Trying to navigate the complexities of real estate contracts is not for the fainthearted, especially if you’re not all that savvy with the legal stuff. 

Whether we like it or not, buying a home is not as straightforward as offering a price and sealing the deal with a handshake. As a general rule, a large amount of money is involved – which usually signals a legal transaction that requires a great deal of fine print in the body of text. 

As such, understanding the many complexities of real estate contracts is a task that should be approached with caution. One small sentence can be all that stands between you and purchasing a lemon, so it’s crucial that buyers are able to read and comprehend what you’re signing up for. Thankfully, there’s also a wide variety of industry professionals such as conveyancers and solicitors that are on hand to help if and when required as well – but what do real estate contracts cover that makes them so important?

Understanding A Contract Of Sale In Real Estate

Once the buyer and seller have agreed to sell the property or it has been sold by auction, the first step to legalise the sale is to sign and exchange a contract of sale. At the time of the exchange, the buyer will be required to pay a deposit – normally 10% of the purchase price – and this will be held in trust by the real estate agent or a conveyancer if applicable. 

However, before the deed is done, the terms outlined in the contract of sale must be formally acknowledged and agreed to. In essence, a contract of sale is a legal document used for the purchase of assets by a buyer from a seller, for an agreed upon value in money. 

An obvious ancient practice of exchange in many common law jurisdictions, it is now governed by statutory law. In Australia, the terms and clauses can vary significantly between states. Although not a legal requirement, both buyers and sellers often enlist the services of a conveyancer or solicitor to help them both draw up a contract of sale, and to spot any potential red flags that may negatively influence their side of the transaction. 

There are many features in standard real estate contracts that can be included, removed, tweaked or amended, but a few of the usual inclusions tend to be the following – 

• The full names of the sellers and the purchasers
• The full address of the property 
• The selling agent 
• The property’s price
• Date of offer 
• The initial deposit, payment terms and conditions, and details of the loan amount
• Any exclusions from the sale of the property 
• Any improvements to the property 
• Any other inclusions with the property’s title
• Any household fixtures, furnishings and chattels included 
• The cooling off period (specified by your state of residence)
• The intended property settlement date and period (usually between 30-90 days) including any potential penalties 
• Warnings of the necessary smoke alarms on the premises 
• Certificate of title information
• Encumbrances such as a mortgage or lease agreement 
• Whether the house will be vacant possession or tenanted
• Any special terms relevant to the contract of sale, such as building and pest inspections, and finance clauses 

The variables in a contract of sale are usually tied to finance clauses, deposit amounts, building and pest inspections, or any inclusions or exclusions that may apply to the property itself. Both parties are welcome to negotiate any of the terms set out in the contract of sale, but only before it is signed. Once those signatures are present, it can be all but impossible to exit the transaction without some form of legal or financial ramification. 

Should you be looking to sell your home or purchase a new one, enlisting the services of a free property advisor like ESPA can often be a game changer. As an example, your advisor would likely research the property, local agents, check the zoning, evaluate market conditions, and communicate clearly with you regarding all of your options – but where do you find one?

Take The Stress Out Of Selling Property 

As a completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.

Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.

If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.