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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. As a Frisco rental property investor, you understand that purchasing properties is crucial for expanding your portfolio. To buy with assurance, it’s crucial to fully understand the real estate purchase contract. A real estate purchase contract is a standard document outlining the terms and conditions of the sale 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

Earnest money deposits usually fall between 1% and 3% or 4% of the purchase price. This is the amount placed in escrow with your offer to signal to the seller your intent to purchase the property. The deposit will be applied to the purchase price at the time of closing.

Offer to Purchase

The Offer to Purchase section kicks off with a detailed 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. Within this section, you agree to the payment amount for acquiring property ownership.

Also, it’s important to note any extra fees or costs connected to the sale, such as the seller covering closing costs. Moreover, this section will describe how you plan to pay for the property, whether through financing or with cash, and the cash amount expected at settlement.

Seller Disclosures

The seller disclosures section details any known physical or legal issues with the property. This encompasses outstanding lawsuits, environmental problems, or a new roof requirement.

Usually, you should consider this information when making an offer. If the seller doesn’t disclose known issues and you discover them after closing, the seller could be held liable for damages.


The contingency section is a critical part of a real estate purchase contract. This outlines all the conditions that need to be fulfilled before closing, like securing financing, conducting an inspection, and obtaining a clear title.

Typically, these contingencies are automatically waived if the buyer does not act. It’s crucial to review these contingencies to know what to expect and the time frame for meeting the requirements.

Inspection Period

The inspection period is the timeframe following your offer submission when you can cancel the purchase contract for multiple reasons. For instance, you might find a major defect in the property and choose not to buy it, or you might experience 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.

This section may also include any unpaid fees you’ll be responsible for at closing, like property taxes, HOA fees, special assessments, or utility bills. Reviewing this information carefully is important to understand any financial obligations you may have from the purchase.

Closing and Settlement

This section of the contract details the timing and location of the sale settlement. This section often includes an estimated date for transferring 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 final parts of a real estate contract will usually detail important dates to watch closely, including the offer’s expiration and contract deadlines. A real estate purchase contract becomes valid once the seller accepts your offer. The offer and acceptance section explains how long you have to make your offer, the seller’s time to accept it, and when the buyer must provide a deposit. Furthermore, this section might include when contingencies start and how long you have to meet them.


After going over the real estate purchase contract and being ready to submit your offer, you must sign 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 chooses to make a counteroffer, responding to your initial offer, this paragraph will be included in your purchase agreement. The seller’s counteroffer may have different terms or propose a revised purchase price. If you agree to the counteroffer, you must sign and return it to show your acceptance.

A rental market expert can provide invaluable guidance through the more complex aspects of purchasing an investment property. Real Property Management Ideal can support you at each stage, from the initial purchase to ongoing property management in FriscoContact us online or call 945-218-6083 to find out more about our services for investors.

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