What is a Real Estate Contract?
A Real Estate Contract is a legal document that you must sign after your offer on a property has been accepted. It outlines the purchase conditions and details from your offer and is a crucial part of the property buying process.
Once your offer on a property is accepted, the next step is to sign the purchase contract. The details and purchase conditions from your offer will form the contract of sale, making it an important stage in the property buying process.
Understanding the property contract is important. To fully understand the contract, seek guidance from your selling agent and conveyancer who can assist you and address any inquiries you may have.
Different Types of Real Estate Contracts
There are two types of contracts that can be produced in real estate – an REIQ contract that can be used for Residential Land and Established Houses and a QBCC or HIA that can be used for and New Construction.
If you are purchasing a Home & Land Package, there will be two separate contracts for the Land and the Build.
Thoroughly Reviewing the Contract
Before signing the contract, carefully review every page to ensure that it aligns with your offer. Pay close attention to sections such as:
- Personal details
- Conveyancer details
- Price and deposit
- Contract conditions and special conditions.
You can send a copy to your conveyancer to peruse prior to signing.
As the purchaser, your personal details will be in the buyer section. You should thoroughly check through all sections where your information is filled in to ensure there are no spelling errors.
Contract Conditions
In your contract, it should contain your clauses and the timeframes listed in your initial offer.
Three conditions in your contract include: Building & Pest, Finance and Settlement.
Building & Pest
A Building & Pest clause allows you, as the buyer, to engage in a licensed inspector to investigate the condition of the property you intend to purchase. The Building & Pest Inspection is only relevant for established homes. It is standard for the Build & Pest clause to occur 7 – 14 days after the contract date.
If the Build & Pest Inspection clause is left blank on the contract, the contract will not be subject to Build & Pest. If you are purchasing vacant land, you can leave this section blank. However, if you are purchasing an established house, it is recommended to include this clause in case there is issues with the property, and you are unwilling to proceed.
Finance
The finance clause provides you, as the buyer, time to organise and receive formal approval for a loan for the property you’re purchasing.
The contract will be subject to finance which is a standard condition in home purchasing contracts. There is no set timeframe for the finance, however, the standard timeframe can vary between 7 – 21 days.
If you are unable to obtain a loan for the property, you can terminate your contract using this clause.
Settlement
The settlement process is where you officially become the homeowner or landowner.
There is no rule that must be followed for the settlement timeframe as each purchaser may different requirements. Settlement can vary from 14 days to 3 months after finance is achieved.
Signing the Contract
The contract can be signed with the selling agent or electronically depending on what you prefer as the buyer. Once you have signed the contract, the selling agent will arrange for the seller to sign it. The contract date is the day that all parties have signed the contract and it is an executed contract.
Getting Help With a Real Estate Contract
If you have any questions about real estate contracts and want to speak with an expert, our team is here to help. Don’t hesitate to reach out to us for guidance and advice.