When you’re selling your house, the contract sets everything in motion. It’s important to understand the key parts so you know exactly what you’re agreeing to and what happens next.
Real Estate Contracts
A real estate contract is a legally binding agreement between a seller and a buyer. It spells out all the key details of the sale, from the agreed price to the closing date, so that both sides are on the same page.
These contracts are typically written and reviewed by real estate attorneys, not scribbled together on a piece of paper or drafted casually. They exist to give you confidence and clear expectations from start to finish.
Contingencies are “if-this-then-that” rules built into the contract. They protect the buyer by giving them a way out if something doesn’t go as planned — like if the financing falls through or the inspection finds major problems. When a contingency isn’t met, the buyer can cancel the deal without penalty.
If the contingency isn’t met, the buyer can cancel the deal without penalty. It’s important to know which contingencies are in your contract so you’re prepared for any changes.
“And/or Assigns” Language
In simple terms, “and/or assigns” means the buyer can transfer the contract to someone else. So the person signing your contract might not be the person who actually buys your home. Instead, they may be planning to wholesale the deal by locking it up and then reselling it to another investor for a profit.
This isn’t always a scam, but it can create serious problems if you’re not careful.
The EMD is a small deposit from the buyer to show they’re serious about purchasing your home. It’s held safely in escrow by the title company until closing.
If the buyer backs out for a valid reason (like a contingency), they get their deposit back. If they back out without cause, you may be able to keep it.
Proof of funds is a document that shows the buyer has the cash available to purchase your home. It’s usually a recent bank statement, a letter from a financial institution, or some form of official verification.
This is a standard part of real estate transactions, and a serious buyer should have no problem providing it. If someone hesitates or avoids sharing this information, that’s a sign to slow down and ask questions.
Once you sign a contract, the buyer gains legal rights to buy your home. This is called “equitable interest,” and it means you can’t just decide to sell to someone else later.
That’s why it’s so important to be comfortable with the contract terms upfront. Make sure you’re ready to move forward before you sign.
A short sale happens when your home is worth less than what you still owe on the mortgage. In this case, your lender has to approve the sale and agree to take less than what’s owed.
Short sales take longer and involve more paperwork. But if you’re struggling with payments or facing foreclosure, it can be a way to move forward without losing everything.
A lease back lets you sell your home but stay in it temporarily after closing. This can give you extra time to move while the buyer officially takes ownership.
In this arrangement, you agree to pay a set rent to the new owner. It’s all spelled out in the contract so both sides know what to expect.
Want to know how Best Offer KC makes it easy to sell your house without the rush to move out?
Once your home is under contract, a team of professionals steps in to handle the paperwork and make sure everything’s legal. This section defines the key terms you’ll hear during this stage so you know what’s happening behind the scenes.
Title
Title is the legal right to own your home. It shows who the official owner is and records any claims or debts tied to the property.
Before closing, a title company confirms that your ownership is clear. This helps avoid surprises that could block the sale.
Title Company
The title company acts as a neutral third party, handling paperwork, legal checks, and the exchange of money.
They confirm ownership, check for liens, prepare closing documents, and manage escrow to make sure everything’s handled fairly.
Escrow is a secure account where money is held during the sale. The buyer’s earnest money deposit and final payment go here.
The title company manages escrow to protect both you and the buyer. Funds are only released when everything is signed and clear.
Loan Payoff Authorization
A loan payoff authorization lets the title company pay off your existing mortgage using the sale proceeds.
Once your lender is paid, the remaining money from the sale is sent to you. It’s a simple but essential step for a clean sale.
Contingency Period
Once the contract is signed, the buyer has a window of time called the contingency period to inspect the home, order an appraisal, and confirm financing. Here’s what typically happens during this stage.
Inspections
A home inspection gives the buyer a chance to check the condition of the property. A professional inspector examines the roof, plumbing, electrical systems, and overall structure.
Depending on what they find, the buyer might request repairs, ask for a price adjustment, or cancel the contract if the issues are serious enough.
Appraisals
An appraisal is when a licensed appraiser estimates the home’s market value. They’ll consider the home’s condition, location, and recent sales of similar properties nearby.
The appraisal ensures the lender that the home is worth the loan amount. If the appraisal comes in lower than the agreed sale price, the buyer may need to renegotiate or provide a larger down payment.
Limited Power of Attorney
A Limited Power of Attorney (LPOA) allows someone else to act on your behalf for specific tasks, like signing documents or handling certain parts of the transaction. In a home sale, it can be used if you can’t be present for signing or need someone to coordinate repairs and negotiations.
This document is limited to the home sale and doesn’t give broad control over your affairs. It simply helps keep the transaction moving when you can’t be there yourself.
Cash Advance
A cash advance is when the seller receives a portion of the sale proceeds before closing. This can help cover moving expenses, bills, or other immediate needs.
The advance is subtracted from the final payment at closing, so the seller receives the remaining amount when the sale is finalized.
Best Offer KC offers this service to homeowners who need cash quickly.
Closing is the finish line of the sale when the paperwork is signed, the money changes hands, and the ownership of the house officially transfers. Here’s what you’ll need to know about each part of the closing process.
Deed
The deed is the legal document that transfers ownership of the home from you to the buyer. It lists the names of both parties and a description of the property.
At closing, you’ll sign the deed, and the title company will record it with the county. Once that’s done, the buyer is officially the new owner of the property.
Settlement Statement
The settlement statement (also called a Closing Disclosure or HUD-1) shows the full breakdown of the money involved in the sale. It includes the sale price, loan payoffs, closing costs, and the net amount you’ll receive.
You’ll get a copy before closing day to review everything. It’s important to check this document carefully to make sure it’s correct.
Closing Fees
Closing fees cover the costs of services provided during the sale. These can include title company fees, recording fees, taxes, and HOA dues. If you worked with a real estate agent, the commission, usually around 5–6% of the sale price, is also part of your closing costs.
Some fees are split between buyer and seller, while others are your responsibility as the seller. Most of the time, these costs are deducted from your sale proceeds, but if the sale price doesn’t cover everything, you may need to bring cash to the closing table to cover the difference.
Getting Paid
Once everything is signed and recorded, the title company releases the sale funds. They’ll pay off any remaining mortgage, liens, fees, and any other amounts owed. If you took a cash advance before closing, that amount will be subtracted from your final proceeds.
The balance is usually sent to you by wire transfer or check. You’ll walk away with a copy of all the documents and the peace of mind that your sale is officially complete. The money you receive is yours to use however you like.
Protect Yourself When Selling Your Home
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