The sales contract and contingency clauses
Offers from buyers are presented in the form of a Purchase and Sale Agreement, also know as “the contract”. This is a four-page legal document, the main elements of which are:
• Identification of the parties in the transaction, plus a legal description of the home.
• The offer price and method of payment. Also includes what earnest money is included.
• State the type of deed and the condition of the title
• Any contingency clauses
• State the date of transfer of possession and title to the property
The buyer will fill out the contract forms with the help of their agent. The agent will then fax the document to the listing agent who then present the offer to the seller. The offer must be in writing. Verbal agreements are not legal for real estate transactions in the state of Washington.
The initial offer from the buyer will have a deadline within which time the seller can respond to the offer. Once that period has elapsed, and no action has been taken by the seller, the offer is considered no longer valid. Any earnest money would be returned to the buyer.
Assuming the price the buyer is offering to pay is in the range you are willing to accept, your next step will be to review the other elements of the sale agreement.
Contingency Clauses
Though the buyer may want to buy your home, they may not want to be bound by the sale agreement unless certain conditions are met first. These conditions are described in the contingency clauses of the purchase and sale agreement. Most contingencies are there to protest the buyer. Once the conditions of a contingency clause (s) have been met, then the agreement must be honored.
The most common contingency clause are:
• Financing clause means that, for example, the buyer may need to secure financing from a lender before being able to buy your property. This protects the buyer in the event that they are unable to secure a loan.
• Sale of property clause means that the buyer has to sell their own home first before they can buy yours.
• Appraisal provisions allows for the buyer’s lender to carry out an appraisal of your property to assess whether the property is worth what you are asking for it.
• Inspection contingency allows the potential buyer to carry out a full inspection of your home at their expense to assess its structural soundness.
