Buying a home here in Nashville for the first time can be an exciting time, but it can also be a confusing and frustrating prospect. So many steps require attention before the buyer gets the keys to his or her new home, and a new homebuyer may wonder what takes so long and why there is so much paperwork. Understanding the terms of the real estate purchase contract could help alleviate some of that and answer some questions.
Contingencies may serve as some of the most important provisions in the contract from the buyer's perspective. They outline the items that a buyer needs to do prior to closing the sale. For instance, the deal could be contingent upon the buyer receiving a clean home inspection, upon receiving a clean title search or upon some other condition specified by the buyer and agreed to by the seller. Contingencies allow a buyer to walk away from the deal if they are not met. In most cases, the buyer would receive his or her deposit, or earnest money, back.
Earnest money is the amount of money that a buyer provides the seller upon the signing of the purchase contract. Usually, it is around 1 or 2 percent of the sale price. This money is kept in an account, called an escrow account, until the closing of the transaction and is applied toward the total purchase price.
These are just two of the more important terms that pertain to nearly every real estate purchase agreement. More than likely, new homebuyers here in Nashville will have questions about others. Getting the answers they need regarding the terms in this and any other document pertaining to the transaction could help them better understand the process and make it less of a mystery.