Write a Contract for Buying a House
House hunting can be a challenge, so finding the perfect home often motivates people to buy it immediately. When you find a house you want to buy, most states will require you to sign a contract or a home purchase agreement. This is your offer to the seller as well as your intent to purchase the home. Write a contract for buying a house with the help of a real estate agent or an attorney to make sure you include all of the necessary information, such as your offer, deposit amount and clauses that cover inspections, financing and other details.
Steps
- Use a standard contract approved by your local Board of Realtors. In order for the contract to be legitimate and legal, it must be in a proper form for your state or city.
- Describe the house. This can be as simple as listing the residential street address of the property you want to buy.
- Include identifying information, such as "a one-story single family home" if your agent or attorney recommends it.
- Provide the names of the sellers and buyers. Also include the name or names that will appear on the deed once the house is purchased.
- Offer a specific amount of money. Whether this is the same as the listed purchase price or different, put your offer in writing.
- Specify how long this offer is valid. For example, say you are offering $200,000 for a period of 48 hours or 5 business days.
- Provide earnest money. This is also considered a deposit. You will need to write a check to prove your serious attempt to buy this house.
- Consult with your attorney or agent about how much of a deposit is necessary. Most agents recommend at least $1,000.
- Establish who will hold the earnest money. Usually, this money goes into escrow, which means an agent who will oversee the closing will hold the deposit.
- Suggest a closing date. Any contract to buy a house should indicate when the buyer would like to close (or finalize) the sale.
- Establish the financing deals. A seller will only take your contract seriously if you have financing in place. Include information on your lender or mortgage company.
- Include a contingency that will release you from the contract if you are unable to secure your home loan. Sometimes, people are pre-approved for a mortgage and then the financing falls through before the closing date.
- Write out what each party is expected to pay. For example, the seller is expected to continue paying for utilities and landscaping until the close of the sale.
- Include a title warranty. The contract should stipulate that the seller will provide a clear title to the home upon sale.
- State that the sale is contingent upon a home inspection. This will release you from the contract if an inspection reveals serious problems with the structure of the home that the seller is unwilling to repair or reimburse you for.
- Use a damage clause to explain who is responsible for paying for any damage to the house while it is under contract.
- Add a statement of default to protect each party if the other backs out. For example, if the buyer backs out of the contract, the seller keeps the earnest money.
- List any other stipulations or inclusions you want to cover in your contract. Some people list the appliances that are staying, such as washer and dryer, refrigerator, etc.
- Add a contingency that you sell your own home before you close on this new house, if you need the proceeds of that sale to qualify for your mortgage or pay for the new house.
- Add a provision that you are able to do a final walk through before closing if you want to take one last look at the property before you sign off on buying it.
Tips
- Prepare to negotiate. Once you submit your contract, the seller may come back with a counter offer. Discuss with your agent how much you are willing to spend on the house you want to buy.
