What Is the Best Real Estate Contract Template (2021)?
Table of contents
- Use SignTime to sign your real estate contracts
- How to buy real estate
- Step 1. Finding homes for sale
- Step 2. Get a prequalification letter
- Step 3. Attending open houses
- Step 4. Scheduling a private showing
- Step 5. Writing the purchase agreement
- Step 6. Review seller’s disclosures
- Step 7. Get the home inspected
- Step 8. Obtain financing
- Step 9. Schedule and attend the closing
- Step 10. File the deed
- Use SignTime to store your real estate contracts in a safe and secure online repository
- How to write a real estate purchase agreement
- The best real estate contract template repository
- How to understand and fill out the best real estate contract template
- 1. Initial every page
- 2. Introduce the agreement, seller, buyer, and concerned property
- 3. Define the basic terms of the real estate purchase
- 4. Record any property the buyer must sell to complete this purchase
- 5. Discuss factors relevant to the closing of this purchase
- 6. Supply the additional information affecting the closing where requested
- 7. This agreement can only be executed by all parties signing the contract
- What are some commonly asked questions about real estate contracts?
- What are disclosures?
- What are addendums?
- What does “caveat emptor” mean?
- How do you terminate a purchase agreement?
- What does under contract mean in real estate?
- What are contingencies?
- What are the most common types of contingencies in real estate contracts?
- What does pending mean in real estate?
- What is the execution date of a real estate contract?
- What is the effective date of a real estate contract?
- Is it OK to backdate a contract?
- Who executes a real estate contract first?
- What is an exclusive buyer-broker contract?
- What is an exclusive listing contract?
- How long does an exclusive contract with a real estate agent last?
- What is an option contract in real estate?
- Who uses real estate option contracts?
- Real estate contract templates are a time saver
Written by Timothy Ware
Real estate contracts usually have the same clauses and structure. This makes real estate contract templates particularly useful. While there are exceptions to this (for example, the real estate option contracts I discuss in another post), most contracts will use the same required articles.
Note also that laws differ by state, and so you will want to use a real estate contract template that matches your local jurisdiction. For your convenience, I’ve linked to real estate contract templates customized to every state.
One of the hardest parts about the relationship between real estate agents and their clients is sharing a common understanding of the process of buying a home. To help with this, I will also go through a simple but detailed summary of the steps of the real-estate buyer journey that you can use to guide your clients during this exciting time.
Finally, while purchase agreements tend to be very similar, they do need to be modified according to the details of each sale. I’ll go through how to do this with a sample purchase agreement template so that you are comfortable using these templates in the future.
At the end of the article, you can find a useful FAQ detailing everything you need to know about real estate contracts.
Use SignTime to sign your real estate contracts
It can be difficult to coordinate schedules when trying to get your clients to sign purchase agreements. While you are driving around collecting signatures, your competition is out closing more deals.
That’s why you should use SignTime to collect signatures for your contracts. With convenient e-signature capabilities, you’ll get signed contracts back from your clients in record time.
Using convenient e-signatures even makes it easier to get your prospects to sign exclusive contracts with you as their real estate agent.
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How to buy real estate
To appreciate when and why you need real estate contract templates, you need to appreciate the entire process of buying real estate.
In some ways, the process begins when the buyer makes an offer on a home and ends when the accepted offer is finalized and the deed transferred. However, the entire process can begin months earlier.
Let’s go through it from the very start to appreciate just how long the buying process can take and how realtors make every step easier.
Step 1. Finding homes for sale
Traditionally, the major task of the real estate agent has been to find the homes to show their clients. However, this is shifting towards relationship management and client support during the real estate buyer journey. The rising prices of housing has made this whole process far more stressful, and a good real estate agent is an essential support during this process.
In 2007, 51% of all home sales were initially found by the buyer on the Internet. The most commonly used website are Zillow.com, Realtor.com, and Trulia.com. Directing clients to these sites is a great way to help them narrow down exactly what they are looking for in their new property.
If you aren’t pulling these sites up in your office with your clients yet, then you are missing out on a great tool. Because realtors have their own special lingo, demystifying this for your clients by going through listings together is a great way to leverage your knowledge to build a trusting relationship with your clients.
Realtors still find 30% of homes for their customers directly. The remaining homes are initially found from friends and family, seeing a sign on a lawn, or, surprisingly, in a newspaper. Listing agents should take note of this and continue to pursue these advertising avenues. I personally see great homes for show on Facebook all the time, and they generate loads of engagement.
Step 2. Get a prequalification letter
Buyers should always consider getting prequalified for their mortgage. This is where you go to the bank and have them assess your creditworthiness. Having a prequalification letter can help your house hunting in several ways.
Prequalification is a good signal that a buyer is serious. This will motivate a real estate agent to take extra time for the buyer as a client. In addition, it will make it easier to schedule viewings.
