What's in a sales contract?

The sales contract is a very important document. The terms defined in writing will be used throughout the transaction.

Depending on the situation, terms and conditions will vary. Most important is making sure you know who pays what and what the costs of those items are. Here are some typical points contained in a contract:

- A description of the property, including separate personal property that is to be conveyed to the buyer.
- The amount of earnest money (also "deposit") who holds it and what happens to it in case of default. Earnest money is a partial down payment that shows the buyer's good faith in buying. Normally, earnest money deposits are returned to the buyer if the contingencies are not met.
- The sale price of your home.
- The amount of mortgage loan the buyer intends to obtain, the maximum interest rate the buyer will pay and a time limit to secure loan approval and/or specified seller financing.
- Discount points and who pays them.
- The date of settlement or closing.
- Possession date and any pre- or post-settlement or closing occupancy agreement if you wish to stay in the home after settlement or closing and pay rent, or the buyer needs to occupy before settlement or closing.
- Contingencies that will determine the fulfillment of the contract, such as: prompt inspection to determine the condition of your home; required improvements such as painting, roofing, termite inspection; legal review of the contract by either or both buyer's or seller's lawyer(s).
- Your signature and signature of the buyer.