How to Review a Purchase Agreement Before Closing
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The average home purchase involves multiple simultaneous pressures: competing buyers, tight timelines, excited agents, and the emotional weight of a major decision. In this environment, the 30-page purchase agreement often gets less scrutiny than the home inspection report.
Purchase agreements are not standard documents. Every deal involves negotiated terms, and the defaults favor the party whose agent drafted the contract. Understanding the key clauses before you sign — not after — is the only way to know what you've actually agreed to.
The 7 Clauses That Matter Most in a Purchase Agreement
1. Contingency clauses
Financing, inspection, and appraisal contingencies are your legal escape routes if things go wrong. Understand what triggers each contingency, the deadline to invoke it, and what happens to your earnest money if you walk. Waiving contingencies is common in competitive markets but carries real risk — a failed appraisal without an appraisal contingency leaves you either making up the difference in cash or losing your deposit.
2. Earnest money and forfeiture conditions
Earnest money (typically 1–3% of the purchase price) demonstrates commitment and is typically credited at closing. But under what conditions does the seller keep it? If you back out for a reason not covered by a contingency, you typically forfeit the deposit. Understand the exact forfeiture conditions before you write the check.
3. As-is clauses and seller disclosure limitations
"As-is" sales limit what you can demand of the seller after inspection. The seller still has disclosure obligations, but an as-is clause waives your right to ask for repairs or renegotiate price based on inspection findings. Know whether this is in your contract before the inspection period starts.
4. Closing date flexibility and delay penalties
Closing dates are often tight. If your financing is delayed or title issues arise, what are the consequences? Some agreements allow for reasonable extensions; others impose per-day penalties or allow the other party to cancel. Understand the timeline and who bears the cost of a delay.
5. What's included and excluded from the sale
Fixtures are generally included; personal property is not. But "fixtures" is often disputed. The contract should list specific items that are included (appliances, window treatments, built-ins) or excluded (specific light fixtures, garage equipment). Verbal agreements about what stays don't survive closing.
6. Title warranty type
A general warranty deed provides the strongest title guarantee — the seller warrants title against all claims, even those predating their ownership. A special warranty deed only warrants against claims arising during the seller's ownership. A quitclaim deed provides no warranty. Know what you're getting.
7. Default remedies
If the buyer defaults, the seller typically keeps the earnest money. If the seller defaults, the buyer can typically demand specific performance (force the sale) or sue for damages. Understand both scenarios and what your actual remedies are.
Before You Sign: A Quick Checklist
Run through these before countersigning any purchase agreement: (1) Are all contingencies present and is the timeline realistic? (2) Is the earnest money amount and forfeiture condition clear? (3) Does the agreement specify what's included in the sale? (4) What is the exact closing date and what happens if it's missed? (5) Is there an as-is clause, and if so, what are the remaining inspection rights?
Real estate transactions are complex enough that professional review — by a real estate attorney or experienced agent — is typically warranted. Use an AI review as a first pass to understand the document and identify specific clauses to discuss with your attorney.
Revealr Editorial Team
Reviewed for accuracy by the Revealr editorial team. Our articles are written and reviewed by contract specialists to ensure the information reflects common legal standards and current practice. This article is for informational purposes only.
Not legal advice. This article is for informational purposes only. It does not constitute legal advice and is not a substitute for consultation with a licensed attorney in your jurisdiction. Laws vary significantly by state and country.
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