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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 Nicholasville rental property investor, you understand that purchasing properties is crucial for expanding your portfolio. A thorough understanding of the real estate purchase contract is essential for confident buying. A typical real estate purchase contract outlines the terms and conditions of the sale between buyer and seller. This blog post will detail the crucial sections of a real estate purchase contract that every investor needs to know!

Earnest Money Deposit

Generally, the earnest money deposit is between 1% and 3% to 4% of the purchase price. This sum is placed in escrow when you submit your offer, showing the seller your commitment to buying 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 should be carefully reviewed to ensure it includes the accurate details of the property you are bidding on.

There will likely be a list of items that are included in and excluded from the sale. These lists require close attention since the seller can exclude virtually anything from the sale.

Purchase Price

One of the most essential sections in the real estate purchase contract is the purchase price section. This section details the amount you agree to pay to secure ownership of the property.

Also, it’s important to note any extra fees or costs connected to the sale, such as the seller covering closing costs. This part will also detail how you intend to pay for the property, whether with financing or cash, and the amount you expect to bring at settlement.

Seller Disclosures

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

You should generally factor in this information when making an offer. If the seller fails to disclose any known problems and you find them after closing, the seller could be 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.

These contingencies are generally waived automatically if the buyer fails to act. Reviewing these contingencies is essential to understand what to expect and how much time you have to meet 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.

During the inspection period, you can cancel the contract without consequences if you find something not covered in the initial inspection.

Assessments and Financial Obligations

This part covers any present or future assessments and the financial obligations associated with them. If a large project is proposed for the area where the property is situated, this section will outline the project and its associated costs.

This section may also cover any unpaid fees you will be responsible for at closing, such as property taxes, HOA fees, special assessments, or utility bills. It’s crucial to carefully review this information to understand any financial obligations you might incur as a result of the purchase.

Closing and Settlement

This section of the real estate contract provides details on the time and place for settling the sale. This section often includes an estimated date for transferring the property. Many buyers think they can take possession at closing, but that isn’t necessarily true. For this reason, it’s vital to closely review the closing section of your contract to avoid unforeseen timing problems.

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 time for acceptance section indicates how long you have to make your offer, the seller’s period for acceptance, and when the buyer’s responsibility for providing a deposit starts. 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. Should the seller accept your offer, the purchase agreement becomes legally binding, requiring you to proceed with the transaction per the contract terms.

However, if the seller chooses to make a counteroffer, responding to your initial offer, this paragraph will be included in your purchase agreement. The counteroffer from the seller may include different terms or suggest a revised purchase price. If you agree to the counteroffer, you must sign and return it to indicate acceptance.

A rental market expert can provide invaluable guidance through the more complex aspects of purchasing an investment property. Real Property Management Bluegrass can support you at each stage, from the initial purchase to ongoing property management in NicholasvilleContact us online or call 859-684-2054 to find out more about our services for investors.

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