It will also save the buyer a lot of time looking for homes that are out of their budget. At the other end, it will keep them from looking at less desirable properties below their budget.
Step 3. Attending open houses
Buyers should make a point of seeing several different types of homes at the beginning of their search. That way they will have a good idea of what is available in their price range, what they want and need in a home, what different neighborhoods look like, and in their tastes more generally.
After seeing several different homes, the buyer and their real estate agents should have a much better idea of what the ideal home looks like. Then, future viewings can be scheduled with the intent of seeing only homes that meet their needs.
Step 4. Scheduling a private showing
Open houses can last hours, and anyone is welcome to walk in off the street and take a look around. The listing agent acts as the host, answering any questions potential buyers have.
Conversely, private showings are reserved for qualified buyers. They usually spend about 15 minutes touring the home with their real estate agent. This is a good opportunity to use the real estate agent’s expertise on the market to give the house an estimated value so that an offer can be submitted.
Step 5. Writing the purchase agreement
Depending on the location, an offer sheet will either be a smaller contract or the first draft of the purchase agreement. This document outlines the price the buyer is willing to pay for the home, when they’d like to take possession of the property, and any contingencies that might be included.
Contingencies are conditions that need to be met before the contract can be executed. Home inspection, mortgage, appraisal, and home sale contingencies are the most common types to include. I recently detailed these contingencies in an article about what it means to be under contract.
Step 6. Review seller’s disclosures
Not everything in a home can be seen with the naked eye. There can be many problems hiding under (or in) the paint. That’s why there are federal, state, and local laws requiring disclosures.
This is the point where the seller notifies the buyers about any such issues. For example, homes built before 1978 must notify the future resident about any lead paint issues (cracking, peeling, and so on).
What needs to be disclosed varies by state. In addition, buyer beware states do not make sellers liable for the information provided in some disclosures, so it is especially important for the buyer in those states to confirm all the information.
Step 7. Get the home inspected
Speaking of hidden issues, it is highly recommended that buyers always include a home inspection contingency in their offer sheet. This gives the buyer the right to hire a certified inspector to go through the home to find any potential issues.
For example, a certified inspector will be able to give you a good idea about the condition of the foundation. They’ll also be able to tell you if there are issues with rot, mold, or termites.
Buyers should try to find a home inspector who is willing to go through the home with them and point everything out as they inspect the property.
Step 8. Obtain financing
If the buyer did not get prequalified for a mortgage, this can be a stressful moment. Even if the buyer did get prequalified for one, they should include a mortgage contingency. Their financial situation can change over the months of searching for a home and the bank is under no obligation to honor a prequalification letter.
Step 9. Schedule and attend the closing
This step is very involved, but the majority is done by third parties. The attorneys who are hired to close the deal will coordinate with all other parties on behalf of the buyer.
The title company will conduct a deed search to confirm that transferring the deed to the buyer is legally feasible. The attorneys will also need to work with the bank to make sure that the funds are available and can be transferred.
When everything is ready, the attorneys will schedule the closing. This is where all documents, disclosures, and funds are transferred. After that, a new deed with the buyer’s name will be issued.
Step 10. File the deed
Once the deed is signed by the new owner, it will be filed at the county’s Registry of Deeds. Most states require a notary public to be present when the deed is signed.
If there are any land transfer taxes, they are paid when the new deed is filed. This concludes the purchasing process.
Use SignTime to store your real estate contracts in a safe and secure online repository
When you are juggling many clients and they are all at different points of the real estate buyer journey, it can be difficult to keep track of all the paperwork.
In addition to offers and purchase agreements, there are addendums, disclosures, and so much more. That’s not even including the exclusive contract you sign with clients.
SignTime is there to help with an easy-to-access and organized online contract repository.
Sign up for our free trial now, and never search for important paperwork again.
How to write a real estate purchase agreement
Before I provide you with links to the best real estate contract templates you can find online, let’s go through how you draft a basic real estate purchase agreement.
A purchase agreement should have the following details:
- Buyer and seller details: The full names and contact details for all parties to the contract must be included.
- Property details: The address of the property must be written into the contract. In addition, a legal description of the land also needs to be included.
- Purchase price: The total agreed upon price of the property must be added to the contract. This should include any deposit.
- Personal property: If the purchase includes any added property, it needs to be listed. This includes the fridge, stove, washer, dryer, dishwasher, etc.
- Representations and warranties: This is where the seller will make some claim about the condition of the home. The rules here can change from state to state (especially in “buyer beware” states), so this does not mean a buyer can skip the home inspection.
- Financing: There are many different types of financing. Whatever is used must be selected and the details provided.
- Contingencies: These are actions that need to be accomplished before the purchase agreement can be executed.
- Title insurance: Title insurance protects the buyer from any defects or issues found in the title. In most jurisdictions, this is mandatory.
