Signing the contract will also require an earnest money deposit from you. These deposits aren’t regulated and can be any amount both parties agree to. There are perhaps local customs that say one or two percent of the sales price is the norm but it all boils down to what you decide. You can put down $100 if you want to but the seller may want a little more commitment than that. The earnest money is given to a third party, typically the settlement agent holding the closing.

Your contract should clearly spell out your right to have an inspection and adjust or withdraw your offer after the inspection has been completed. Yes, there is a Seller’s Property Disclosure but there may be some other items undiscovered that could affect not just the value of the property but whether or not you want to move forward with the purchase altogether. The seller will typically allow for such a clause but will also ask that this option be made within a specific period of time, say 10 days or so which is plenty.

After the inspection you may want to lower your sales price due to newly discovered issues, or you may find there are some major structural problems with the roof which could cause you to cancel the contract altogether and get back your earnest money deposit.

In some areas it’s common practice for a contract to include an option clause. For a small fee, say $300 or so, the buyer has the option to back out of the sales contract for any reason at all. In fact, for no reason at all and still get the earnest money back. The $300 fee then goes to the seller but the buyers can back out of the contract simply because the wind changed direction. Most option periods are five to 10 days.

When you applied for financing to obtain a preapproval your lender also provided you with a list of potential closing costs you might encounter at the closing table. However, that doesn’t mean you have to pay them. The seller can pay them. The seller has to agree of course, but your purchase agreement should always ask that the seller pay for a percentage of your closing costs. The seller may not agree--or may agree to pay for a portion of them--but if you don’t ask you’ll have to pay for them. If the seller does not agree, counter with paying for a specific cost such as title insurance or your appraisal.

The preliminary title report will be ordered by your lender almost immediately after receipt of an executed sales contract. Much like a property inspection, the title report presents the condition of ownership and lists any and all parties that may have a legal interest in the property. If there are any issues that need resolving before closing you should have the right to cancel.

The most common lien appearing in the report will be any existing mortgage on the property, the one belonging to the seller. However, there can be other issues that must be resolved before the property can be transferred. Delinquent property taxes, federal tax liens, or unpaid child support or alimony are some of the liens that have to be paid or otherwise resolved.

Finally, give yourself plenty of time for the closing to take place. If you’re making a cash offer this isn’t as much of a concern. but most will finance the transaction and the lender needs information from various third parties before the loan can close. Many contracts will close within 30 days but there’s no need to rush things if you don’t have to.

1. The earnest money is given to a third party and as long as all parts of the contract are completed; the money is credited to the buyer at closing. The amount can be anything you and the seller agree to
2. Give yourself time to order an inspection and review it carefully
3. An option clause in a contract gives you the right to cancel at your discretion during a specific period
4. Always ask the seller to pay for your closing costs
5. You should have time to review the title report before closing
6. Don’t rush the closing date if possible. Give you and your lender time