Real Estate Purchase Agreement Checklist: 7 Things to Review Before You Sign

1. The inspection contingency — and how quickly it expires

The inspection contingency gives you the right to have the property professionally inspected and to back out (or renegotiate) if serious problems are found. It's the most important consumer protection in most real estate contracts.

What to check:
• **Duration**: How many days do you have to complete the inspection and notify the seller? 7–14 days is standard. Shorter is riskier — you need time to schedule the inspector and read the report.
• **What triggers the contingency**: Can you back out for any inspection finding, or only for "material" defects? The definition of "material" matters.
• **What "back out" means**: Do you get your earnest money back if you cancel? Under what circumstances could it be disputed?
• **Waiver traps**: In competitive markets, sellers sometimes ask buyers to waive the inspection contingency. Understand what you're giving up if you agree.

In as-is sales, the inspection contingency is often limited or waived entirely. If you accept an as-is clause, get an independent inspection before making your offer — not after.

2. The financing contingency

A financing contingency protects you if your mortgage loan doesn't come through as expected. Without it, if your loan is denied, you may lose your earnest money deposit.

What to look for:
• **Loan amount and type**: Does the contingency specify the exact loan amount and type you're getting? If you can't get exactly that loan, are you protected?
• **Interest rate cap**: Some contingencies specify a maximum acceptable interest rate. If rates rise above that cap, you can back out. If there's no cap, you may be locked in at a much higher rate than expected.
• **Deadline**: How long do you have to secure the financing commitment? Is it long enough for your lender?
• **Seller's right to cure**: If you can't get the loan, can the seller force you to try another lender? Can they extend the deadline unilaterally?

In cash transactions, a financing contingency isn't applicable — but you should confirm what "cash" means and when the funds verification is required.

3. The appraisal contingency

If you're getting a mortgage, your lender will require an appraisal. If the property appraises below the purchase price, the lender will only lend based on the appraised value — leaving you to make up the difference out of pocket, or back out.

An appraisal contingency protects you in this scenario. Without it, you're at risk of being contractually obligated to close at a price your lender won't fully finance.

What to check:
• **Is the contingency present?** In hot markets, buyers sometimes waive this to strengthen their offer. Know the risk.
• **Appraisal gap clause**: Some contracts include an "appraisal gap clause" where the buyer agrees to pay up to a specified amount above the appraised value. Understand exactly what you're committing to.
• **Dispute process**: If you disagree with the appraisal, can you get a second one? What happens if they differ?

4. Earnest money — when you can get it back

The earnest money deposit (also called a good faith deposit) signals your commitment to purchase. It's typically 1–3% of the purchase price and can easily be $5,000–$30,000 on a typical home.

The critical question: under what circumstances can you get it back?

Your earnest money is generally refundable if:
• You cancel because a contingency isn't met (inspection, financing, appraisal)
• The seller fails to disclose known defects required by law
• Title issues arise that can't be resolved

Your earnest money is generally at risk if:
• You back out without a contingency basis
• You miss deadlines that void your contingencies
• You don't perform required acts (e.g., apply for a mortgage within the required timeframe)

Read the "default" section of your contract carefully. It defines exactly what happens if you back out — and the circumstances under which you could be sued for more than just the deposit.

5. Closing cost allocations

Closing costs typically run 2–5% of the purchase price and include lender fees, title insurance, attorney fees, transfer taxes, escrow fees, and prepaid items. Who pays which closing costs is negotiable — but the defaults vary significantly by state.

What to check in your contract:
• **Seller concessions**: Has the seller agreed to contribute to your closing costs? Is the amount clearly specified?
• **Transfer taxes**: In many states, both buyer and seller owe transfer taxes. Who pays which portion?
• **Title insurance**: Owner's title insurance (protecting you) vs. lender's title insurance (protecting the lender) — who pays each?
• **Pro-rations**: How are property taxes and HOA fees pro-rated? If the seller has already paid taxes for a period that extends past closing, you'll owe them a credit.

Ambiguous closing cost language is a source of last-minute disputes. Make sure every significant cost has a clear allocation in the contract.

6. What's included — and what's excluded — from the sale

Real estate contracts should specifically identify what personal property, fixtures, and appliances are included in the sale and what the seller is taking. Disputes over "what comes with the house" are surprisingly common and surprisingly contentious.

What's typically included (unless excluded): built-in appliances, light fixtures, window treatments, garage door openers, outdoor structures.

What sellers sometimes take unexpectedly: decorative light fixtures they plan to keep, refrigerators, washer/dryers, mounted TVs, specific plants or trees.

Best practice: list everything you expect to be included in an "Included Personal Property" exhibit. If the listing photos show a refrigerator and you want it, put it in writing. If there's a staging item you covet, ask now.

Also check: are there items the contract specifically excludes? Review the exclusions list carefully.

7. HOA documents and CC&Rs

If you're buying in a homeowners association (HOA), the purchase agreement should reference the HOA's governing documents: the Declaration of Covenants, Conditions & Restrictions (CC&Rs), bylaws, and rules.

What to check:
• **Review period**: Do you have a right to review HOA documents and cancel if you find objectionable restrictions?
• **Transfer fees**: HOAs often charge buyer or seller a transfer fee. Who pays?
• **HOA financial health**: Is the HOA adequately funded? Are there pending special assessments? Ask for the most recent financial statements and meeting minutes.
• **Restrictions that affect your plans**: CC&Rs may restrict short-term rentals (important if you're buying an investment property), pet types and sizes, exterior modifications, parking, and more.

In many states, sellers are required to provide HOA documents before closing. If the right to review and cancel isn't in your contract, ask for it explicitly.