- Closing and possession dates: These are the dates on which the sale is finalized and the buyer takes possession of the property. These are often the same day.
- Disclosures: Any required or voluntary disclosures about the home are made in this section by the seller. For example, the lead-based paint disclosure is mandatory for homes built before 1978.
The best real estate contract template repository
There are so many real estate contract templates out there that, instead of drafting another one, I’ll just send you here. eForms has every type of contract template imaginable. For example, just for purchase agreements, eForms offers the following types:
- Asset Purchase Agreement
- Business Purchase Agreement
- Commercial Real Estate Purchase Agreement
- Land Purchase Agreement
- Stock Purchase Agreement
In fact, just for residential purchase agreements, you can find real estate contract templates customized to each of the 50 states and D.C. Take a look:
While there are other real estate contract types, I’m going to walk you through a generic purchase agreement template below. Once you understand how to fill in and customize this contract, you should have all the tools you need to work through the rest.
While the purchase agreement template that I’ll go through below is comprehensive, some items are rare enough to be separated into addendums. The following Purchase Agreement Addendums are available from eForms:
- Closing Date Extension Addendum
- Condominium Assoc. Addendum
- Earnest Money Deposit Receipt
- Escrow Holdback Agreement Addendum
- Estoppel Certificate Addendum
- Inspection Contingency Addendum
- Release of Earnest Money
- Seller Financing Addendum
- Short Sale Addendum
- Termination Letter to Purchase Agreement
- Third (3rd) Party Financing Addendum
There are also common disclosure documents available from eForms:
- Lead-Based Paint Disclosure: Federal law dictates that sellers of homes constructed prior to 1978 must state if there has been any paint chipping, peeling, etc.
- Property Disclosure Statement: This form is also required in every state. However, “buyer beware” states do not hold sellers liable for the contents of their disclosure.
If the contract needs to be terminated, you can also find a termination agreement here.
How to understand and fill out the best real estate contract template
I’m going to walk you through most of the purchase agreement template below. All of the images of the purchase agreement template below come from the contract provided by eForms.
However, note that some articles (Articles VIII, XI XIV, XVIII, XIX, XX, XXI XXII, XXIII, XXV, XXVI, XXVII, XIX, and XXX) do not require specific customization during the real estate contract drafting process. For this reason, I will not go over them below.
1. Initial every page
First, note that every page of the document must be initialed by both the buyer and the seller. While I put this at the top, I’d recommend doing this last or after the pages are filled out.
2. Introduce the agreement, seller, buyer, and concerned property
This section sets out the basic information of the parties involved.
- The first part specifies the effective date of the contract.
- The buyer (hereafter in the document named “Buyer”) fills in their full name and address, including city and state.
- The seller (hereafter in the document named “Seller”) fills in their full name and address, including city and state.
The next article is all about the property to be sold.
- The box describing the type of property should be checked. If the property is different from the options available, it can be written under “Other.”
- The exact street address needs to be written next. This includes any unit number, the neighborhood/city/county, state, and zip code.
- Tax Parcel information can also be called the Parcel ID or Tax Map & Lot. This information can be found by contacting the County Recorder.
- The other description line is for any other pertinent information. If there is none, it can be left blank.
The Personal Property article is where the seller can include any property, for example a fridge or stove, that is included in the sale.
3. Define the basic terms of the real estate purchase
The first part of the financial particulars is the earnest money. That’s the amount that the buyer must pay to the seller to enter into the agreement. Approximately 1% to 3% of the total purchase price is considered a normal amount for earnest money. The following needs to be filled in:
- The amount of the earnest money
- The date and time that the earnest money will be transferred
- Whether the earnest money needs to be placed in a special escrow account in accordance with local state laws
The next article is the purchase term and the financing plan. First, the purchase price is listed. Then, the financing details are selected. The three options are an All Cash Offer (the Buyer is paying with cash), Bank Financing (the Buyer is taking out a mortgage with a bank), and Seller Financing (the Seller is providing financing to the Buyer).
4. Record any property the buyer must sell to complete this purchase
If the buyer lists selling their home as a contingency, then this section needs to be filled out. The address of the property should be listed along with the number of days from the effective date that the buyer has to sell the property.
5. Discuss factors relevant to the closing of this purchase
This article defines who is responsible for paying the closing costs.
The Closing article stipulates the date and time that the sale will be closed.
6. Supply the additional information affecting the closing where requested
The remaining articles provide further information on the terms of the agreement.
The buyer has the option to perform a survey of the property. Any issues with the survey must be reported to the seller a specified number of days before the closing date. Then, the seller has a specified number of days to rectify the issues. If the issues cannot be rectified, the buyer may cancel the deal.
