good choices as you start out on the home buying journey. Through the years, I've   learned the importance of having well-written contracts. I once rented a house to a couple of   boys fresh out of high school. They were responsible in many ways, but still very young and   on their own for the first time. Then the neighbors started complaining about the parties. The   ruts in the yard. The booze bottles and beer cans were everywhere! These guys had to go   before someone got hurt. Warnings didn't help. They paid their rent on time, so they thought   that was all that mattered. I was so glad for the clause in the lease that didn't allow illegal   activity, such as serving alcohol to minors! Thank goodness I had a way to get them out.   Contracts protect us. Contracts give us guidelines so everyone knows what is expected of   them. Contracts are a vital part of the home buying process, so it is good to know a little bit   about how they work.

First rule: Don't sign anything if you don't understand it! Or, before you are ready to! I look back on the start of my time as an agent and I realize that I didn't do a very good job of making sure my clients knew what they were signing. I just took it for granted that everyone would understand this. After all, as a homeowner and investor, I had signed many of these over the years. Hasn't everyone? -- No. No, they have not. And a lot of people will sign anything you put in front of them. -- Please don't be that way! -- I truly appreciate your trust in me, but you will be mad at me if you end up with buyer's remorse. I now instruct clients to read the contract before signing it. Sometimes I'll send a blank copy for them to read before they even find a house they want to buy. And sometimes I'll meet you where we can sit down, have a cup of coffee, and actually go through a Purchase Agreement line by line. If you have any doubt that you are clear on what you are getting yourself into, DON'T SIGN IT.

Next: Anything you sign in a home sales transaction is legally binding. And anything you don't sign is not. So if you sign a Purchase Agreement and don't follow through with everything you have agreed to, you could be sued. Yes, you could be forced to buy a house you don't want if you don't handle this part right. (FSBO* buyers beware!) This is called specific performance. On the flip side of that, spoken words mean nothing in real estate transactions. If you want the lawnmower in the garage, you have to put that in writing. Otherwise, the seller has every right to take it with him, or give it to the kid next door. Even if he told you that you could have it.

Five parts to a contract: 1) Offer - in this case, you are agreeing to give someone money for their property. 2) Acceptance - when the other party signs it, they are accepting your offer. Signatures from the buyers AND the sellers? You have a deal! 3) Consideration- AKA $$$$ 4) Both sides agree to do something. 5) The parties on both sides must be competent and able to commit to the agreement. If you have all these things, you have a binding agreement. Congratulations!

"Time is of the essence": Dates are very important in real estate transactions. There is a start date, an end date, and dates for certain things to happen. Pay attention to these! Missing a deadline could put you in default of the contract. That could put you in danger of being sued, or giving the other party an excuse to get out of it if a better offer comes along. The start date is when the last signature of the parties is added. The end date is normally either closing day (Yay closing day!!) or the possession date. Either way, there is a point after both parties have performed the duties outlined in the contract, that they are free of responsibility to each other. So be sure you are satisfied before signing at closing!

Keep in mind that I am a realtor, not an attorney. If you need clarification or advice about an agreement you are about to sign, you should consult with an attorney.

Hopefully understanding this part of the process will take some of the anxiety away- and potentially keep you out of a big mess!

Happy house shopping!!

- Sara

*FSBO- For Sale By Owner