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Before you sign on the dotted line, here’s what to expect.

Your weeks, months, or years of house hunting have come down to this moment, you’ve found your dream home and it time to sign a California Association of Realtors Residential Purchase Agreement (CAR-RPA) and submit your offer! The Residential Purchase Agreement is the most used, yet least understood tool in the real estate business. Understanding a real estate contract is essential to make sure the transaction meets your expectations. Most of the language used in a real estate contract is written to be easily understood by whomever reads it, but it’s important that you proceed with caution. Misinterpretation can be costly, and once you sign, your options are limited for making changes later. It’s not impossible to modify terms during the transaction, but all terms must be agreed to by all parties.

Here’s what you need to know about the basics of a contract.

The Parties

The full names of any parties involved in the contract must be clearly stated on the CAR RPA itself. Although it isn’t legally required, a contract commonly sets forth full names and middle initials (it helps the title company in preparation of the title commitment). The real estate agent brokering the sale should also be listed in this manner.

The Property

The real estate being sold should be clearly identified. Just like the parties above, it is necessary that this information is in writing on the contract so that no miscommunication is possible. At the very minimum, the address of the property should be listed, although a property parcel number (APN) should be included as well. Once in escrow, a legal description of the property and parcel will be stated on the escrow instructions.

The Price

The contract must state the purchase price of the property or a reasonably ascertainable figure (for example, “appraised value as determined by X”). The price can be negotiated through a series of counter offers, but in the end the sale price must be crystal clear to all parties involved.

The Terms

The terms of the agreement are equally important. Sellers and Buyers can negotiate numerous critical terms, from sale price, the length of the escrow period, who pays for certain necessary documents (Natural Hazard Disclosures, Title Report, HOA documents, etc.), a one-year home warranty, termite report and termite work, government requirements and water conservation retrofits, equipment to convey and more. An experienced professional, who thoroughly understands the contract, can navigate these terms and potentially negotiate to save significant money for their clients.

Signatures

Without signatures from both parties, the contract is not valid. Signing the CAR RPA and additional paperwork proves that both parties agreed to the information within it and will follow the rules set out by the contract and outlined in escrow instructions.

When you’re deciding how to handle your next home sale and real estate contract, instill the help of a reliable realtor. To get started, contact Jenn Blake Real Estate Group at Pacific Sotheby’s International Realty in San Diego, California at 858-663-6788.