The Title article works similarly to the Survey one. The buyer performs a title search and then has a specified number of days to notify the seller of any issues. The seller then has a specified number of days to resolve the issues. If they cannot be resolved, the buyer has the option to cancel the purchase agreement.
This article details the buyer’s right to have an inspection of the property made by a certified home inspector. Again, if issues arise due to the home inspection, the buyer and seller can either resolve them or the contract be terminated.
This article stipulates which state laws are to be followed. The state must match the location of the property.
The buyer may stipulate a date and time by which the contract must be signed and executed. After that date, the contract is nullified.
Any disclosure forms that must be provided are listed in this article.
As a last article in the extended information section of this real estate contract template, any additional terms and conditions may be written out.
7. This agreement can only be executed by all parties signing the contract
Finally, all parties must sign the purchase agreement for the contract to be enforced.
When it comes time to sign a purchase agreement, or any other contract, SignTime can make things easy With convenient e-signature capabilities, all parties can sign contracts from the comfort of their own home.
With the secure online contract repository, both the buyer and seller have access to the contract wherever they are in a safe and secure manner.
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What are some commonly asked questions about real estate contracts?
Here are some common questions I hear about real estate contracts.
What are disclosures?
Disclosures are statements included with purchase agreements that reveal further information about the property. They are usually only included when mandated by local, state, or federal law.
What are addendums?
Addendums are files attached to a purchase agreement. They explain in further detail the contingencies in place in the agreement.
What does “caveat emptor” mean?
Caveat emptor is Latin for “buyer beware.” It signifies that the buyer in the agreement is taking on more risks in the agreement according to state laws.
In buyer beware states, the seller does not need to disclose material defects on a property.
Alabama, Arkansas, Colorado, Florida, Indiana, Massachusetts, Missouri, Montana, New Hampshire, New Jersey, Virginia, West Virginia, and Wyoming are buyer beware states.
How do you terminate a purchase agreement?
A purchase agreement can only be terminated in one of two ways. The first is that both the buyer and seller agree to cancel the contract. The second is when a contingency triggers the cancellation of the contract.
For example, the buyer stipulates that the purchase agreement is contingent on the sale of another property. If that property does not sell then the purchase agreement is canceled.
What does under contract mean in real estate?
Under contract means that the seller has accepted an offer on their property. However, the contract has not yet been executed and there may still be contingencies to be met (read more here).
What are contingencies?
Real estate contingencies are conditions that must be met for a purchase agreement under contract to become enforceable (read more here).
What are the most common types of contingencies in real estate contracts?
The four main types of contingencies found in most real estate contracts are home inspection, mortgage (sometimes called financing), appraisal, and home sale contingencies (read more here).
What does pending mean in real estate?
Once all contingencies have been met and the contract has been executed, it is considered pending. Pending contracts are nearly complete and unlikely to fall through (read more here).
What is the execution date of a real estate contract?
The execution date is the day on which all parties signed the contract. Since you need to sign a contract for it to be enforceable, this date always comes before the effective date (read more here).
What is the effective date of a real estate contract?
The effective date is the day when all obligations in the contract become enforceable. Since you need to sign a contract for it to be enforceable, this date always comes after the execution date (read more here).
Is it OK to backdate a contract?
You should never backdate a contract. Depending on the jurisdiction, this may even be a crime (read more here).
Who executes a real estate contract first?
It does not matter from a legal standpoint whether the buyer or the seller signs a contract first (read more here).
What is an exclusive buyer-broker contract?
An exclusive buyer-broker contract is between a real estate agent and someone looking to buy a home (read more here).
What is an exclusive listing contract?
An exclusive listing contract is between a real estate agent and someone looking to sell their home (read more here).
How long does an exclusive contract with a real estate agent last?
Every exclusive contract with a real estate agent is different. Most last between 30 and 90 days. This will be written in the agreement and is often negotiable (read more here).
What is an option contract in real estate?
A real estate option contract is an agreement between a buyer and a seller. The seller offers the option to buy a property for an agreed upon amount for the duration of the contract. Conversely, the buyer pays for the right to be able to buy the property for the agreed upon amount at any point during the duration of the contract. Note that the buyer has the option to buy the property but may choose not to (read more here).
Who uses real estate option contracts?
Investors and developers are the primary users of real estate option contracts. Real estate option contracts are a great way of reducing the risk of big real estate deals. They also limit the amount of up-front investment required to start work on the deal (read more here).
Real estate contract templates are a time saver
Most real estate contracts are dictated by local, state, and federal law. The articles do not change much from sale to sale. That makes real estate contract templates a great way to simplify the process of buying or selling a home.
When it comes time to sign a purchase agreement, or any other contract, SignTime is there to help. With convenient e-signature capabilities, you’ll get signed contracts back from your clients in record time.
With an easy-to-access and organized online contract repository, never search for important paperwork again.
Sign up for our free trial now, and improve your sales game.