Understanding Real Estate Contracts: What Every Buyer and Seller Should Know

When it comes to buying or selling property, there’s a lot to think about—from the perfect price to the perfect porch. But one piece of the puzzle that often gets overlooked? The paperwork. Specifically, understanding real estate contracts is essential to making sure your transaction is smooth, secure, and successful.

As real estate professionals serving West Texas and beyond, we walk clients through these contracts every day. Here’s a breakdown of what you need to know and what to watch for.

What Is a Real Estate Contract?  

At its core, a real estate contract is a legally binding agreement between a buyer and a seller. It lays out all the terms of the transaction, including:

  • Purchase price

  • Property address and legal description

  • Financing and loan details

  • Contingencies (like inspections or loan approval)

  • Closing date

  • Earnest money deposit

Whether you’re buying your first home or selling your family ranch, the contract sets the terms for how everything unfolds.

Why Contingencies Matter  

Contingencies are protections built into the contract to safeguard both parties. Common examples include:

  • Inspection contingency – Gives the buyer a chance to uncover issues and request repairs, or walk away.

  • Financing contingency – Protects the buyer if they can’t secure a mortgage.

  • Appraisal contingency – Ensures the property appraises for at least the agreed-upon price.

Pro tip: Don’t waive these without talking to your agent first. They’re designed to protect your investment.

Earnest Money: What It Is and Why It Matters  

Earnest money is a deposit made by the buyer to show good faith and is an essential factor in understanding real estate contracts. It’s typically held in escrow and later applied to the purchase price.

If the deal falls through for a reason not covered by a contingency, the seller may be entitled to keep the deposit. But if the buyer backs out for a valid reason, they usually get it back.

Local insight: The amount of earnest money varies depending on market norms. We’ll help you determine what’s typical in your area.

Watch the Deadlines  

Real estate contracts are full of important dates—inspection periods, financing deadlines, and closing day. Missing one can jeopardize the deal.

At Ekdahl Real Estate, we keep our clients on track with reminders and regular check-ins. But we always encourage buyers and sellers to stay informed and proactive.

What Stays with the Property?  

It’s a common question: “Are the appliances included?” The answer depends on what’s written in the contract. If there’s something specific you want—like that stainless steel fridge or custom window treatments—make sure it’s clearly listed.

Buying a Home “As-Is”  

In an “as-is” sale, the seller isn’t making repairs. But that doesn’t mean you should skip the inspection. In fact, it’s even more important.

Bottom line: You still need to understand what you’re buying, even if the seller doesn’t address any issues. That knowledge helps you make an informed decision.

Read the Fine Print (Yes, All of It)  

From flood zones to HOA rules, current leases, disclosures, and addenda can impact everything from your monthly costs to your future plans. Make sure you understand every clause, and ask questions if anything is unclear.

Our team is always here to walk through documents with you—we believe no question is too small when it comes to protecting your future.

Don’t Sign Until You’re Sure  

This might be the most important tip of all: never sign a real estate contract unless you fully understand it. We’re here to explain every detail, and in some states, an attorney may be part of the process as well.

Final Thoughts  

Understanding real estate contracts doesn’t have to be overwhelming. At Ekdahl Real Estate, we’re committed to making sure our clients feel informed and confident at every step of the process. Whether you’re buying a home in town or selling land out in the country, having the right team—and the right knowledge—makes all the difference.

Have questions about a real estate contract? We’d love to help. Reach out anytime, or stop by one of our local offices to chat with a member of our team.

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