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Key Sections of a Real Estate Purchase Contract for Rental Property Investors

Young woman shaking hands after agreeing to purchase a home.Being a rental property investor in Hutchinson Island, you know that buying property is essential for portfolio growth. To buy with assurance, it’s crucial to fully understand the real estate purchase contract. The standard real estate purchase contract details the sale’s terms and conditions between the buyer and seller. In this blog post, we will discuss the essential sections of a real estate purchase contract that every investor needs to understand!

Earnest Money Deposit

The earnest money deposit typically ranges from 1% to 3% or 4% of the purchase price. It’s a sum placed in escrow when you make an offer, indicating to the seller your serious intent to buy the property. When the sale closes, the earnest money deposit is applied to the purchase price.

Offer to Purchase

The Offer to Purchase section initiates with an in-depth property description. This description must be scrutinized to confirm it includes the accurate property details you are bidding on.

This section will likely include a list of items included with and excluded from the sale. Close attention to these lists is vital, as the seller can exclude nearly anything from the sale.

Purchase Price

One of the most essential sections in the real estate purchase contract is the purchase price section. In this part, you consent to pay the amount stated to acquire ownership of the property.

Furthermore, it’s vital to account for any additional fees or costs tied to the sale, including the seller paying for closing costs. This section outlines your payment method for the property, whether it’s financing or cash, and the amount of cash you’ll bring at settlement.

Seller Disclosures

The seller disclosures section details any known physical or legal issues with the property. This section includes any pending lawsuits, environmental issues, or the need for a new roof.

Typically, you should take this information into account when making an offer. If the seller fails to disclose any known problems and you find them after closing, the seller could be liable for damages.


The contingency section is a critical part of a real estate purchase contract. It details all the conditions that must be satisfied before closing, including securing financing, getting an inspection, and having a clear title.

If the buyer doesn’t act, these contingencies are usually automatically waived. However, it’s vital to review these contingencies to know what to expect and the time frame for meeting them.

Inspection Period

After submitting the offer, the inspection period allows you to cancel the purchase contract for various reasons. For instance, you may uncover a major defect in the property and opt not to buy it, or you might have buyer’s remorse.

The inspection period enables you to cancel the contract without consequences if you uncover something that wasn’t noted in the initial inspection.

Assessments and Financial Obligations

This part describes any current or future assessments and their related financial obligations. Should a major project be proposed for the property’s area, this section will detail the project and any associated costs.

It may also list any outstanding fees you will need to cover at closing, such as property taxes, HOA fees, special assessments, or utility bills. Carefully reviewing this information is crucial to understand any financial obligations you may incur from the purchase.

Closing and Settlement

This part of the real estate purchase contract indicates when and where the sale will be settled. It usually outlines an anticipated date for the transfer of the property. Many buyers assume they can take possession of the property at closing, but that isn’t always true. Hence, carefully reviewing the closing section of your contract is essential to prevent unexpected timing issues.

Offer and Time for Acceptance

One of the last sections of a real estate contract typically lists key dates to monitor, such as the offer’s expiration date and contract deadlines. A real estate purchase contract becomes valid once the seller accepts your offer. The offer and time for acceptance section describes the timeframe for making your offer, how long the seller has to accept it, and when the buyer must provide a deposit. This section may also indicate the start of contingencies and the time you have to fulfill these terms.


Upon reviewing the real estate purchase contract and being ready to submit your offer, you must sign at the bottom to indicate acceptance or rejection. If the seller accepts your offer, the purchase agreement is legally binding, and you must follow through with the transaction as outlined in the contract.

However, if the seller opts to make a counteroffer, responding to your initial offer, this paragraph will be included in your purchase agreement. The seller’s counteroffer could contain different terms or suggest a new purchase price. If you agree to the counteroffer, you must sign and return it to indicate acceptance.

A rental market expert can provide invaluable guidance through the more complex aspects of purchasing an investment property. Real Property Management Dynamic can support you at each stage, from the initial purchase to ongoing property management in Hutchinson IslandGet in touch online or call 772-251-1169 to learn more about what we offer investors.

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