Key Clauses to Know in Real Estate Contracts

Buying or selling a home is one of the biggest financial decisions most people will ever make. Along with the excitement comes a lot of paperwork — and at the center of it all is the real estate contract. While it may feel tempting to skim through and just “sign where they tell you,” the fine print can have lasting financial and legal impacts.

In this post, we’ll break down the key details you should understand before signing on the dotted line.

1. Purchase Price and Financing

The most obvious detail is the purchase price, but don’t overlook how the financing is structured. Contracts often outline whether the buyer is paying in cash or using a mortgage, and specify timelines for securing financing. Missing these deadlines can put the deal at risk.

2. Contingencies

Contingencies are “safety nets” built into the contract. Common ones include:

• Financing contingency – protects the buyer if their loan doesn’t get approved.

• Inspection contingency – allows the buyer to negotiate repairs or back out if major issues are found.

• Appraisal contingency – ensures the home’s value matches the purchase price.

Understanding these clauses helps both parties know what could cause the deal to fall through.

3. Earnest Money Deposit

This is the buyer’s way of showing good faith. The contract specifies how much money is deposited, who holds it, and under what conditions it is refundable. If either party fails to meet their obligations, this deposit may be at stake.

4. Closing Costs and Responsibilities

Contracts spell out which party pays for certain expenses — such as title insurance, escrow fees, and transfer taxes. These details can vary by state and even by negotiation, so clarity here avoids surprises at closing.

5. Timelines and Deadlines

Every contract comes with a timeline: inspection deadlines, financing deadlines, and the closing date itself. Missing a deadline could mean losing the home or forfeiting your deposit. A good agent will keep you on track, but it’s wise to mark these dates on your own calendar as well.

6. Disclosures and Addendums

Sellers are typically required to disclose known issues with the property, and sometimes additional addendums (such as HOA rules or lead paint disclosures) are attached to the contract. Read them carefully to avoid unpleasant surprises later.

Final Thoughts

Real estate contracts can feel overwhelming, but understanding the details gives you confidence and protection in the process. Always take the time to read through the fine print, ask questions, and rely on your real estate professional to guide you.

Buying or selling a home is more than a transaction — it’s a major milestone. Knowing what’s in your contract ensures your interests are protected every step of the way.