Real estate purchase contracts will vary from location to location. If the homebuyer is working with a real estate agent, the agent will probably use the standard contract that is approved by the local Board of Realtors. Since real estate agents handle the bulk of real estate sales transactions, they generally use purchase contracts that provide both buyer and seller protection.

• Whether using a real estate agent or handling the purchase agreement on your own, there are a number of items listed below that should be included in the purchase agreement:

• The full legal description of the property – found on title policies, surveys, or public records in the county recorders office. The street address should also be included.

• The amount of earnest money – a purchase offer is usually accompanied with an "earnest money" deposit. This money serves to assure the seller that the buyer is making an offer in good faith and that you mean business. Because the seller will take his home of the market once a purchase offer is signed, the earnest money offers her/him some protection if the buyer backs out of the deal. The seller will weigh the offer to see if it will result in a successful sale.

The amount of earnest money given is totally at the buyer’s discretion. The earnest money is usually placed with a real estate broker or deposited in an escrow account. If the buyer proposes a small amount of money, the offer may not be considered. On the other hand, if the buyer deposits a customary amount of earnest money, it indicates the sincerity of the buyer’s intentions to purchase the home. If for some reason, the buyer changes his/her mind, the seller may be entitled to keep the earnest deposit. The contract should clearly state under what circumstances this money will be refunded. At the closing on the house, the full amount of earnest money will be counted as a credit toward the amount of money needed by the buyer.

The offer to purchase is usually valid for a limited time from the date of the offer. If the seller is out of town or unavailable, the buyer may want to extend this acceptance period.

The buyer should find out as much as possible about the sellers from their real estate agent. Accurate information is the key to price negotiation when making an offer. It is helpful to know if the seller is really motivated to sell the property. You should ask the seller or seller’s agent questions about the house and property. The condition of the appliances, heating and cooling systems, roof, the electrical systems and plumbing systems will help determine if the house has been well maintained. The prospective buyer should disclose as little as possible to the seller or his/her agent. For example, the buyer can be at a disadvantage if the seller discovers that buyers lease is about to expire or has expired. The real estate agent will assist in filling out the contract when an offer is made.

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